Defending Partially Covered Claims

1) Introduction of speaker

2) Mixed action suits

3) Duty to defend vs. duty to indemnify

4) What doesn’t trigger a duty to defend

5) Triggering the duty to defend

a) “Groundless, false or fraudulent” claims

b) Necessity of a suit

c) Necessity of tender

6) Prejudice due to late notice

7) Pay only post-tender costs

a) vs. pre-tender costs

b) jurisdictional variations

1) Defend if any possibility of indemnification

2) Defend the uncovered claims along with the covered claims

a) No parsing through the complaint for covered claims only

b) “In for a penny, in for a pound”

3) Four corners rule

a) Exception: mere shotgun allegations

4) Extrinsic evidence: 3 approaches

a) The “purists”

b) Readily available evidence

c) affirmative duty to investigate

5) No duty to defend claims if no possibility of indemnification

6) Special cases: California and NY

a) “But for” coverage analysis

1) Duty to defend broader than the duty to indemnify

2) Preventing your duty to defend from turning into a duty to indemnify

a) Keep the insured informed

b) “Knowledge is power”

3) Tools to keep insured informed

a) Reservation of rights letter

b) Denial or partial denial

4) Waiver

a) Definition of waiver

b) jurisdictional variations

5) Estoppel

a) Definition of estoppel

b) Difference from waiver

6) Elements of estoppel

a) acts or statements of carrier

b) reasonable reliance

c) reliance to detriment

7) Possibility of recouping some defense costs

1) Reasons for requirement to defend entire mixed action suit

a) Meaningful defense

b) Logistics of parsing claims

c) Conflict of interest and bad faith issues

2) Conflict of interest

a) Defense counsel’s role is as an advocate for the insured

b) Defense counsel’s duty is to his client

3) Case study: New York

a) Defense counsel should look for additional coverage for its client

4) Defense counsel’s role compared to insurer’s role

5) Common scenarios with conflicts of interest

a) Defense of punitive damages claims

b) Defense of claims for non-monetary relief

1) Cumis Counsel / Independent Counsel: 2 approaches

a) “actual conflict”

b) “potential conflict”

2) Case study: notifying the insured about the right for Cumis counsel

3) Billing rates for independent counsel

a) Some jurisdictions set by statute

b) Some jurisdictions have reasonableness standard

4) Billing guidelines for independent counsel

a) Negotiation

b) Business decisions

1) The Tripartite Relationship defined

a) Special and distinct relationship between defense counsel and insured

b) Insurer pays the bills

c) Potential for bad faith if insurer and defense counsel appear to be in a collusive relationship

2) Common bad faith problems

a) Moving to dismiss covered claims leaving insured with uncovered claims and without insurance coverage

b) Stipulating to withdraw covered claims

c) Discovery conducted in a way that that helps the insurer with its coverage defenses

d) Detailed verdict sheet allowing easy recognition of covered/uncovered claims

3) Solutions to the bad faith problems

a) Moving to dismiss covered claims leaving insured with uncovered claims and without insurance coverage

b) Stipulating to withdraw covered claims

4) Conclusion