Justices To Consider Insurer Malpractice Lawsuit

Jun 10, 2019

The Florida Supreme Court has quickly decided to take up a dispute about whether an insurance company can sue a law firm for alleged malpractice after the firm represented one of the insurer’s policyholders. 

The Supreme Court issued an order Thursday saying it would hear the case, after Arch Insurance Co. filed an initial notice in the court April 22. Justices Ricky Polston, Alan Lawson, Robert Luck and Carlos Muniz agreed to hear the case, while Justice Jorge Labarga dissented.

Typically, five of the seven justices make such decisions about whether to accept cases. The dispute stems from Arch Insurance’s decision to hire the law firm Kubicki Draper, LLP to represent a policyholder in a separate lawsuit.

A settlement was reached in the separate lawsuit that involved an amount of money within the customer’s policy limits, according to a January ruling by the 4th District Court of Appeal. But Arch Insurance sued Kubicki Draper for alleged malpractice, contending that the firm’s actions led to a large settlement that could have been avoided --- a settlement that would be paid by the insurer.

A circuit judge and the appeals court rejected the malpractice case, finding that the law firm represented the policyholder and not the insurer. Because of a lack of what is known as “privity” between the insurer and law firm, the circuit judge and appeals court said Arch Insurance did not have legal standing to pursue the malpractice claim.

“Based on our review of the record, we agree with the circuit court's conclusion that the law firm was in privity with the insured as the client,” the appeals court ruled in January. “We see nothing in the record to indicate that the law firm was in privity with the insurer.”

In March, however, the appeals court agreed to a request by the insurer to urge the Supreme Court to take up the dispute, a move known as “certifying” a question to justices. Arch Insurance followed in April by going to the Supreme Court. Justices did not set a date for oral arguments in the order issued Thursday.