 |
 |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|
|
|
|
Britton v. Smythe9/21/2000
f Ohio, Inc. (1984), 15 Ohio St.3d 321, 322.
A potential conflict of interest exists when an insurer assumes control of a defense for an insured but also intends to challenge its duty to indemnify if the defense is unsuccessful. Collins v. Grange Mut. Cas. Co. (1997), 124 Ohio App.3d 574, 577. The insurer may undertake a defense on behalf of an insured yet protect its position by reserving its rights under the policy. A reservation of rights consists of notice given by the insurer that it will defend the suit, but reserv all rights it has based on noncoverage under the policy. Motorists Mut. Ins. Co. v. Trainor (1973), 33 Ohio St.2d 41, 45.
An insurer's reservation of rights is important because insurers often find themselves in positions that might create a conflict of interest. In some circumstances, an insurer might believe that its insured's conduct constitutes excluded conduct under an insurance policy. Hence, it may be to the insurer's financial advantage to see that the conduct is excluded, thus precluding indemnification. This constitutes a potential (though not necessarily actual) conflict of interest. See Collins v. Grange Mut. Cas. Co., 124 Ohio App.3d at 577. Under such circumstances, the insurer is obligated to defend the action but reserve its rights to indemnification. This way, the client can make a knowing choice whether to proceed with representation and the possible conflict, or obtain independent counsel.
Section D of the legal defense program lists ten different exclusions. Subsection 1 of Section D excludes:
Fraud, dishonesty, criminal acts, licence law or ethics violations, undisclosed dual agency, reckless, malicious or intentional wrongdoing whether by act, omission or inaction.
"Intentional deceit" as alleged in the Lamb complaint is a form of conduct that would fall within subsection 1 of Section D as either "fraud" or "intentional wrongdoing." On its face, the Lamb complaint alleged that plaintiff engaged in conduct that would be excludable under the legal defense program. The court found that Smythe, Cramer reserved its rights in a January 8, 1996 letter to plaintiff and we agree. That letter stated Smythe, Cramer's opinion that plaintiff's conduct had been "fraudulent and dishonest." This statement would put the reasonable person on notice that Smythe, Cramer was denying coverage.
Despite this reservation of rights, the question remains whether Smythe, Cramer reserved its rights in a timely manner.
n insurer may waive its defenses if it defends without notifying the insured of a reservation of rights. Turner Liquidating Co. v. St. Paul Surplus Lines Ins. Co. (1994), 93 Ohio App.3d 292, 297; Insurance Co. of North America v. Travelers Ins. Co. (1997), 118 Ohio App.3d 302. If the reservation of rights comes so late that it prejudices the insured's ability to defend the matter, a court may find the insurer has waived the reservations of rights. For example, in Turner Liquidating Co. v. St. Paul Surplus Lines Ins. Co., the court held that " roviding a defense for nearly one year without reserving rights may give rise to a claim of estoppel * * *." Turner Liquidating Co., 93 Ohio App.3d at 300. Likewise, in Collins v. Grange Mut. Cas. Co., the court of appeals held that a sixteen-month period constituted a waiver of a reservation of rights. Collins, 124 Ohio App.3d at 579.
Over two years elapsed from the time that Smythe, Cramer undertook a defense in the case to when it reserved its rights. Smythe, Cramer says the reason it waited so long to question coverage under the legal defense plan is that it learned during discovery that plaintiff had misrepresented certain facts when asking f
Page 1 2 3 4 5 6 7 8 9 10 11 Ohio Personal Injury Attorneys
Personal Injury Lawyers
|
| |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|