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Vol. 7, Iss. 3
April 11, 2018

Never Have Truer Words Been Spoken In A Coverage Case
I recently had occasion to read Owens-Illinois, Inc. v. United Ins. Co., the New Jersey Supreme Court’s 1994 landmark decision on trigger and allocation in the long tail context. The last time I read it, start to finish, was probably twenty years ago. At that time, I am sure that I did not stop and consider one sentence from the opinion as I no doubt did many others. But this time around it was a much different story when I read Justice O’Hern’s description of the terms of a CGL policy’s insuring agreement (which the Justice quoted from Judge Landau in the New Jersey Appellate Division’s 1990 decision in Gottlieb v. Newark Ins. Co.): “Despite the relative familiarity of these concepts, the one hundred or so pertinent words in the coverage clause have spawned ‘a bewildering plethora of authority’ interpreting their meaning.” Twenty years later I paused and marveled at the incredible truth contained in this sentence.

Insurer Can Be Liable For Malpractice Of Its Staff Counsel
The last issue of Coverage Opinions addressed Kapral v. GEICO, No. 17-11511 (11th Cir. Jan. 23, 2018), where the federal appeals court held that an insured, under a GEICO automobile policy, could not maintain a malpractice action against the defense counsel retained by GEICO to defend him. The court cited two Florida decisions (the relevant state) holding that an insurer cannot be liable for the negligence of counsel that it retains for its insureds. Of note, the fact that the case at hand involved “staff counsel” did not dictate a different result. Now comes DiMuccio v. GEICO, No. 16-1307 (E.D. Calif. Mar. 19, 2018), where the court addressed the same question as Kapral and reached the opposite decision, in a case involving a defense provided for a motor vehicle accident: “GEICO argues it bears no responsibility for Plaintiffs’ contentions in this regard because they amount to attorney malpractice claims and cites authority to the effect that insurance carriers are not liable for the malpractice of trial counsel. See Merritt v. Reserve Ins. Co., 34 Cal. App. 3d 858, 880-82, 110 Cal. Rptr. 511 (1973). Merritt, however, was not decided in the face of facts like those confronted here, where Kevin Rodriguez was a salaried employee of GEICO and even described himself in correspondence to Pacific’s lawyer as ‘GEICO Staff Counsel.’ Under those facts, this Court can certainly not determine as a matter of law that Rodriguez was an independent counsel akin to the law firm hired by the carrier in Merritt.”



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