Claims And Issues

Defend or Ignore: Is Tender required or is Knowledge enough?

    Under liability insurance policies, insurance companies ordinarily owe their policyholders a duty to defend them against covered lawsuits.  Insurance companies issuing liablity policies containing standard defense provisions even have a duty to defend additional insureds, i.e., people, corporations, and entities that may not have paid a premium penny for the coverage.

    Some courts hold that when such a liability insurance company "knows" of a lawsuit against one of its insureds (whether policyholders or additional insureds), regardless of where the carrier's knowledge comes from, then that carrier likely has a duty to defend.  Other courts hold that a "tender" of the defense to the insurance company by the insured is required in order for such a liability insurance carrier to have a duty to defend that lawsuit.

    The differences and considerations involved in both of these points of view are discussed in a brand-new case arising under Texas state law and filed in the Fifth Circuit Court of Appeals.  In an opinion filed last Friday, September 29, 2006, Crocker v. National Union Fire Insurance Co. (5th Cir. No. 05-50813 Opinon Filed September 29, 2006) the Fifth Circuit panel reflected that Texas state law was changing on this issue.  The Federal appellate court was confronted with these questions, it wrote (see page 24 of the slipsheet opinion and access the opinion on the Fifth Circuit web site at Fifth Circuit public web site ):

            Does an insurer have any right or duty to defend a covered suit against an additional insured with whom it has no direct relationship and who, knowing of the suit, has not expressly or impliedly requested a defense?  If the insurer knows of the covered suit, what duty, if any, does it have to notify a sued additional insured (who does not know of the coverage) of the applicable coverage?  What duty, if any, does a sued additional insured have in such a situation?
            As to none of these related questions of law does there appear to be any controlling Texas Supreme Court precedent.

Having taken note of these confronting questions, the Fifth Circuit panel certified questions based upon them, to the Texas Supreme Court for answers.  Further updates on these issues will be posted as they become available.  It is a certainty that more cases will be filed raising these issues, and that future courts will be addressing these and related issues.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

Reasonable reliance, replication & rejection.

    For currently recognized or novel disciplines alike, Expert Witnesses or the lawyers who call them to the stand must meet a common requirement regardless of what Court they are in.  They will almost certainly have to demonstrate that the information on which the Expert relied was of a type reasonably relied upon by an Expert in that subject.  Yesterday's post to the recent Doctors Co. "split decision" Doctors Co. case (Fla. 1st DCA site)   of the Florida First District Court of Appeal illustrates my own nearly 30 years experience as a lawyer dealing with the admissibility of opinion testimony from Expert Witnesses.

    As pointed out in yesterday's post, all three judges of the First District panel recognized the rule that an Expert's opinion must be based on information reasonably relied on by Experts in the subject.  The three judges simply disagreed on whether some of the information a particular Expert relied on was reasonably relied on.  What is reasonable is worked out in the cases. 

    If the methodology that an Expert proffers is born out of a new discipline or science, then before that sort of testimony will be allowed, it must meet the Frye test in Florida Courts and in some other State Courts.  Among other things, the Frye test requires replication of results.  This means that the results found by the particular Expert in the new discipline or science, must be capable of being duplicated by other people in other settings before any opinions based on those results will be heard in a courtroom.

    If the venue for recognized or novel disciplines is a Federal Court or some of the other State Courts besides Florida, then once again the trial judge will act as a "gatekeeper" which means, among other things, that the trial judge will allow the opinion testimony of a proffered Expert to come into evidence when and only when the opinion is based on information reasonably relied on by an Expert in the subject.

     This pretty much brings us full circle to where we started, with the Doctors Co. case recently decided in Florida.  This is only one example of our common law system, in which standards are applied by judges to specific facts.  The people involved differ from case to case, of course; the standards applied to them are the same.  To paraphrase Judge Robert T. Mann who spoke in another context, the great glory of the common law has been its capacity for growth in the direction of obvious propriety.  We can reasonably ask no more of human beings judging cases than that.  We have no right to ask more than that, in any case.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.