By Cody L. Frank – Associate, Miami, FL
On June 6, 2019, the Florida Supreme Court granted petition to decide whether an insurer has standing to maintain a malpractice action against counsel hired to represent the insured where the insurer had a duty to defend. The insurer in Arch Insurance Co. v. Kubicki Draper, LLP (Case No. SC19-673) hired a law firm to defend the insured in a separate suit. The separate suit settled within the insured’s policy limits. The insurer thereafter brought a legal malpractice action against the firm, contending that the firm did not timely raise a statute of limitations defense. The insurer argued that the firm’s delay in raising the defense resulted in a higher settlement. The trial court and the Fourth District Court of Appeal rejected the insurer’s position, finding that “the insurer lacked standing to sue the law firm because the insurer and the law firm were not in privity with each other.” The Fourth District also found that “the insurer was [not] an intended third-party beneficiary of the relationship between the law firm and the insured.” On March 4, 2020, the Florida Supreme Court heard oral argument. To find standing, the insurer argued that (1) a tripartite relationship existed between the insurer, the insured, and the insured’s defense counsel, (2) principles of equitable and conventional subrogation provide a basis for bringing a malpractice action against the insured’s defense counsel, and (3) public policy in favor of competent insurance defense supports the insurer’s right to hold defense counsel accountable. The Florida Supreme Court’s decision is pending.