FL Sup. Ct.
Insurer May Sue Defense Counsel Retained to Defend its Insured
An accounting firm that Arch Insurance Co. insured, Spear Safer, was sued for accounting malpractice. Arch defended Spear Safer under a professional liability policy that gave the insured the right to appoint legal counsel with Arch’s consent. Arch retained Kubicki Draper to represent its insured and the case eventually settled for $3.5 million. Arch then filed a legal malpractice action against Kubicki Draper, claiming that it failed to timely raise a statute of limitations defense, which increased the cost of settlement. The Arch insurance policy with Spear Safer included a subrogation provision that gave Arch all subrogation rights that Spear Safer had against any person or entity.
The trial court granted Kubicki Draper’s motion for summary judgment, holding that there was no privity of contract between Arch and the lawyers. The appellate court affirmed. The Florida Supreme Court held that Arch had standing to sue the lawyers for legal malpractice due to Arch’s subrogation rights under the insurance policy. Moreover, since Spear Safer was in privity of contract with the lawyers, Arch could step into its insured’s shoes and pursue the negligence claim. Arch Insurance Co. v. Kubicki Draper, LLP, 2021 Fla. LEXIS 898 (June 3, 2021).