virginia subrogationThe blog post recently by William Gericke of Cozen O’Connor brought up an important issue concerning all Virginia subrogation counsel.  Every experienced Virginia subrogation attorney has encountered an instance where the insured mistakenly assumed “your my lawyer.”  This problem has to be adequately addressed by the Virginia subrogation attorney to maintain ethical standards and avoid unnecessary litigation.  for instance, where no agreement between the insured and the carrier is in place delineating what losses of the insured are included in suit, a disgruntled policyholder can file suit against their insurer for uncompensated damages.  Mr. Gericke’s article uses Massachusetts cases as an example, but nonetheless, the legal principles still ring true for Virginia subrogation practitioners.
The case of Sandman v. Quincy Mut. Fire Ins. Co., et al. (Mass. App. No. 10-P-2080, January 25, 2012) deals with the above scenario, what can happen when an insured is not advised whether their losses are included in a subrogation suit.  In the case Quincy Mutual brought a subrogation action against a heating oil delivery company, claiming they had spilled 100 gallons of fuel oil in Elaine Sandman’s property during delivery.  Quincy paid for the $200,000 remediation costs arising from the oil spill, but denied coverage for damage to her personal property due to a policy exclusion.  Thereafter, Quincy retained subrogation counsel to pursue its remediation costs from the oil delivery company.
After the incident, Sandman began looking for an attorney to pursue her uninsured losses when she was contact by counsel representing Quincy in its subrogation claim.  For the next five years he represented to her that he represented her interests and those of Quincy both verbally and once in writing.  He never mentioned to Ms. Sandman that he was not pursuing her damages, but only those of Quincy.  When the case reached settlement in 2009 subrogation counsel, for the first time, informed Ms. Sandman that he only represented Quincy Mutual and that he could not represent her in any further actions due to a conflict of interest arising out of his representation of Quincy in its subrogation action.
Luckily for Quincy, they were not held vicariously liable for the misrepresentations and malpractice of their subrogation counsel.  The court held that that since the conduct of the litigation is the responsibility of trial counsel, the insurer is not vicariously liable for the negligence of the attorneys who conduct the defense or representation of the insured.
The entire debacle could have been avoided had subrogation counsel made the appropriate disclosures to the policyholder at the outset.  Virginia subrogation attorneys should take the Massachusetts ruling to heart, that clear communication is imperative with a policyholder, and the sooner the better.
For more on Virignia subrogation practice visit the website of Chaplin & Gonet.

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