Appeals judge denies malpractice claim in insurance dispute over settlement of personal injury suit

By Sandra Lane | Oct 16, 2018

SACRAMENTO – California's Third District Court of Appeal recently affirmed a lower court's ruling concerning allegations of legal malpractice in an insurance settlement dispute and denied a motion for a writ of mandate and prohibition order.

As outlined in the decision by Associate Justice Harry E. Hull Jr. filed Sept. 28, plaintiffs Silva Trucking Company and its employee, Elaine McDonold, filed suit against their excess insurer, Lexington Insurance Company (LIC) and its attorney Ralph Zappala as well as the law firm of Lewis, Brisbois, Bisgaard & Smith (collectively LBBS). 

Plaintiffs accused defendants of malpractice in prelitigation settlement discussions related to the settlement of a personal injury claim. The injury case involved an accident in 2010 in which a truck driven by McDonald collided with another vehicle, causing severe injuries to that motorist, court documents said.

Plaintiffs demanded discovery of attorney-client communications between LIC and LBBS.  However, the Sacramento County Superior Court denied this request and granted a protective order, saying that LIC and LBBS had been successful in proving that the documents fell under the classification of attorney-client communications between LIC and its attorney LBBS, who did not represent the plaintiffs. They were represented by an attorney provided to them by the primary insurer.

Furthermore, the trial court ruled that plaintiffs had not met their burden to prove that they were a joint client of LBBS.  As quoted in the court’s ruling, Hull said, “The trial court ruled that its conclusion was limited to the discovery dispute and did not constitute a determination for purposes of the merits of the current lawsuit.”

Hull also stated that, “We conclude that the trial court got it right under established law and did not abuse its discretion. Insureds may benefit from an attorney’s representation of an excess insurer without the insureds being joint clients of that attorney, because the attorney’s duty to protect the excess insurer’s interests includes protecting the insurer against liability for failure to discharge the insurer’s duty to the insureds. The evidence in this case does not compel a conclusion that the insureds were joint clients of LIC’s attorney. We deny the petition for writ of mandate and/or prohibition.”

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