An Arch Insurance Group Ltd. entity may sue a law firm it hired to represent its policyholder because of its subrogation rights, the Florida Supreme Court ruled Thursday by reversing two lower court decisions.
Arch Insurance Co. issued a professional liability policy to Fort Lauderdale, Florida-based Spear Safer CPAs and Advisors, who had performed audits for Mutual Benefits Corp., a viatic and life-changing company.
Mutual benefit was the subject of a U.S. Securities and Exchange Commission action, according to Thursday's decision in Arch Insurance Co. vs. Kubicki Draper LLP .
Mutual benefit was settled with the SEC and, through a recipient, then sued Spear Safer for alleged misrepresentation. , according to the decision. This lawsuit resulted in a claim under Spear Safer's policy with Arch.
In accordance with its policy terms, Arch Kubicki retained Draper in Miami to defend Spear Safer. Just before the trial, the underlying trial was decided within the policy limits of $ 3.5 million, the judges said.
Arch then filed a legal error against Kubicki, arguing that the litigation was prohibited by applicable statute of limitations and that the law firm's failure to address the issue in a timely manner increased settlement costs significantly.
Kubicki filed a summary judgment, arguing that Arch was not entitled to sue the law firm. Two lower state courts ruled in favor of the law firm.
However, the Supreme Court of Florida unanimously overturned these rulings, based on the insurer's subrogation right.
“If an insurer has an obligation to defend and the lawyer violates the obligation. indebted to the insured client, the contractual subrogation allows the insurer, who ̵
"Consequently, we conclude that Arch has been subject to contractual subrogation in order to maintain a malpractice against a lawyer who was hired to represent his insured," the decision states when he claims the case for further negotiation.
while Kubicki Draper's attorneys did not respond to a request for comment or comment. bus accident.