Insurer Able To Proceed With Legal Malpratice Lawsuit
An Illinois appellate court recently reversed a circuit court entry of summary judgment in favor of a lawyer and his Park Ridge law firm, holding that an insurance company can proceed with its legal malpractice lawsuit against the law firm that represented the insurer in connection with a coverage dispute. The appellate court found that the "defendants failed to meet their burden of production on their motion for summary judgment because they did not present evidence that, left unrebutted, would entitle them to judgment as a matter of law or demonstrate that the [insurer] would be unable to prove any element of its cause of action."
The case-within-a case stemmed from a car accident that occurred in 1991. The insurer, Universal Underwriters Insurance Co., had issued an insurance policy to Carriage Chevrolet Inc., a car dealership in St. Louis. Michele Heflin, a Carriage Chevrolet salesperson, was driving a car owned by the dealership when she pulled over to help a driver with a disabled vehicle on the side of the road. While Heflin was rendering assistance, another car struck and injured her. Heflin filed suit against the driver and received $25,000 - the limit of the driver's policy. Heflin then turned to the Universal umbrella policy issued to her employer, Carriage Chevrolet, arguing that it provided under-insured motorist coverage. When Universal denied her claim, Heflin then filed a declaratory judgment suit asking the court to determine and adjudicate the rights and liabilities of the parties with respect to the umbrella policy. Universal then hired the defendants in this action, Jay Judge and his law firm, Judge & James, to defend it in the dec action. 1n 2001, after litigating the action (in court and in arbitration), the trial court entered an order requiring Universal to pay $2,975,000 plus interest, and two weeks later, Universal, through new counsel, settled Heflin's claim for $3 million.
Universal then filed this legal malpractice suit against it's former lawyers. In its amended complaint, Universal contended that the lawyers owed it a duty of care, which included the obligation to take timely appeals and to timely seek other remedies in the event of adverse and erroneous judgments. Additionally, Universal contended that the lawyers breached their duties by failing to raise the $1 million umbrella policy limit as a defense or limitation on damages in the arbitration proceeding.
The defendants argued that a 1995 court order in Heflin's declaratory judgment action finding that Heflin was insured under Universals umbrella policy, was not final and appealable and that a 2001 order confirming the arbitration award was void because the 1995 order was not final and appealable - the appeals court, however, disagreed. See Universal Underwriting Insurance Co. v. Judge & James Ltd., and Jay S. Judge.