... AND THE INSURANCE COMPANY MOVES TO DISQUALIFY THE PLAINTIFF'S ATTORNEYS IN THE BAD FAITH CASE.
"The case presently before the Court raises issues regarding Defendant's attempt to settle Plaintiff's claim for insurance proceeds and to obtain a release from further liability for its insureds ... by tendering a check for the $50,000 bodily injury policy limits to Plaintiff." Merrett v. Liberty Mutual Insurance Co., 2013 WL 2710717 *1 (M.D. Fla. June 12, 2013)(Richardson, USMJ), objections overruled and Order aff'd by District Judge, 2013 WL 5330258 (M.D. Fla. September 23, 2013)(Howard, USDJ). However, alleged bad faith failure-to-settle was not the issue in this third-party bad faith decision; it was the claim.
This particular decision in the Merrett case was narrowly focused on whether the liability insurance company made a sufficient showing that the plaintiff's attorneys should be disqualified from representing the plaintiff in the third-party bad faith case.
The insurance company's motion was directed to both of the plaintiff's attorneys. One of those lawyers was the underlying defense attorney hired by the insurance company to represent the policyholder-insured in the underlying case. The liability carrier made an argument often made as to why the underlying defense lawyer should be disqualified from representing the current plaintiff in the present bad faith case. The carrier argued that the previous defense lawyer was a necessary witness in the plaintiff's bad faith case, and that it, the defendant, was going to call the previous defense lawyer as a witness in the bad faith case.
The defendant carrier added a factual wrinkle to the standard argument in this particular case. According to the carrier, this particular lawyer was "'the critical decision maker'" about whether or not to settle in the underlying case. The carrier further argued that this meant that no other witness could testify about the plaintiff's settlement positions in the underlying case. Merrett v. Liberty Mutual Insurance Co., 2013 WL 2710717 *1 (M.D. Fla. June 12, 2013)(Richardson, USMJ), objections overruled and Order aff'd by District Judge, 2013 WL 5330258 (M.D. Fla. September 23, 2013)(Howard, USDJ).
The legal question was whether on the record in the bad faith case it had been legally established that the lawyer's testimony would be "sufficiently adverse" to the bad-faith plaintiff's interests as to require his disqualification as one of his client's attorneys in the bad faith case.
In an unusual legal ruling, compared to previous precedents in most U.S. jurisdictions, the Merrett Magistrate Judge in Florida ruled that the plaintiff's lawyer could be disqualified because the defendant said it intended to call the plaintiff's lawyer as a witness. The ruling included a double burden of proof, which held that where the defendant argued for disqualification because it was going to call the former defense lawyer as a witness, then the defendant carrier would have to show both that the lawyer is a "necessary witness" and that the lawyer's testimony would be "sufficiently adverse" to the client's interests to warrant disqualification in the bad faith case. Merrett v. Liberty Mutual Insurance Company, 2013 WL 2710717 *3 (M.D. Fla. June 12, 2013)(Richardson, USMJ), objections overruled and Order aff'd by District Judge, 2013 WL 5330258 (M.D. Fla. September 23, 2013)(Howard, USDJ). The U.S. District Judge agreed with this view of the applicable law. Merrett v. Liberty Mutual Insurance Co., 2013 WL 5330258 *3 & n.8 (M.D. Fla. September 23, 2013)(Howard, USDJ).
The Court concluded in this case that the carrier's double hand was not enough to win the disqualification issue in this case. Merrett v. Liberty Mutual Insurance Company, 2013 WL 2710717 *3 (M.D. Fla. June 12, 2013), objections overruled and Order aff'd by District Judge, 2013 WL 5330258 *3 (M.D. Fla. September 23, 2013)(Howard, USDJ).
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