That is because Count III failed to state a claim for inadequate defense upon which relief could be granted. It does not mean that the substantive law of the forum State does not award damages for an inadequate defense; it does.
However, in the federal case of Mosley ex rel. Cellini v. Progressive Am. Ins. Co., No. 14-cv-62850-BB, 2018 WL 4208201 (S.D. Ill. April 8, 2018), U.S. District Judge Beth Bloom granted the liability carrier's motion to dismiss the inadequate defense claim which was alleged in Count III of Plaintiff's Amended Complaint against the carrier. Count III failed to state a claim of inadequate defense for two reasons. The Court's reasons for dismissing the inadequate defense claim in that case are instructive.
First, the claim contained a failure to settle allegation so that a claim for contract breach because of an inadequate defense, could not be determined objectively from the contract itself. It would require a determination of "bad faith" or "good faith," which is a fact determination reserved exclusively to failure-to-settle claims. The question of good or bad faith, in the eyes of the Court, has nothing to do with a claim of an inadequate defense. Mosley, 2018 WL at *3.
Second, the Plaintiff did not present any "evidence" that defense counsel was "not competent or qualified[.]" Mosley, 2018 WL at *4. In the absence of such allegations, and since liability carriers are not vicariously liable for provided counsel's negligence in the forum State, there could be no claim for inadequate defense in this case as a matter of law. (The Court must have meant that the Plaintiff did not present any allegations, since the Court was ruling on a motion to dismiss for which evidence should not be an issue.)
Allegations of inadequate defense are clearly almost inextricable from allegations of a failure to settle. The rulings in this case make that all the more clear.
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