Claims and Bad Faith Law Blog

SANCTIONING BAD FAITH CONDUCT OF ATTORNEYS, PARTIES: INHERENT v. STATUTORY AUTHORITY.

Federal courts, it has been held, have at least two kinds of authority to sanction bad faith conduct of attorneys and parties.

One source of their authority is inherent.  A federal court can sanction a lawyer or a party for acting in bad faith, vexatiously, wantonly or for oppressive reasons.  The standard for imposing inherent sanctions is subjective.  JQ Adams & Sons, Inc. v. Scottsdale Ins. Co., NO. 3:21-cv-492-TJC-PDB, 2022 WL 2643587, at *6 (M.D. Fla. July 8, 2022) (Barksdale, USMJ).

A second source of their authority is under 28 U.S.C.A. § 1927.  The statute authorizes sanctions for unreasonable and vexatious conduct,  which has been held to mean virtually the same thing as bad faith.  The standard is objective.  When the standard is applied to lawyers, the standard measures the conduct of the particular lawyer at bar, against how a reasonable lawyer would have acted.  JQ Adams & Sons, Inc. v. Scottsdale Ins. Co., NO. 3:21-cv-492-TJC-PDB, 2022 WL 2643587, at *6 (M.D. Fla. July 8, 2022) (Barksdale, USMJ).

Whatever the source of sanctions authority, sanctions for bad faith conduct is definitely not good faith.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

PROVIDED DEFENSE COUNSEL: LIABILITY TO THE INSURER FROM DEFENDING INSURED?

It seems that things have changed somewhat in Florida with the decision in Arch Ins. Co. v. Kubicki Draper, LLP, 318 So. 3d 1249 (Fla. 2021).  In Kubicki Draper, the Florida Supreme Court answered the following question certified to it by Florida's Fourth District Court of Appeal:

WHETHER AN INSURER HAS STANDING TO MAINTAIN A MALPRACTICE ACTION AGAINST COUNSEL HIRED TO REPRESENT THE INSURED WHERE THE INSURER HAS A DUTY TO DEFEND.

Kubicki Draper, 318 So. 3d at 1251.  The Supreme Court answered this question "in the affirmative," then quashed the Fourth District's decision and remanded.  To be clear here, the liability insurance carrier Arch was the entity that retained Kubicki Draper, LLP to defend Arch's insured.  Kubicki Draper, 318 So. 3d at 1251.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.