Miss. SC rejects negligence claim against law firm

JACKSON, Miss. (Legal Newsline) - The Mississippi Supreme Court has held that an excess insurance carrier cannot make a direct claim for professional negligence against the primary insurance counsel but it can make a claim under equitable subrogation.

The Court decided Thursday that the requisite attorney-client relationship needed to pursue a legal malpractice claim does not exist between the excess insurance carrier and the counsel for the primary insurance carrier. However, the plurality opinion held that the excess carrier "may pursue the same claim the client could have pursued" under the doctrine of equitable subrogation.

The estate of a former resident sued a nursing home alleging that the facility had provided negligent care. The primary insurance carrier assigned the case to a defense firm who evaluated the case at a "trial value" of $500,000 and sent the evaluation to the excess insurance carrier. The excess insurance was responsible for all damages more than $1 million and was not obligated to defend until the evaluation reached that figure.

The court refused defense counsel's attempt to designate an expert after counsel had exceeded the time allotted to do so. Defense counsel then reevaluated the case at $3 million-$4 million and notified the excess carrier. The primary insurance company tendered its limit and the excess carrier then took over the defense. The excess carrier settled with the injured party for an undisclosed amount and then filed suit against the counsel for the primary carrier on numerous claims.

The trial court dismissed all claims against Quintairos, Prieto, Wood & Boyer, ruling that without the attorney-client relationship, the excess carrier could not pursue a claim. The Mississippi Court of Appeals found that the evaluation provided to the excess carrier by the primary carrier's counsel was enough to establish an attorney-client relationship.

Justice Jess Dickinson wrote, "Because the case presents an issue of first impression, we granted certiorari to review whether an attorney-client relationship is necessary for a claim of legal malpractice, and whether an excess insurer can bring a claim against a primary insurer's attorney under a theory of equitable subrogation."

In rejecting the professional negligence claim, the Court distinguished this case from a title work case in which it held that "foreseeable third parties who detrimentally rely" on an attorney can make a claim without an attorney-client relationship. It found the title work case to be a unique situation in which attorney's engaged in work they knew others down the line would rely on from this "liability-insurance carrier context, where attorneys often provide information and strategies to others with common interest in litigation."

The Court expressed concern that adopting the express carriers' view would ignore the realities of "real-world litigation" and stated, "Indeed, we have recognized that the respective lawyers of two or more clients with common interests in litigation may do far more than share settlement opinions without establishing an attorney-client relationship."

On the equitable subrogation claim, the Court agreed with the Court of Appeals that "excess insurance carriers, who - on behalf of the clients - pay the damage, may pursue the same claim the client could have pursued" and remanded the case to the Circuit Court so the equitable subrogation claim can be pursued.