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PostPosted: Mon Sep 19, 2016 3:33 pm 
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I bring this up following questions by some students as to how to proceed after receiving a reservation of rights letter from their liability insurance company regarding defense and indemnity obligations_ in a civil action by an assailant you injured in self defense.

An understanding of what a 'Cumis counsel' means, is helpful.

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A Cumis counsel is "an attorney employed by a defendant in a lawsuit when there is a liability insurance policy supposedly covering the claim, but there is a conflict of interest between the insurance company and the insured defendant."


https://bostonbarjournal.com/2014/01/07 ... -reserves/

I have come up against a number of these situations in my professional work of liability claims representative.

Lets start with this
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The insured sends the complaint to the insurer, with a sigh of relief (“that’s what we have insurance for”), and then sometime later, often around when an answer or motion to dismiss may be due, the insured gets a letter saying that the insurer is willing to defend only after reserving its right to disappear in the future. Cold comfort. In many such situations, the insured’s initial inclination is not to challenge the insurer on anything, including on the reservation of rights.

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PostPosted: Mon Sep 19, 2016 3:35 pm 
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Now with this understanding, lets read on...

https://bostonbarjournal.com/2014/01/07 ... -reserves/

by Richard J. Yurko

Legal Analysis

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Yurko_Richard_As lawyers, we often say that we are “reserving” our client’s rights and, in doing so, we hope to preserve some often unstated client rights, presumably neither expanding nor reducing those rights.

However, when an insurance company “reserves” its rights to disclaim coverage while undertaking the defense of its insured, this step actually creates rights for the insured under Massachusetts law. Counsel for an insured needs, however, to be ready to assert those rights or they will evaporate like the summer’s dew.

To understand the setting and how new rights may arise from an insurer’s reservation, one need only appreciate several principles of insurance law and how they commonly apply to business and professional clients.

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PostPosted: Mon Sep 19, 2016 3:37 pm 
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Basic Framework

First, the insurer’s duty to defend the insured is generally broader than its duty to indemnify (i.e., to pay any resultant judgment). Doe v. Liberty Mut. Ins. Co., 423 Mass. 366, 368 (1996); Boston Symphony Orchestra v. Commercial Union Ins. Co., 406 Mass. 7, 10 (1989).

For instance, if a four-count complaint arising from common facts is filed against the insured and only one of the four counts is covered by the insurance policy, the insurance company typically has the duty to defend the entire complaint, including the non-insured claims.

See, e.g., Aetna Cas. & Sur. Co. v. Cont’l Cas. Co., 413 Mass. 730, 732 n.1 (1992); Northern Sec. Ins. Co., Inc. v. R.H. Realty Trust, 78 Mass. App. Ct. 691, 691 (2011) (only one of five counts covered).

Second, in general, if the insurer is aware that some claims are covered and other claims may not be covered, the insurer must apprise the insured of the possibility that some specific claims may not be covered — or the insurer could later be deemed to have waived its right to disclaim coverage on those claims. E.g., Salonen v. Paanenen, 320 Mass. 568, 571 (1947).

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PostPosted: Mon Sep 19, 2016 3:38 pm 
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As a result, in practice, within a reasonable time after receiving notice of a claim from its insured, in most cases, most insurers will accept the defense of the insured while also either disclaiming coverage on some claims or reserving the insurer’s right to do so.

Such reservation of rights letters permit the insurer to undertake the required defense of the insured while also cautioning the insured that

(a) the insured rather than the insurance company may actually have to pay any judgment on some claims,

(b) the defense may be short-lived if the covered claim(s) should be dismissed, and/or

(c) the policy limits may well be insufficient to pay the entire judgment even for covered claims.

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PostPosted: Mon Sep 19, 2016 3:39 pm 
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Although reservation of rights letters from an insurer have become commonplace, they put the insured in an odd position.

Typically by contract, unless otherwise agreed, the insurer has the right to appoint counsel to represent the insured when a claim arises. Insurers typically have panel counsel to whom they refer large numbers of cases and, as a result, they receive reduced billing rates.

Where the duty to defend and the duty to indemnify are co-extensive and the claim is within the policy limits, the insured has little economic incentive to complain of panel counsel selected by the insurer.

But where the duty to indemnify is more narrow than the duty to defend, the reservation of rights letter effectively tells the insured that the insurer may walk away at any time, leaving the insured with counsel whom the insured might not otherwise have selected —

_and leaving the insured to pay that insurer-appointed counsel’s fees out of the client’s own pocket.

And, if the appointed counsel commits malpractice, the insured may not be able to look to the insurer to pay damages. Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439 Mass. 387, 407-10 (2003).

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PostPosted: Mon Sep 19, 2016 3:41 pm 
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For these reasons, among others, Massachusetts cases provide that when the insurer issues a reservation of rights letter, the insured can force the insurer either to give up the reservation of rights or to allow the insured to designate counsel:


When an insurer seeks to defend its insured under a reservation of rights, and the insured is unwilling that the insurer do so, the insured may require the insurer either to relinquish its reservation of rights or relinquish its defense of the insured and reimburse the insured for its defense costs.

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PostPosted: Mon Sep 19, 2016 3:42 pm 
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Asserting the Right

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As a practical matter, it may not be as simple as the cases imply for the insured to assert the rights that Massachusetts case law provide. The insured has just been sued. The people involved are feeling attacked and vulnerable. The insured sends the complaint to the insurer, with a sigh of relief (“that’s what we have insurance for”),

and then sometime later, often around when an answer or motion to dismiss may be due, the insured gets a letter saying that the insurer is willing to defend only after reserving its right to disappear in the future. Cold comfort. In many such situations, the insured’s initial inclination is not to challenge the insurer on anything, including on the reservation of rights.

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PostPosted: Mon Sep 19, 2016 3:44 pm 
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But if the insured does not challenge the appointment of counsel and seek to have its own counsel appointed, or alternatively seek to have the reservation of rights withdrawn_

_those rights can be lost, as the insured will be deemed to have acquiesced in the choices made by the insurer.

E.g., Sullivan, 439 Mass. at 407 (“There is no indication in the record that [the insured] either insisted on having the reservation of rights removed or, in the alternative, insisted on assuming control of its own defense. As such, we conclude that [the insured] acquiesced…”).

The insured should think of itself as present at a shotgun wedding between its defense and insurer-appointed counsel: You must speak now or forever hold your peace.

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PostPosted: Mon Sep 19, 2016 3:46 pm 
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Simply calling the insurer and requesting in that phone call the ability to appoint counsel is not enough, legally or practically.

As a legal matter, making a single phone call is not “insisting.” E.g., Sullivan, 439 Mass. at 407.

Also, as a practical matter, most insurers are not based in Massachusetts and most of their personnel may not be familiar with the case law here, which differs from that in other states in this area.

See, e.g., Cumis, 162 Cal. App. 3d at 375 (“insurer must pay reasonable costs for hiring independent counsel by the insured” where insurer has issued a reservation of rights); Cal. Civ. Code § 2860; Swanson v. State Farm Gen. Ins. Co., 219 Cal. App. 4th 1153 (2013) (withdrawal of reservation of rights eliminates insurer’s duty to pay for independent co-counsel).

The insured should send a letter, citing the case law and insisting that the insurance company must choose between the reservation of rights and the appointment of counsel.

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PostPosted: Mon Sep 19, 2016 3:47 pm 
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Negotiating the Resolution

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Following the assertion of the insured’s rights arising from the insurer’s reservation of rights, the insured and the insurer each hold some cards, but none invariably trump the others.

As a result, in the best cases, a three-way process of negotiation among insured, insurer, and counsel often ensues.

Assume, for the moment, that the insurer is unwilling to relinquish its reservation of rights.

Under the case law, it must then accede to the insured’s selection of counsel.

As noted, very often, the insured’s selected counsel will be charging hourly rates that, while reasonable for the market, are substantially higher than insurer’s panel counsel. E.g., Northern Security, 78 Mass. App. Ct. at 697. This is a situation the insurer wants to avoid or minimize.

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PostPosted: Mon Sep 19, 2016 3:49 pm 
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At the same time, there is nothing in the case law that says the insurer has to pay insured’s selected counsel on a monthly, quarterly, or any other particular periodic basis.

Absent a separate declaratory judgment action, the insurer may only have the obligation to pay fees at the end of the representation, e.g., Magoun, 346 Mass. at 685; Three Sons, 357 Mass. at 276-77;

but see Northern Security, 78 Mass. App. Ct. at 698 (delaying payment of fees for 14 months gives rise, with other factors, to c. 93A liability), leaving it to the insured to advance legal fees on an ongoing basis until then or leaving the insured’s selected counsel to remain largely unpaid until then.

The insured wants to avoid the former and its selected counsel certainly wants to avoid the latter.

So, the assertion of these rights figuratively leaves the parties playing poker with each other, each trying to avoid a particular permissible, but less than optimal, outcome.

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PostPosted: Mon Sep 19, 2016 3:51 pm 
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In this situation, the parties can negotiate various resolutions that avoid the least desirable outcomes, such as the following:

1.The insurer can decide to withdraw its reservation of rights and preserve its selection of counsel. This generally will happen in a case where the insurer re-assesses its reservation of rights and determines that the rights being reserved are more theoretical than real.

2.The insurer and insured can agree that the day-to-day work in the defense of the insured will be undertaken by insurer’s panel counsel, but that the insurer will also pay for co-counsel appointed by the insured who acts either like a spare tire or a security blanket, depending on the nature of the case and the parties.

This is the common solution in some states, like California, where the case law leans this way. See, e.g., Cumis, 162 Cal. App. 3d at 375.

To date, it is not a solution much seen in Massachusetts, but it could be the preferred solution where the parties believe, for instance, that a dismissal of the sole insured claim is possible or likely.

3.The insurer and insured can negotiate a three-way agreement with insured-selected counsel on the rate at which that specially-appointed counsel will be paid and the periodic payment of such counsel.

Typically, the insured-selected counsel will charge more than insurer’s panel counsel because the specially-appointed counsel does not have the expectation of volume that panel counsel have, cf. Northern Security, 78 Mass. App. Ct. at 697,

but such counsel is willing nonetheless to discount its rates somewhat to benefit the insured (so that the insured does not have to advance payment) and to engender a good working relationship with the insurer. This is perhaps the most common resolution in Massachusetts.

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PostPosted: Mon Sep 19, 2016 3:57 pm 
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In addition to these options, there are as many possible variations and permutations as there are insurers, insureds, and potential counsel.

Whatever gets agreed upon, however, usually needs to be hashed out and documented in the compressed time between issuance of the reservation of rights letter and the first major event in the defense of the case.

A court will then have no trouble enforcing that agreement, ordinarily. Cf. Northern Security, 78 Mass. App. Ct. at 697-98 (agreement on fees trumps reasonable rate).

The situation will not reach the optimal result by itself, but adroit lawyering can help substantially.

Counsel for the insured should be ready to assert the insured’s rights and also to broker a quick resolution of these rights.


Richard Yurko is the founding shareholder of the business litigation boutique, Yurko, Salvesen & Remz, P.C.

~~

This particular situation will confront you in a case where you defend yourself, and have insurance coverage for self defense with an insurance company[umbrella policy] and tender the company your civil defense.

It is not something the average person knows much about and something to be aware of lest you are sunk financially.

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PostPosted: Mon Sep 19, 2016 4:02 pm 
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Panther »

Excellent points Canna-Sensei...

One thing that IMNSHO is very important, and so-far overlooked here, when looking at defense attorneys to represent you in a self-defense case (especially when you've used a firearm), is the capability of the attorney to mount what is known as a "positive defense".

Essentially, this means that your position is that you did shoot the person, you shot the person purposefully, your shot was taken in self-defense based on the situation at that instance in time

(Side Note: the Supremes have held that you can't be convicted based on second-guessed, arm-chair, what-ifs mindset of the calm courtroom, that your actions must be viewed from the perspective of your actual situation at the instance the action occurred... I would have to look up the site, but I reread that just recently)

and that your actions had to be taken because of the immediate/imminent aggressive, threatening actions of the person you shot in self-defense.

You would be surprised at the number of attorneys who haven't got a clue as to how to mount a postive defense.

If you're in this situation and your attorney isn't expert at this type of defense, then (s)he can do much more harm than good! (IOW, fire them and get someone who knows what they're doing, regardless of cost...

You become destitute financially, but its worth it if you can still walk in the tall green grass.

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PostPosted: Mon Sep 19, 2016 4:05 pm 
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Preclusion

There are four elements to legitimate self-defense, and they must all be present simultaneously in order for there to be a situation where deadly self-defensive actions are warranted. They are:

1. Ability
2. Opportunity
3. Manifest intent (imminent jeopardy)
4. Preclusion

An "ability" is simply an injurious capacity. It usually manifests itself in the form of a weapon of some sort, but not always. Serious injury can be inflicted by many individuals using no weapon at all. The person you applied deadly force against must have been "able" to kill you or inflict serious bodily harm. Threats alone do not suffice, unless he had the ability in hand to carry them out.

If you were attacked by a person much larger than yourself, or by someone using martial arts techniques, or several individuals at the same time, you may reasonably conclude that he/they had the ability to seriously injure or kill you, even though they may have been technically "unarmed."

Disparity in size, age, strength, sex, and the level of aggressiveness of the involved parties are all important matters when considering the element of "ability."

When considering the element of "opportunity," we must have a situation where this attacker, in addition to having”ability," was also in a position to bring the destructive powers of his ability to bear effectively upon you.

The question is, were you within the effective range of his weapon(s)? For example, a knife or bludgeon is harmless in the hands of someone standing twenty meters away from you, [ or is it, in view of the Tueller principle] :?:

yet either can be deadly if the person is standing within arm's reach, or is several meters away but closing fast. A firearm, on the other hand, is considered deadly at any range.

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