Georgia Injury Lawyers Blog

Approaching Compliance in a Trucking Case

October 21, 2015 | by Slappey & Sadd, LLC

Trucking Case: Regulatory Compliance Issues

Knowing how to approach the pre-suit investigation and pre-trial discovery of regulatory compliance issues is an essential part of obtaining a successful result in a trucking case. Often the initial step is to understand the size and scope of the defendant motor carrier. While not always true, small “mom and pop” motor carriers may be less likely to demonstrate full compliance with the regulations. In more than one case, a small motor carrier “president” has been unfamiliar with the requirement of a driver qualification process. Larger motor carriers, on the other hand, are far more likely to demonstrate at least some compliance with the rules, although the size of an operation may cause significant driver problems to fall through the cracks. In a perverse application of Murphy’s Law, the more employees involved with the compliance process, the greater the chance some requirement will go unsatisfied. Likewise, it is not unusual for different employees of a single motor carrier to have varying, even wildly so, understandings of what the regulations require. In some cases, taking depositions up the chain of command and across the safety department ranks may reveal clear evidence of corporate neglect, or outright ignorance, of regulatory requirements by the very people charged with ensuring compliance.

An attorney investigating a truck-related occurrence should also strive to quickly recognize the signs of a breakdown or breach in regulatory compliance and respond appropriately with tailored discovery requests or possible amendment of the complaint to add newly-uncovered claims. For example, what can appear to be a relatively simple and straightforward collision could develop into a case of full-fledged negligent entrustment or even give rise to a fraudulent record-keeping/creation claim. The attorney’s role in this regard includes the immediate issuance of a proper preservation of evidence, or “spoliation,” letter calibrated not only generically to motor carriers, but specifically to those issues spotted early on. The attorney’s gameplan should also include a thoroughly-detailed investigation into any potential breach of the regulations with an eye towards identifying the evidence that ties the collision to those breaches.

Insurance Law: Limitation on Damages & Statute of Limitation

October 20, 2015 | by Slappey & Sadd, LLC

An insurance agent’s bad faith may be imputed to the insurance company and thus become the company’s bad faith. However, under Georgia law, the potential liability of an insurance broker or agent (separate from the potential liability of the insurer itself) is limited to the terms of the insurance policy it negligently failed to procure. An agent who negligently fails to procure the requested coverage is liable for loss or damage to the limit of the agreed policy.

J. Smith Lanier & Company v. Southeastern Forge, Inc.

In J. Smith Lanier & Company v. Southeastern Forge, Inc., the Georgia Supreme Court clarified that an agent or broker who negligently fails to procure a policy is not necessarily subject to the same law as an insurer who refuses to pay a claim in bad faith. Southeastern Forge was a client of the independent insurance broker J. Smith Lanier (“Lanier”). In 1998, Lanier prepared Southeastern’s application for primary and excess general liability coverage, but negligently failed to list an event on the application when it was submitted to the excess insurer. After an agricultural blade manufactured by Southeastern Forge malfunctioned and injured a worker in Texas, the excess insurer sought a declaratory judgment that the policy was void ab initio for the failure to list the event on the application. Southeastern Forge then filed suit against Lanier, asserting negligence, breach of fiduciary duty, and breach of contract to recover the funds expended in the Texas suit. The trial court held that Southeastern Forge could not obtain more than the $2 million policy limits. The Georgia Supreme Court agreed, noting that under the facts of that case the law did not impose “the unique statutory duties of insurers on independent brokers who do not issue contracts of insurance and have no duty or ability to evaluate and compromise claims.”

Insurance Law: Dual Agency & Liability of Agents

October 16, 2015 | by Slappey & Sadd, LLC

Dual Agency

Independent agents or brokers are often considered the agent of the insured. However, Georgia law recognizes the concept of dual agency, where an agent acts on behalf of both the insured and the insurer. Dual agency is not considered void per se as against public policy in Georgia. Dual agency is proper where the principals have knowledge of the dual agency and do not repudiate it. Dual agency does not in and of itself relieve the agent of responsibility to either of the principals.

Georgia courts take a number of factors into consideration to determine whether a dual agency exists. For example, courts consider:

Insurance Law: Negligent Procurement

October 15, 2015 | by Slappey & Sadd, LLC

Insurance Agents and Brokers

An insurance agent is an individual appointed or employed by an insurer who sells, solicits, or negotiates insurance, or an individual insurance producer. Agents are licensed by and subject to regulation by the state. An agent may be an independent agent, representing at least two insurance companies and serving clients by searching the market for the most coverage at the best price. An agent generally receives a commission and a fee for handling the insured’s policy. A captive agent is a representative of a single insurer or group of insurers who is obliged to submit business only to that company, or at the very minimum, give that company first refusal rights on a sale. In exchange, that insurer usually provides its captive agents with an allowance for office expenses as well as an extensive list of employee benefits such as pensions, life insurance, health insurance, and credit unions.

The terms “agent” and “broker” are now often used interchangeably. Early case law suggests that an “agent” usually refers to a captive agent and a “broker” to an independent agent. Here, however, we will use “agent” to refer to both independent and captive agents.

Insurance Law: In-House Counsel To Defend Insureds

October 12, 2015 | by Slappey & Sadd, LLC

Defense of an Insured by Insurer’s In-House Counsel

A trend toward the use of in-house counsel to defend insureds has emerged. Insurers benefit because in-house attorneys become specialists not only in general insurance law, but also in the particular workings of their employer. Additionally, the insurer recognizes savings through not paying outside counsel bills.

When an in-house attorney represents an insured, unique ethical issues may arise, including whether the attorney is assisting the insurer in the unauthorized practice of law. The North Carolina Supreme Court held that “a licensed attorney who is a full-time employee of an insurance company [may not] ethically represent one of the company’s insureds as counsel of record” as doing so would constitute aiding the insurer in the unauthorized practice of law. There is little doubt that the use of in-house attorneys should intensify attention on the tripartite relationship. However, the majority of jurisdictions – including Georgia – hold that an in-house attorney may defend an insured without engaging the insurer in the unauthorized practice of law.

Insurance Law: Outside Auditors

October 9, 2015 | by Slappey & Sadd, LLC

Outside Auditors

Insurers sometimes audit defense counsel’s fee bills as a cost control measure. A billing audit “encompasses a range of services, from an examination of the face of the legal bill for improper charges or errors to a detailed analysis of original time records, attorney work product, expenses and hourly rate benchmarks, and more.” Audits examine hourly rates, background information about the legal matter and lawyer work product to gauge quality, tactics, strategy and performance in context. Ethical problems arise when bills contain confidential or privileged information. Billing records and underlying documentation may reveal the motive of the client in seeking representation, litigation strategy, or the specific nature of the services provided to the insured – information that is generally protected by confidentiality rules, attorney-client privilege, or both. Disclosure of the information required to perform an audit may be particularly problematic when coverage issues exist, as work product by defense counsel could harm the insured’s interests with regard to the coverage issue.

Third-Party Audit

Insurance Law: Litigation Guidelines

October 7, 2015 | by Slappey & Sadd, LLC

Insurer’s Use of Litigation Guidelines

Many insurers issue to defense counsel “litigation guidelines,” which state under what circumstances defense counsel may decide to take certain actions in the defense and under what circumstances prior authorization from the insurer is necessary. Georgia Rule of Professional Conduct 1.7(a) provides as follows: “A lawyer shall not represent or continue to represent a client if there is a significant risk that the lawyer’s own interests or the lawyer’s duties to another client, a former client, or a third person will materially and adversely affect the representation of the client, except as permitted [by client consent].” Where an insurer uses litigation guidelines to control defense costs by limiting defense counsel’s actions in defending the case, Rule 1.7 comes into play. For example, guidelines may limit the discovery to be propounded on adverse parties. Such restrictions create potential conflicts of interest if they inhibit an attorney’s ability to adequately defend a case or interfere with the attorney’s independent professional judgment. For instance, the Montana Supreme Court has held that Montana attorneys may not follow an insurer’s billing and practice rules which limit or direct the scope and extent of the attorney’s representation of the insured.

The American Bar Association: Litigation Guidelines

Insurance Litigation: Ethical Issues

October 6, 2015 | by Slappey & Sadd, LLC

“Advice” to the Defendant from Plaintiff’s Counsel

Ethical issues may arise when an insurer refuses an offer to settle within policy limits, and the plaintiff’s counsel writes a letter to the insured defendant regarding the matter. In Formal Advisory Opinion No. 86-4, the Supreme Court of Georgia first stated the general rules that an insurer is normally only liable for:

the portion of a judgment that is within the policy limits

Insurance Law: Non-Covered Claims, Counterclaims & Third-Party Actions

October 2, 2015 | by Slappey & Sadd, LLC

Non-Covered Claims, Counterclaims and Third-Party Actions

In some cases, defense counsel may become aware that the insured has a potential counterclaim against another party in the lawsuit or a third-party claim that may be barred if not asserted in the pending action. Insurance policies do not necessarily provide coverage for these additional claims, and the insurer will not pay the defense attorney to prosecute them. The proper course of action for the defense attorney is to advise the insured of:

of the existence of such claims

Insurance Law: Ethics And Multiple Insureds

September 29, 2015 | by Slappey & Sadd, LLC

Multiple Insureds

Where multiple insureds are entitled to a defense under the same policy for the same claim, the insurer often assigns the same defense counsel to defend the insureds, creating potential conflicts. For example, a passenger in a car may sue both the driver and the owner of the car after a wreck. An owner and a driver are typically entitled to a defense under the same policy. However, the driver and the owner may have conflicting interests if, for example, the owner asserts that the driver was operating the car without permission.

If hired to represent multiple insureds under the same policy, defense counsel should, at the inception of the representation