Defense Attorney liable in Car Accident Insurance Claim
In a recent Arizona Appeals case, Chalpin vs. Snyder, the Court, raised several questions in a case regarding an insurance company not paying an insureds claim regarding a car accident. One of the most far-reaching question's is whether an attorney is liable for aiding and abetting in a malicious tort?
This case argues that Snyder, Attorney for the Reliance Insurance Company, assisted and participated in a tort against Hi-Health and its owner Mr. Chalpin, when the company refused to cover a driver-at-fault accident involving Mr. Chalpin’s daughter. Mr. Chalpin’s daughter was covered under the company policy as an occasional employee.
Two additional points of note are that 1) Reliance initially accepted the claim, and 2) Snyder initially held that the claim was valid. It was not until the claim exceeded a five million dollar expense that Reliance sought to disallow the claim. In fact, Snyder advised Reliance Insurance to sue their insured, Mr. Chalpin as a means of minimizing the value of the policy and thus reducing the acceptable settlement amount in the accident claim.
Two courts dismissed motions for summary judgment filed by Hi-Health and allowed the case to go to trial. Their reason was that the evidence as presented raised a credibility issue that was best decided by jury.
The subsequent appeal noted that the credibility issue would not have been present if Snyder had addressed the points of the suit in the motion. In short, Hi-Health claimed that Snyder knew that Reliance had improperly revisited its original decision to cover Mr. Chalpin’s daughter only after it realized the amount of exposure the company would suffer and that the subsequent suit was in fact an effort to shift its losses.
The court noted that Reliance failed to avail itself of a number of alternatives when issuing the original coverage, including modified coverage and deeper initial investigation of the person covered. The fact that Snyder was aware of these options, and initially held that the coverage was legitimate, was Snyder’s undoing.
Under general rule, “a lawyer is subject to liability to a client or non-client when a non-lawyer would be in similar circumstance.” Moreover, “when a lawyer advises or assists a client in acts that subject the civil liability to others, those others may seek to hold the lawyer liable along with or instead of the client.” (Paragraph 45 of the ruling) Thus, the court held that Snyder, due to active involvement in the misdirection of the case and its subsequent motions, was indeed liable and that aiding and abetting was a valid cause of action.
The Supreme Court reversed the trial court’s orders dismissing the aiding and abetting claims and granted summary judgment of the malicious prosecution claim.
Ironically, if Reliance Insurance had authorized the original settlement amount, consistent with the coverage obtained by the policyholder, this case would never have gone to trial.
