Playbook Conflicts — Tales of Three Reversals (Both Ways)

At a recent public risk forum, I found myself graciously name-checked by a longtime reader and friend. Gracious indeed to be included in the same breath with risk hawk Bill Frievogel, who notes several recent playbook matters:

  • Former Client; Playbook (Rejected) (posted May 22, 2020) Plein v. USAA Cas. Ins. Co., No. 97563-9 (Wash. May 21, 2020.)
    • “…USAA balked at providing coverage for additional work, and the Pleins sued USAA for bad faith. Law Firm joined in the representation of the Pleins. The problem was that Law Firm had just recently terminated its representation of USAA.”
    • “That representation spanned some ten years and involved ‘at least 165 cases,’ some of which involved bad faith claims by homeowners. One case involved a bad faith claim arising out of defective remediation of smoke damage. USAA moved to disqualify Law Firm in this case.”
    • “The trial court denied the motion. The appellate court reversed. That court pretty clearly adopted the playbook approach to the substantial relationship test under Rule 1.9. The court noted the ‘legal strategies and defenses developed between USAA’ and Law Firm. The court concluded that Law Firm’s knowledge goes beyond the ‘general knowledge of the client’s policies and practices’ as discussed in Comment 3 to Rule 1.9.”
    • “In this opinion the Washington Supreme Court reversed the appellate court, holding that Law Firm’s knowledge of USAA’s attitudes and procedures in matters similar to this one do not rise to the level of ‘substantial relationship.’ The court focused largely on Comment 3 to Rule 1.9 (Evidently, Comment 3 in the Model Rules is quite similar to that in the Washington Rules.)”
  • Persichette v. Owners Ins. Co., No. 19SA188 (Col. May 4, 2020).
    • “Plaintiff is suing InsCo over an uninsured motorist matter, including claims of bad faith. Law Firm appeared for Plaintiff. Law Firm previously represented InsCo in 455 bad faith cases between 2004 and 2017. Twenty-three cases ‘mirror’ Plaintiff’s claim. Law Firm had put in place several of InsCo’s procedures and trained the adjuster handling this case. InsCo moved to disqualify Law Firm. The trial court denied the motion. In this opinion the Colorado Supreme Court reversed (made ‘the rule to show cause absolute’).”

Atty’s Internal Work For Insurer Spells DQ In Coverage Row” —

  • “In an en banc decision, the court said Englewood, Colorado, litigator Marc Levy carried a former client conflict of interest into a case he joined against Owners Insurance Co. and should not have been allowed to stay in the litigation by a lower court.”
  • “The seven-member panel said it was particularly troubled by the prospect of Levy being in position to ‘attack’ his own internal advisory and training-related work at Owners on behalf of an insured, even if he didn’t have specific factual information about his client’s case from his time working for the other side.”
  • “Overturning a district court decision not to disqualify Levy, the court said the district court judge misinterpreted the ‘substantially related’ standard of former client conflicts to mean a conflict was created by a lawyer working both sides of the same matter.”
  • “The court then incorrectly concluded that information Levy’s firm likely has from its prior work for Owners ‘is neither confidential nor advantageous to plaintiff,’ the decision states.”
  • “After initially hiring an Aurora-based firm, Persichette later hired Levy as co-counsel for the case. According to the decision, Levy Law PC was intimately familiar with the people and practices of Owners, having represented the insurer in more than 450 cases over a 13-year period ending in 2017 and collecting more than $5 million in fees in the last five years of that relationship.”
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