Long-Standing Relationship With Insurer Did Not Establish Conflict

The Washington State Supreme Court affirmed the dismissal of a legal malpractice claim

This case involves claims of breaches of fiduciary duty and legal malpractice against lawyers hired to defend insureds in a civil action where the insurance company provided the defense. The insureds claim the lawyers violated their professional responsibilities by failing to disclose a potential conflict based on a long-standing relationship the law firm had with the insurance company in not only accepting cases representing insureds in civil cases, but also at some time representing the insurance company in coverage disputes. The insureds also claim the attorneys violated their professional responsibilities by failing to advise them of settlement negotiations and by taking settlement directions from the insurer.

The Court of Appeals affirmed the trial court’s summary judgment dismissal and held that under the facts of this case, the Ardens failed to establish an actionable breach. Arden v. Forsberg & Umlauf, PS, 193 Wn. App. 731, 373 P.3d 320, review granted, 186 Wn.2d 1009, 380 P.3d 484 (2016). While we disagree with portions of the Court of Appeals’ analysis, we affirm in result.

The insurance company had agreed to defend at the importuning of privately-retained attorney Cushman. The company selected Forsberg & Umlauf.

The court

The record establishes that as to settlement, Forsberg, Cushman, and the Ardens had agreed in the initial settlement strategy that Hartford fund the entire settlement. Throughout negotiations, Forsberg was advancing the Ardens’ directions that Hartford pay any settlement. The record shows that settlement offers authorized by Hartford were understood to be authorized by the Ardens.^ As the Court of Appeals’ decision notes—^there is no evidence to suggest that if Forsberg had consulted with the Ardens a different result would have occurred. Arden, 193 Wn. App. at 756. In the end, Hartford ended up funding the settlement. The Ardens have failed to establish damages.

 The litigation arose from Mr. Arden’s shooting to death a neighbor’s Labrador puppy. (Mike Frisch)