In the case of Eckman v. Erie Insurance, Solid Waste Services sued Eckman
for false statements made during a local election campaign. Eckman presented the
claim to its homeowner’s carrier, Erie. Erie assigned defense counsel under a
reservation of rights. The ROR noted that intentional acts and punitive damages
were excluded from coverage. Eckman rebuffed Erie’s assigned counsel and instead
demanded counsel of its own choosing. When that offer was rejected, Eckman
commenced a declaratory judgment action and sought injunctive relief to force
Erie to provide Eckman with counsel of Eckman’s choosing. In making its
argument, Eckman relied upon admittedly non-binding Pennsylvania case law and
suggested that “a conflict of interest is a conflict of interest, exclusive of
Pennsylvania case law.” Eckman argued that any attorney selected by an insurer
under a reservation of rights, and paid by that insurer, would ipso facto breach
his or her obligations to the insured/client.
Eckman’s claim was rejected
both by the trial court and the Superior Court. In a good result for insurers,
the court reasoned that a conflict of interest (such to support the assignment
of independent counsel) must be proven and cannot merely be presupposed. This decision is consistent with
controlling PA precedent and as the court rightfully noted, it is bound to
“follow controlling precedent as long as decision has not been overturned by the
Supreme Court.” So, in Pennsylvania at least, a reservation of rights does not
automatically trigger a right to independent counsel.
If you have any
questions about this post, please contact Bob Cosgrove at email@example.com.