Hartford Ins. Co. of the Midwest v. Koeppel, 2009 WL 1229250 (M.D. Fla. 2009)

Brief Summary
A Florida district court concluded the state supreme court would allow an insurer to sue the insured’s attorney.

Complete Summary
Hartford Insurance Co. (“Hartford”) sued attorney Steven Koeppel for malpractice and breach of contract in connection with Koeppel’s work on a matter for Ronald Davis, a Hartford insured. Koeppel moved to dismiss on the ground that Hartford lacked standing. The United States District Court, Middle District of Florida, held that Hartford had standing as Koeppel’s client due to privity of contract. The court further noted that Hartford would also have had standing even if Koeppel had been retained to represent Davis alone.

The court found privity of contract between Hartford and Koeppel as a matter of fact. Early in litigation, Hartford had successfully encouraged Davis to secure his own counsel because Davis’ policy limit was unlikely to cover the plaintiff’s claims. Months later, when the plaintiff tendered an offer to Hartford to settle the matter, Hartford hired Koeppel at least in part to represent Hartford. Based on these facts, the court found privity of contract between Hartford and Koeppel, and therefore held that Hartford had standing to pursue legal malpractice and breach of contract claims.

The second issue, whether Hartford would have had standing if Koeppel had represented Davis alone, required an assessment of how the Florida Supreme Court would decide this issue. Standing in such a case could be found in at least two ways: a finding of privity of contract, or a finding that the insurer was an intended third party beneficiary of the relationship between the attorney and the insured.

Although Florida appellate courts had not directly addressed the issue, the district court found persuasive state decisions in three areas of law tangentially related to the issue. First, the Florida Court of Appeals had held that an attorney may ethically represent both an insured and an insurer absent conflicts of interest. Second, Florida courts recognize exceptions to the strict privity requirement for legal malpractice claims in other areas of law such as will drafting. Finally, the Florida Supreme Court answered a question certified by the Eleventh Circuit regarding the statute of limitations for a malpractice case by an insurer against an insured’s law firm. The Florida court answered this question without raising any objections to the insurer’s standing.

The district court therefore concluded that the Florida Supreme Court would likely side with the majority of jurisdictions, and find that Koeppel had an attorney-client relationship with Hartford or that Hartford was an intended third party beneficiary.

Significance of Opinion
This holding extends the majority rule (i.e., an insurer may sue an insured’s attorney in at least some instances) to Florida. 

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