Eleventh Circuit Holds Insurer Not Liable for Defense Counsel’s Malpractice

In its recent decision in Kapral v. GEICO Indemnity Co., 2018 U.S. App. LEXIS 1937 (11th Cir. Jan. 23, 2018), the United States Court of Appeals for the Eleventh Circuit, applying Florida law, had occasion to consider under what circumstances an insurance carrier can be held liable for the acts or omissions of counsel it retains to defend its insured.

The underlying lawsuit giving rise to the dispute in Kapral arose out of a car accident involving GEICO’s insured, Cory Kapral.  Upon receiving notice that Mr. Kapral had been sued, GEICO advised that it would be providing Mr. Kapral with a defense by a salaried GEICO litigation attorney.  The suit later resulted in a verdict against Mr. Kapral for an amount in excess of policy limits.

Mr. Kapral subsequently sued GEICO, claiming that it failed to properly defend him in the underlying lawsuit by having appointed an attorney not capable to “provide competent legal services with a degree of knowledge and ordinary skill of which similarly situated Florida lawyers would exercise.”   In particular, he claimed that defense counsel failed to take certain actions required to properly defend the suit and that these omissions informed plaintiff’s decision to take the matter through trial rather than to settle.

In considering this dispute, the Eleventh Circuit noted that under Florida law, an insurer is not vicariously liable for the negligence of the attorney it retains, so long as the attorney is competent and qualified to handle the type of suit involved.  The court reasoned that these criteria were satisfied in that counsel appointed by GEICO had eighteen years of litigation experience and had run his own personal injury law firm for eight years prior to joining GIECO.  As such, the court concluded that Mr. Kapral could not successfully state a claim that GEICO provided an inadequate defense.

While Mr. Kapral presented evidence suggesting that counsel may have been negligent in providing the defense, this negligence, held the court, could not be imputed to GEICO.  The court specifically rejected the assertion that GEICO could be vicariously liable for counsel’s negligence solely on the basis that he was salaried staff rather than outside defense counsel.  The basis for the court’s reasoning was that the GEICO claims handler did not exercise control over counsel’s conduct and judgment.