APRIL 2014 BAD FAITH CASES: COURT REFUSES TO DISQUALIFY INSURER APPOINTED COUNSEL POST TRIAL AFTER AN EXCESS VERDICT (New Jersey Appellate Division)

In Carbone v. Potouridis, the carrier had appointed defense counsel to represent an individual insured and the estate of her son, and later appointed a separate counsel to represent the estate after an excess verdict. Plaintiff had attempted to settle within policy limits, but the carrier did not settle, the matter went to trial, and there was an excess verdict. There was an issue as to the insureds having a potential claim against the carrier and/or assigning that claim.

Plaintiffs sought to disqualify counsel who had been appointed by the carrier from any continued representation of the defendants. After close scrutiny of the facts wherein the insured was satisfied with counsels’ advice, where counsel certified that they knew their loyalty was to the insureds and not the carrier, and where the insured made a knowing waiver; the Rules of Professional Conduct; and prior precedent on the nature of the “triadic” relationship, the Appellate Division denied the motion to disqualify.

Dated of Decision February 19, 2014

Carbone v. Potouridis, DOCKET NO. A-0575-12T1, SUPERIOR COURT OF NEW JERSEY, APPELLATE DIVISION, 2014 N.J. Super. Unpub. LEXIS 329 (App. Div. Feb. 19, 2014) (Judges Sapp-Peterson and Lih)