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Whose Side Are You On? Washington Supreme Court Finds Firm That Previously Defended Insurer Can Represent Policyholder in Bad Faith Suit Against Insurer
The Washington Supreme Court held a law firm who had previously represented an insurance company in defending bad faith suits was not disqualified from representing plaintiff policyholders in a bad faith suit involving a fire loss against the same insurer. The Court held the representations were not “substantially related” because they were not factually related and the insurer did not show a “substantial risk” the law firm obtained “confidential factual information” which would “materially advance” the policyholders’ case.
The insurer brought a declaratory judgment action arguing it had no duty under Errors & Omissions (“E&O”) coverage of primary and excess insurance policies to defend its insured in an underlying breach of contract claim. The 7th Circuit reversed and remanded finding the exclusion rendered the coverage illusory.