Triggers Insured’s Right to Choose Defense Counsel
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Triggers Insured’s Right to Choose Defense Counsel

An insured sought a declaratory judgment that it was authorized to select its own attorney due to a conflict of interest arising from the insurer's reservation of rights regarding intentional acts and punitive damages. The insurer counterclaimed arguing it no longer had to honor the policy because the insured breached the policy's cooperation clause when it advised the insurer's chosen counsel to take no action. Affirming summary judgment for the insured, the court held the insured was entitled to independent counsel where its insurer was reserving rights based on a punitive damages exclusion and the claim for punitive damages was the most significant part of the insured’s exposure. The court found a conflict of interest in that the insurer's interests would be furthered by providing a less-than-vigorous defense to these claims thus the insured’s direction to appointed counsel to stand down was reasonable.

Xtreme Protection Services LLC v Steadfast Insurance Co