Academic journal article The University of Memphis Law Review

Agency-Givens V. Mullikin: Tennessee Supreme Court Holds That Insurance Company and Insured May Be Vicariously Liable for the Tortious Acts of Defense Counsel

Academic journal article The University of Memphis Law Review

Agency-Givens V. Mullikin: Tennessee Supreme Court Holds That Insurance Company and Insured May Be Vicariously Liable for the Tortious Acts of Defense Counsel

Article excerpt

In 1988 Connie Jean Givens (Givens) and Larry McElwaney (McElwaney) were involved in an automobile accident.1 Following the accident, Givens filed a lawsuit against McElwaney to recover damages for the injuries she sustained in the accident. McElwaney's automobile liability insurance carrier, Allstate Insurance Company (Allstate), hired attorney Hal Nichols (Nichols) to represent McElwaney.3 Nichols began the discovery process by deposing Givens, submitting interrogatories, and obtaining Givens's medical records.4 Shortly thereafter, Allstate terminated Nichols and hired the Richardson Law Firm (Richardson Firm).5 Even though Nichols completed a large portion of the discovery process before his termination, the Richardson Firm issued over seventy subpoenas to records custodians and resubmitted 237 interrogatories to Givens.6 Then, the Richardson Firm deposed Givens a second time, questioning her "about every aspect of her social, educational, employment and medical history."7 The Richardson Firm also questioned Givens about every medical problem she experienced prior to the accident and requested the "names of every doctor, dentist and other healthcare professional who treated her."8

On June 12, 1998, Givens filed a second lawsuit for the alleged tortious conduct of the Richardson Firm.9 Givens, however, did not sue the Richardson Firm, but instead sued Allstate and Ed Mullikin (Mullikin), the administrator of McElwaney's estate, on the basis of vicarious liability.10 Allstate and Mullikin filed motions to dismiss for failure to state a claim.11 The trial court denied the motions to dismiss.12 Both Allstate and Mullikin requested permission for an interlocutory appeal.13 The trial court and Tennessee Court of Appeals granted permission to appeal.14 The court of appeals held that the complaint did state valid claims for abuse of process and remanded the case.15

Upon remand, the trial court held Allstate and Mullikin vicariously liable for the tortious acts of the Richardson Firm.16 The Tennessee Court of Appeals affirmed the trial court's holding.17 As a matter of first impression, the Tennessee Supreme Court held, affirmed.18 An insurance company or the insured may be vicariously liable for the tortious acts of defense counsel hired to defend the insured, if either the insurance company or the insured directs, commands, or knowingly authorizes defense counsel to perform the acts. Givens v. Mullikin, 75 S.W.3d 383 (Tenn. 2002).19

A typical liability insurance policy protects the insured from the risk of financial loss.20 Under the typical liability insurance policy, the insurance company is obligated to "defend lawsuits [filed] against the insured, to pay the costs of defense, and to indemnify the insured for judgments and settlements up to a specified limit."21 In addition, a typical liability insurance policy permits the insurance company to control the defense of the lawsuit, including the selection of defense counsel, and requires the insured to cooperate in the defense of the lawsuit.

While the role of a liability insurance policy is often clear, the role of defense counsel hired to defend a third-party claim is often not well-defined. Unless there is a retainer agreement between the insurance company and defense counsel, the law of agency and rules of professional responsibility define the relationship and responsibilities of defense counsel in this context.23 Both the scope of defense counsel's relationship with the insurance company and the insured and defense counsel's duties and responsibilities within the relationship are governed by these principles.24

Within the insurance defense context, the insurance company, the insured, and defense counsel interact with one another in a tripartite relationship.25 Here, the insurance company and the insured may be regarded as co-principals or co-clients based on the operation of a retainer agreement26 or by state law.27 However, in some instances, the insurance company or the insured may be regarded as the sole client/principal. …

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