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7th Circuit rejects lawsuit on insurer’s use of in-house counsel

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The 7th Circuit Court of Appeals Tuesday agreed that a woman’s lawsuit against State Farm Mutual Automobile Insurance Co. should be dismissed because state law creates no obligation for an insurer to provide advance notice to an insured that it uses in-house counsel to defend its policyholders.

Cindy Golden, who is insured by State Farm, brought her lawsuit after State Farm in-house attorney Patrick J. Murphy represented her in a lawsuit that was a result of an accident she was in. Her policy says that in the event of the accident, State Farm will pay “attorney fees for attorneys chosen by us to defend an insured who is sued” for damages.

Murphy sent Golden a letter telling her that he worked full time for State Farm. The lawsuit went to trial, and State Farm paid the nearly $4,000 judgment entered against Golden.

She filed her purported class action, claiming that State Farm had a duty to disclose at the time of the policy issuance the possibly that house counsel would be used in the event of a third-part lawsuit. She alleged breach of “special, confidential and fiduciary duties and common law duties to disclose,” breach of duty of good faith and fair dealing, and unjust enrichment.

Golden cited Cincinnati Insurance Co. v. Wills, 717 N.E.2d 151, 155-56 (Ind. 1999), saying the state’s justices acknowledged such a duty exists. But the case is not on point with hers, the 7th Circuit noted, as the insurance company in that suit used in-house counsel but made it seem like they were from an outside firm.

Current law does not require an insurer to disclose at the outset that its choice of counsel in the event a claim arises may be in-house counsel. The level of disclosure required is up to the insurance commissioner to decide, and the Indiana Department of Insurance has not chosen to require the type of notice that Golden requests, Judge Ilana Rovner wrote in Cindy Golden v. State Farm Mutual Automobile Insurance Company, 12-3901.

The judges also rejected Golden’s request that the court certify the question of policy disclosure to the Indiana Supreme Court.

“As our discussion of Wills should make clear, we are not ‘genuinely uncertain’ about whether an insurer is obligated to disclose, at the time of policy issuance, its practice of using house counsel to defend insureds,” she wrote. “Nor do we believe this case presents a ‘matter of vital public concern’ worthy of certification to the Indiana Supreme Court.”
 

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  1. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

  2. Seventh Circuit Court Judge Diane Wood has stated in “The Rule of Law in Times of Stress” (2003), “that neither laws nor the procedures used to create or implement them should be secret; and . . . the laws must not be arbitrary.” According to the American Bar Association, Wood’s quote drives home this point: The rule of law also requires that people can expect predictable results from the legal system; this is what Judge Wood implies when she says that “the laws must not be arbitrary.” Predictable results mean that people who act in the same way can expect the law to treat them in the same way. If similar actions do not produce similar legal outcomes, people cannot use the law to guide their actions, and a “rule of law” does not exist.

  3. Linda, I sure hope you are not seeking a law license, for such eighteenth century sentiments could result in your denial in some jurisdictions minting attorneys for our tolerant and inclusive profession.

  4. Mazel Tov to the newlyweds. And to those bakers, photographers, printers, clerks, judges and others who will lose careers and social standing for not saluting the New World (Dis)Order, we can all direct our Two Minutes of Hate as Big Brother asks of us. Progress! Onward!

  5. My daughter was taken from my home at the end of June/2014. I said I would sign the safety plan but my husband would not. My husband said he would leave the house so my daughter could stay with me but the case worker said no her mind is made up she is taking my daughter. My daughter went to a friends and then the friend filed a restraining order which she was told by dcs if she did not then they would take my daughter away from her. The restraining order was not in effect until we were to go to court. Eventually it was dropped but for 2 months DCS refused to allow me to have any contact and was using the restraining order as the reason but it was not in effect. This was Dcs violating my rights. Please help me I don't have the money for an attorney. Can anyone take this case Pro Bono?

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