SE Texas Record

Tuesday, November 12, 2019

Court allows negligence suit against law firm Schiff Hardin to proceed

By Angela Underwood | Jan 16, 2018

Insurance 05

MARSHALL – The Marshall Division of the Eastern District of Texas partially granted and partially denied a law firm's motion to dismiss a claim against it filed by an insurance company.

A motion to dismiss an amended complaint against defendant Schiff Hardin LLP by plaintiff Ironshore Europe DAC has been both granted and denied in part by Judge Rodney Gilstrap in a Jan. 9 ruling.

According to the ruling, in 2014 Ironshore issued an insurance policy to Dorel Juvenile Group Inc., which was represented by Schiff. Thereafter Dorel was sued by the Hinson couple, the parents of a minor child who was injured in an auto accident involving a car seat manufactured by Dorel and awarded $34 million. Ironshore argues it was willing to settle with the Hinson couple for as little as $3.25 million but was denied the opportunity due to misrepresentation by Schiff.

First discussing attorney immunity, Gilstrap cited Cantey Hanger LLP. v. Byrd 2015 to explain that under Texas law, counsel is protected from civil liability to non-clients for any action taken that links them client representation; however based on McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests 1999, Gilstrap showed under the Restatement of Torts Section 552, an attorney may be liable for misrepresentation.

While Ironshore argued Schiff’s statements “were made out of court and ‘in discharge of an independent duty Schiff knowingly assumed to Ironshore, a non-client,’" according to the opinion, Gilstrap stressed the statements fell "outside the core of what attorney immunity doctrine is intended to protect.”

But Schiff saw it differently.

“Defendant maintains that attorney immunity is a shield to liability in this case, suggesting that to the extent McCamish holds otherwise it cannot be regarded as good law in light of Cantey Hanger,” Gilstrap wrote in the appeal.

After much discussion based on precedent cases, Schiff’s motion to dismiss was granted “to the extent Ironshore’s negligent misrepresentation claim depends on Schiff’s predictions about the future, such as the exposure the Hinson case presented to Ironshore, or Schiff’s subjective assessments about trial going ‘fine’ or ‘pretty well,’” Gilstrap wrote.

Ironshore claims at one point Schiff said the Hinson couple was willing to settle for $6.5 million, but in actuality they expressed they would accept a settlement for $3.25 million. Due to the lack of alleged misrepresentation, Ironshore argued it did not feel its policy was a risk and did not further assist in the lawsuit defense. If given the opportunity, Ironshore said it would in fact have exercised its right to settle the case outside of the court, which would have cost it millions dollars less in pay out.

“Ironshore’s allegation that Schiff misrepresented information about offers to settle made by the Hinson plaintiffs, either directly or by failing to disclose subsequent, lower offers, is sufficient to state a claim for relief,” Gilstrap added in the appeal.

It may have been enough to state a claim for relief, according to Gilstrap, but it was not enough to accept that aspect of the motion. 

“Accordingly, with respect to this aspect of plaintiff’s negligent misrepresentation claim, the motion is denied,” Gilstrap concluded in the appeal.

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Organizations in this Story

Schiff Hardin LLPMarshall Division of the Eastern District of Texas