Insurers are not allowed to bring equitable subrogation actions premised on professional negligence against attorneys, the Colorado Court of Appeals has ruled.
When a unit owner sued the HOA for lost rental income, the HOA settled, and then submitted a claim to State Farm for $52,000.
State Farm then initiated an equitable subrogation action against the attorney, based on the theory of professional malpractice. Weiss claimed State Farm couldn’t bring a professional negligence claim against it because State Farm was not the attorney’s client — the HOA was. Yet State Farm opposed the motion and submitted the HOA’s waiver of its attorney-client privilege. The trial court granted the motion.
“If we allow insurers to bring equitable subrogation actions premised on professional negligence against attorneys. There is no question that allowing such claims will increase the number of lawsuits. This burdens both the legal profession and the justice system and would ultimately restrict the availability of competent legal services,” the appeals court wrote.
The appeals court ruled that the trial court properly dismissed State Farm’s claim, and the case was remanded for an award
of reasonable attorney fees incurred on appeal.
For more information, visit www.lawyersusaonline.com/pdfs/WEISS99310730.pdf.
Source: Colorado Courts