March 16, 2016 |

Insurance Coverage

Our client was sued, for wrongful termination, by its former CEO. We counter-claimed for claims including fraud. The insurance policy, under which we tended the defense, had an unusual provision which allowed the insured to tender the defense to the insurer (in which case the insurer would presumably have the right to choose counsel and to control strategy) or to retain the duty to defend, with the insurer reimbursing costs. However, when the client elected to retain control, the insurer asserted that it would only consent to counsel if there was an agreement to accept a lower hourly rate. We sued the insurer for bad faith. Ultimately, the suit was so complex (we prevailed on the underlying matter, obtaining punitive damages against the former CEO), that the policy was exhausted, even at the lower hourly rate. We still obtained an additional settlement from the insurer to resolve the bad faith action.