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Vol. 10 - Issue 4

June 17, 2021


Snippy Lawyer Response: This Made Me Laugh


I couldn’t help but find this snippy lawyer comment amusing.  It was wrong and uncalled for.  But, unfortunately, it happens in this business. 

At issue in State Farm v. Palomares, No. 20-392 (D. Idaho May 21, 2021) was coverage for a claim involving an individual killed by an escaped bull.  State Farm filed a declaratory judgment action.  Things happened in the underlying action that State Farm believed justified dismissal of its D.J. action.  But counsel for State Farm could not get the insureds’ counsel to stipulate to a dismissal. 

Instead, the insureds’ counsel had this to say to State Farm’s counsel: “I’ve asked my associate to look into a filing seeking fees for what strikes me as a frivolous wasteful filing by State Farm. We have to do some research.”

State Farm responded with a length reply.  I need to set it out here, in its entirety, as its length is relevant to the punchline.

“Mr. Holzer, I want to make sure I am understanding you correctly. Are you saying the declaratory judgment action was frivolous? That argument does not hold water. Your clients brought a lawsuit against Ms. Pedroza and her brothers. Each of them tendered that lawsuit to State Farm. State Farm did not believe a defense or indemnity was owed by the policy. Therefore, there was a disagreement ripe for declaratory judgment between State Farm and Ms. Pedroza, Raul and Mario. If your clients obtain a judgment against an insured of State Farm, and no judgment barred them from doing so, then your clients would have been able to seek that judgment directly from State Farm. Therefore, because State Farm contested Raul's and Mario's insured status and thus contested any obligation to indemnify them, and because State Farm contested whether there could be indemnity coverage for Ms. Pedroza regarding a potential judgment against her in the underlying case, there was a disagreement with your clients regarding coverage, and this disagreement was ripe for decision in a declaratory judgment action. See 22 U.S. Code § 2201(a) ‘In a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration’. If your clients did not disagree with State Farm regarding possible indemnity coverage, then that would have been reflected in the Answer you filed on their behalf. Instead, in their Answer, the Bartees requested that the Court ‘declare, under the terms of the policy of insurance at issue herein, Plaintiff [State Farm] has a duty to indemnify the Defendants in the Underlying Lawsuit for any damages said Defendants are legally obligated to pay.’ The disagreements referenced were the basis of the declaratory judgment action. Those disagreements are no longer ripe because (1) your clients dismissed Ms. Pedroza from the underlying lawsuit with prejudice, meaning there can be no further request by Ms. Pedroza for defense or indemnity from State Farm; (2) the Court ruled that Mario and Raul are not insureds on the State Farm policy meaning there can be no further request by Mario or Raul for defense or indemnity from State Farm; and (3) because your clients can no longer seek to collect on any potential judgment from State Farm due to reasons (1) and (2), there is no longer any dispute with your clients. State Farm is attempting to cut off any fees that your clients could have to expend in this action at the earliest possible moment, it is you who are keeping this action alive after all questions are resolved. Therefore, if you are not willing to stipulate to the dismissal, State Farm will move ahead with a motion to dismiss and we may seek from your clients the fees and costs that will be incurred due to your frivolous obstruction. Please let me know how you plan to proceed.”
Following this lengthy discourse by the insurer’s counsel, the insureds’ counsel came back with this succinct response: “Thank you so much the lecture is wonderfully helpful. Is there CLE credit available?”


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