Insurer Who Pays Jury Verdict has no Duty to Appeal

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Contents

Insurer Punished For Fulfilling Terms of Contract

In Fiaze Issa v. Allstate Insurance, 2022 IL App (1st) 210343-U, No. 1-21-0343, Court of Appeals of Illinois, First District, Sixth Division (December 16, 2022) Mr. Issa sued his insurer for legal malpractice after defending its insured to a verdict, paid it in full, and refused Mr. Issa’s request that it appeal the verdict.

Mr. Issa, though not personally liable for any part of the judgment, wanted Allstate to appeal the judgment. Allstate declined to do so. Mr. Issa then filed a pro se complaint against Allstate for legal malpractice and breach of duty, alleging that his insurance premiums had increased as a result of the judgment against him.

The circuit court granted Allstate’s motion to dismiss the complaint and Mr. Issa appealed.

BACKGROUND

On October 15, 2017, Mr. Issa was an insured driver under Allstate’s auto insurance policy when he rear-ended the vehicle of Alicia Contreras. Ms. Contreras filed suit against Mr. Issa seeking compensation for property damage and personal injury. Allstate defended Mr. Issa in that action, which Mr. Issa alleged resulted in a jury verdict for Ms. Contreras in the amount of $14,000. Mr. Issa further alleged that Allstate paid an additional $6000 to Ms. Contreras for damage to her vehicle. Allstate disputed the figures, but the parties agreed that the total amount paid to Ms. Contreras fell well beneath Mr. Issa’s per-person policy limit of $100,000.

Mr. Issa, acting as his own attorney, sued Allstate claiming both that Allstate’s lawyer negligently committed certain errors at trial and that Allstate breached its duty to defend him in the litigation by failing to appeal the jury’s verdict. Mr. Issa sought $1981.88 in compensatory damages-the amount he claimed Allstate had overcharged him for insurance coverage following his accident.

The trial court held that Mr. Issa had failed to state a claim on which relief could be granted and, specifically, that he had failed to cite any legal authority establishing a duty to appeal the jury’s verdict in the Contreras case. The court agreed that Allstate owed Mr. Issa a duty of good faith and fair dealing but concluded that it had fulfilled that duty by defending him in the underlying litigation and fully indemnifying him for the damages awarded to Ms. Contreras.

ANALYSIS

Legal Malpractice

To state a claim for legal malpractice, a plaintiff must allege facts establishing that:

the defendant attorney owed the plaintiff client a duty of due care arising from an attorney-client relationship,
the attorney breached that duty,
the client suffered an injury in the form of actual damages, and
those damages were proximately caused by the breach.

In cases involving litigation, no legal malpractice exists unless the attorney’s negligence resulted in the loss of an underlying cause of action. Mr. Issa’s sole contention is that the damages awarded to Ms. Contreras were inflated.

Generally, an insurance policy gives rise to two duties on behalf of the insurer to the insured: the duty to defend and the duty to indemnify for covered losses. Although the duty to defend does not automatically encompass a duty to appeal an adverse judgment, such a duty can arise in the context of the duty of good faith and fair dealing owed by the insurer to its insured where reasonable grounds are present for bringing an appeal.

However, because there was no adverse judgment exceeding the policy limits in this case there was no breach of duty by Allstate.

There was no question that Allstate both fulfilled its duty to defend Mr. Issa in the Contreras case and indemnified him for the full amount of the judgment the jury rendered in Ms. Contreras’s favor. Under these facts, Allstate had no duty to appeal the judgment.

Dismissal of plaintiff’s complaint with prejudice was affirmed where plaintiff failed to state a claim for legal malpractice or for breach of duty based on his insurer’s election not to appeal a jury verdict falling within policy limits.

Proving that no good faith by an insurer goes unpunished Mr. Issa sued Allstate who did everything they promised to do by the policy – they defended Issa through a jury trial – and paid the verdict of the jury well within the policy limits. Since Allstate could have settled before the trial at its option paying the verdict was within its absolute right. If Issa’s premium increased it did so because he negligent rear-ended Ms. Contreras. He, acting as his own lawyer, wasted the time of the court and his insurer costing them both a great deal of time and money to deal with his suit and appeal that he had no potential to succeed.

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Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com

Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.

Insurer Who Pays Jury Verdict has no Duty to Appeal