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By: Barry S. Brownstein
Schiff Hardin, LLP, asserting that it has immunity under Texas law, has appealed to the Fifth Circuit seeking to end a suit filed by Ironshore Europe DAC, alleging that the law firm’s bad advice in connection with a product liability trial cost it $34 million.
Schiff Hardin defended Dorel Juvenile Group Inc. in a products liability suit over an allegedly faulty car seat. Ironshore, Dorel’s excess insurer, was not paying for the defense, but was regularly monitoring the litigation with Schiff Hardin to make sure the suit would not trigger its policy, which kicked in after $6 million in primary coverage had been exhausted.
Ironshore claimed it was blindsided when Dorel was hit with a $34 million verdict and sued Schiff Hardin for negligent misrepresentation, claiming that Schiff Hardin misrepresented the amount in which the plaintiffs were willing to settle. In addition, Ironshore claimed that the firm repeatedly told Ironshore that the suit was going “pretty well” even into trial. Schiff Hardin asked the panel to overturn a district court ruling allowing Ironshore to continue with some of its negligent misrepresentation claims, saying they are immune from suit for any statements made in the course of representing its client.
The district court partially granted Schiff Hardin’s motion, dismissing the claims based on predictions about the future and subjective claims about the trial by Schiff Hardin and allowing the portions of the claims based on allegations that Schiff Hardin failed to inform Ironshore of important developments in the case, such as settlement offers.
In its appeal, Schiff Hardin argued that the court had incorrectly ruled that the Texas state law that protects law firms from liability to nonclients for actions taken while representing a client has an exception for negligent misrepresentation. That exception, according to Schiff Hardin, only applies if the damages result from an attorney acting entirely outside the scope of representing their client.
In sum, Schiff Hardin asserted that it is was immune from suit by Ironshore, since it was acting within the scope of representing Dorel when it made any alleged negligent misrepresentations or omissions, and its conduct was of the kind in which defense attorneys engage when communicating with their clients’ insurers.
If you have any questions or would like more information, please contact Barry Brownstein at [email protected].