§ 10.3.2 FAILING TO LIMIT EXPOSURE TO SUBROGATION RIGHTS

• Jurisdiction: Arizona

§ 10.3.2 Failing to Limit Exposure to Subrogation Rights

Containing subrogation rights is trickier and potentially more treacherous because subrogation rights can unwittingly expose clients to unnecessary liability. Issues may arise when attorneys (i) fail to expressly limit the scope of damages claims in correspondence, complaints, or settlement agreements with tortfeasors, and (ii) allow clients to agree to unduly broad indemnification provisions in settling claims with tortfeasors.

First, not limiting the scope of a client's damages claims against tortfeasors may invite unwanted subrogation claims. Consider, for example, United Pacific/Reliance Ins. Co. v. Kelley, 127 Ariz. 87, 618 P.2d 257 (App. 1980), where a complaint was filed for personal injury and property damage...