Briefs: Insurance cos. can't sue insureds' attys.+.

• Date: 02 January 2002

Byline: David Ziemer

Insurance company cant sue the attorneys of its insureds

An insurance company has no standing to bring a malpractice action against a law firm over the firms handling of an insureds case, the Minnesota Court of Appeals held last month.

In the case, a Minnesota dairy farmer purchased a milk metering system manufactured by Alfa Laval Agri from Pine Island Farmers Coop. The farmer experienced problems with the system, and claimed that it damaged the health of his herd.

Pine Islands insurer, Farmland Mutual Insurance Company, retained the law firm of Erstad & Riemer to defend Pine Island. Rather than implead the manufacturer, the firm decided to blame the farmer as its defense.

After the jury found Pine Island 90% at fault, and the farmer only 10% to blame, Farmland sued Erstad & Riemer for malpractice based on the failure to implead the manufacturer.

The trial court judge held that, even though the insurer did not have an attorney-client relationship with the law firm, it could sue for legal malpractice under the doctrine of equitable subrogation.

The appeals court disagreed, however. [W]hen [the insurer] engaged [the law firm] to represent [the insured] in the underlying action, it was merely fulfilling its contractual obligation to pay for [the insureds] defense, but that did not establish an attorney-client relationship between [the insurer] and [the law firm], wrote retired Judge Daniel Foley, sitting by appointment.

Minneapolis attorney Kay Nord Hunt, who represented the defendant law firm, said that the Court...