Comments on: $2.5 Million Damage Award in Malicious Prosecution Suit Based on False Accusation of Child Sexual Abuse, http://volokh.com/2008/06/25/2-5-million-damage-award-in-malicious-prosecution-suit-based-on-false-accusation-of-child-sexual-abuse/ Commentary on law, public policy, and more Tue, 14 Feb 2012 11:07:34 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Eugene Volokh http://volokh.com/2008/06/25/2-5-million-damage-award-in-malicious-prosecution-suit-based-on-false-accusation-of-child-sexual-abuse/comment-page-1/#comment-360434 Eugene Volokh Thu, 26 Jun 2008 11:34:28 +0000 http://208.43.137.32/~volokhc/wp/?p=12940#comment-360434 Bill Dyer: I agree entirely that insurance law is a tremendously important field. We certainly teach it here at UCLA. Bill Dyer: I agree entirely that insurance law is a tremendously important field. We certainly teach it here at UCLA.

]]> By: Bill Dyer http://volokh.com/2008/06/25/2-5-million-damage-award-in-malicious-prosecution-suit-based-on-false-accusation-of-child-sexual-abuse/comment-page-1/#comment-360433 Bill Dyer Thu, 26 Jun 2008 05:37:02 +0000 http://208.43.137.32/~volokhc/wp/?p=12940#comment-360433 Standard-form commercial general liability insurance policies, while generally excluding liability for acts that are intentional, nevertheless often do provide express coverage for libel and slander. Quite often such claims are combined with allegations of other intentional torts (e.g., tortious interference with contract or intentional infliction of emotional distress), in which case the carrier will typically respond to a demand that it defend and indemnify by providing a defense subject to a reservation of rights letter. <BR /> <BR />By issuing such a reservation of rights letter, however, under many states' laws, that creates enough of a conflict that the carrier may lose its normal rights to select and direct defense counsel. The costs of paying for counsel other than their favored (and often quasi-in-house) counsel may significantly change the carrier's settlement calculus, prompting it to offer substantial portions of its policy limits to settle a case in its entirety in circumstances when it would not have done so were it potentially indemnifying its insured against the entire claim. <BR /> <BR />Some years ago, I was hired by a smallish trade magazine publisher to defend it in just such a case. Rather than fight — and lose — the declaratory judgment lawsuit I threatened when the carrier hemmed and hawed about providing a defense and confirming its obligation to indemnify, the carrier began picking up my firm's fees — which were reasonable in comparison to local market conditions, but substantially more than the insurance company wanted to pay. And they didn't like me running the show because they knew my true, undivided loyalty ran to their insured (which is supposed to be true of the counsel they hire for their insureds, but more often than not isn't quite true). I pushed for an early mediation and got it; and the adjuster ended up agreeing to pay far more than I thought the case was worth (if defense costs were removed from the equation). My client was thrilled, both because I'd relieved it from the obligation of paying my firm's fees and because the risk and inconvenience of fighting the case, with the potential for an uninsured verdict, was eliminated. (My client ended up, however, having to switch its CGL coverage to another carrier in future years, and its "experience factor" caused it to pay higher premiums than it otherwise would have.) <BR /> <BR />This is the sort of thing that ought to be taught in law schools, Prof. V, along with legal theory. Knowing one's way around such mundane subjects as insurance coverage law can make a hell of a difference even when one's litigating a sexy defamation case. Standard-form commercial general liability insurance policies, while generally excluding liability for acts that are intentional, nevertheless often do provide express coverage for libel and slander. Quite often such claims are combined with allegations of other intentional torts (e.g., tortious interference with contract or intentional infliction of emotional distress), in which case the carrier will typically respond to a demand that it defend and indemnify by providing a defense subject to a reservation of rights letter.

By issuing such a reservation of rights letter, however, under many states’ laws, that creates enough of a conflict that the carrier may lose its normal rights to select and direct defense counsel. The costs of paying for counsel other than their favored (and often quasi-in-house) counsel may significantly change the carrier’s settlement calculus, prompting it to offer substantial portions of its policy limits to settle a case in its entirety in circumstances when it would not have done so were it potentially indemnifying its insured against the entire claim.

Some years ago, I was hired by a smallish trade magazine publisher to defend it in just such a case. Rather than fight — and lose — the declaratory judgment lawsuit I threatened when the carrier hemmed and hawed about providing a defense and confirming its obligation to indemnify, the carrier began picking up my firm’s fees — which were reasonable in comparison to local market conditions, but substantially more than the insurance company wanted to pay. And they didn’t like me running the show because they knew my true, undivided loyalty ran to their insured (which is supposed to be true of the counsel they hire for their insureds, but more often than not isn’t quite true). I pushed for an early mediation and got it; and the adjuster ended up agreeing to pay far more than I thought the case was worth (if defense costs were removed from the equation). My client was thrilled, both because I’d relieved it from the obligation of paying my firm’s fees and because the risk and inconvenience of fighting the case, with the potential for an uninsured verdict, was eliminated. (My client ended up, however, having to switch its CGL coverage to another carrier in future years, and its “experience factor” caused it to pay higher premiums than it otherwise would have.)

This is the sort of thing that ought to be taught in law schools, Prof. V, along with legal theory. Knowing one’s way around such mundane subjects as insurance coverage law can make a hell of a difference even when one’s litigating a sexy defamation case.

]]> By: Dave N http://volokh.com/2008/06/25/2-5-million-damage-award-in-malicious-prosecution-suit-based-on-false-accusation-of-child-sexual-abuse/comment-page-1/#comment-360432 Dave N Thu, 26 Jun 2008 03:30:50 +0000 http://208.43.137.32/~volokhc/wp/?p=12940#comment-360432 Although I disagree with the <i>Kennedy</i> decision, I do note the irony of a post about false allegations of child sexual abuse on the same day the Supreme Court found that the Constitution forbids execution for those convicted of child sexual assault. Although I disagree with the Kennedy decision, I do note the irony of a post about false allegations of child sexual abuse on the same day the Supreme Court found that the Constitution forbids execution for those convicted of child sexual assault.

]]> By: vukdog http://volokh.com/2008/06/25/2-5-million-damage-award-in-malicious-prosecution-suit-based-on-false-accusation-of-child-sexual-abuse/comment-page-1/#comment-360431 vukdog Thu, 26 Jun 2008 03:08:04 +0000 http://208.43.137.32/~volokhc/wp/?p=12940#comment-360431 The judge should order defendant to become plaintiff's butler à la that Seinfeld episode. Seriosly though, isn't one of the most fundamental problems with the civil legal structure exemplified by this case? The fear of being sued in tort, and hence the motivation to act civilly, often only exists in those with something to lose. I suppose this is an artifact of the common law where it was only Lords and what-not who could collect for things like battery or defamation. Admittedly, there doesn't seem to be a quick fix, at least for targeting those who aren't homeowners. The judge should order defendant to become plaintiff’s butler à la that Seinfeld episode. Seriosly though, isn’t one of the most fundamental problems with the civil legal structure exemplified by this case? The fear of being sued in tort, and hence the motivation to act civilly, often only exists in those with something to lose. I suppose this is an artifact of the common law where it was only Lords and what-not who could collect for things like battery or defamation. Admittedly, there doesn’t seem to be a quick fix, at least for targeting those who aren’t homeowners.

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