Insurance Law

Hornberger v. Seymour: Insurer May Retain Defense Counsel Even If Insured Can’t Be Located

  By William Barker, Partner, SNR Denton, LLP

From time to time, insurers and defense counsel face the problem of an insured who can’t be located.  If the insured can’t be found when the lawsuit is filed, there can be a real question whether defense counsel can even file an appearance.  In Hornberger v. Seymour, 764 N.W.2d 371 (Minn. Ct. App. 2009), the court held that, when the insurer received notice of the lawsuit, it had a duty to defend unless the insured requested it not to do so.  Accordingly, it had authority to retain counsel for the insured.  To be sure, the procedural posture is such that, if the trial court finds that service by publication was proper, the insured will suffer a default judgment unless he appears for deposition, so filing an appearance has limited value.  But it at least allows additional time to try to find the insured.

A more traditional analysis of the formation of an attorney-client relationship looks to the insured’s tender of the suit to the insurer after service.  As explained in William T. Barker & Ronald D. Kent, New Appleman Insurance Bad Faith Litigation, § 3.04, “[i]n the normal course of events, the attorney-client relationships are formed as a result of the insured tendering the defense to the insurer and the insurer retaining counsel pursuant to that tender. The insured’s tender authorizes the insurer to retain counsel on behalf of the insured.”  Countryman v. Breen, 263 N.Y.S. 603, 605–08 (N.Y. Sup. Ct. 1933), rev’d on other points, 271 N.Y.S. 744 (N.Y. App. Div. 1934), aff’d 198 N.E. 536 (N.Y. 1935); Moritz v. Medical Protective Co., 428 F. Supp. 865, 871–72 (W.D. Wis. 1977); Charles Silver & Kent Syverud, The Professional Responsibilities of Insurance Defense Lawyers, 45 Duke L.J. 255, 280–83 (1995); Charles Silver, Does Insurance Defense Counsel Represent the Company or the Insured?, 72 Tex. L. Rev. 1583, 1594, n. 52 (1994); ABA Comm. on Ethics & Professional Responsibility, Formal Op. 282 (1950).

The facts in Hornberger could have been fit into that analytic framework, as the insured had notified the insurer of the accident soon after it occurred, and that notice could have been treated as a request for a defense.  But the court appeared to go further and hold that the insurance policy alone sufficed to authorize retention of counsel, even had there been no request for a defense.  This saved the defense lawyer from the sanctions that the trial court had imposed for filing an appearance without having formed an attorney-client relationship with the insured.

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William T. Barker is a partner in the Chicago office of SNR Denton, with a nationwide practice representing insurers in complex litigation, including matters relating to coverage, claims handling, sales practices, risk classification and selection, agent relationships, duties of insurance defense counsel and regulatory matters. Mr. Barker also provides expert consultant and witness services. Mr. Barker is a member of the Editorial Board of THE NEW APPLEMAN ON INSURANCE LAW and a cochair of the Ethics & Professionalism subcommittee of the ABA Litigation Section Insurance Coverage Litigation Committee. Mr. Barker is a co-author, with Ronald D. Kent, of NEW APPLEMAN INSURANCE BAD FAITH LITIGATION.