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Florida Supreme Court holds that insurer has standing through its contractual subrogation provision to maintain a malpractice action against legal counsel hired to represent the insured where the insurer had a duty under the policy to defend the insured

On June 3, 2021, in Arch Insurance Company v. Kubicki Draper, LLP, No. SC19-673, the Florida Supreme Court determined that an insurer has standing through its contractual subrogation provision to maintain a malpractice action against legal counsel hired to represent the insured where the insurer had a duty under the policy to defend the insured. The Court noted that Florida law recognizes two types of subrogation: equitable (often referred to as legal) and contractual (often referred to as conventional), citing Cont’l Cas. Co. v. Ryan Inc. E., 974 So. 2d 368, 376 (Fla. 2008), further noting that contractual subrogation “is based on an agreement between the parties that the party paying the debt will be subrogated to the rights and remedies of the original creditor,” quoting from E. Nat’l Bank v. Glendale Fed. Sav. & Loan Ass’n, 508 So. 2d 1323, 1325 (Fla. 3d DCA 1987). The Court observed that in this case the right to contractual subrogation was expressly provided for in the insurance policy. The Fourth DCA had determined that the insurer lacked standing to sue because it was in privity with the law firm which allegedly committed malpractice, but the Florida Supreme Court determined that it was sufficient that the insured was in privity with the law firm. The Supreme Court also rejected the argument that public policy considerations should prohibit the assignment of the malpractice claim, noting that the Court has previously held that there are exceptions when public policy is not applicable, and citing Cowan Liebowitz &Latman, P.C. v. Kaplan, 902 So. 2d 755, 760-61 (Fla. 2005).

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