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The GeorGia Democrat
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defense firms in Georgia sometimes take cases Opinion 05-435, says that generally a lawyer who that hired the attorney.”
against persons insured by insurance companies
represents
a liability
insurer
as a named
one legal
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continued Longan, according to the
Expand
your
expert
network
–party
andinyour
thinking.
that they also represent.
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“the
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is theused
insured
rather than the
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“Prior to this case there has never been a case
action against a defendant whose defense is being For
insurer.”
or visit west.thomson.com/westlaw/litigator/expert.asp
their sworn statements and trial testimony.
© 2006 West,
a Thomson business
L-320669/2-06
in Georgia that held that that was or was not
provided
under
an insurance policy by that liability
See Page, page 10
®
Litigator
10
Columbus firm loses
$400K suit on conflict
of representation
See Page, page 11
Conflicts check
ACC’s case against Page, Scrantom
started in May 2001, when Sara
Johnson hired Page, Scrantom to
pursue a personal injury action against
Richard Allen. Johnson claimed
Allen was at fault in a car accident
that cost her $1,100 in medical bills,
according to an ACC brief.
ACC and the law firm have agreed
that Page, Scrantom was representing
another ACC insured when Johnson
retained the firm and that Page,
Scrantom previously had represented
ACC directly at least once.
The parties also agreed that Page,
Scrantom did not represent ACC
directly in any particular matter
when the law firm was retained by
Johnson.
According to an ACC brief, the
law firm ran a conflicts check when it
opened a file in Johnson’s case, which
red-flagged ACC as a client of the
firm.
ACC contended in its brief that,
without asking ACC to waive any
identified conflict, Page, Scrantom
partner Virgil Ted Theus initialed
the conflicts sheet to the effect that
the conflict was “waived.”
Buchanan said that when Theus
signed off on the form, he was
indicating that there was no conflict,
not that there had been a conflict that
had been waived. Page, Scrantom’s
conflicts check process form gives no
space to indicate that a conflict does
not exist, according to Buchanan.
Lawyers for Page, Scrantom also
said that ACC waived any conflict
by negotiating with Page, Scrantom
on the Johnson case, sending the
firm new cases to handle, and settling
cases on behalf of their insureds in
which Page, Scrantom represented
other plaintiffs—even after becoming
aware that the law firm represented
Johnson.
Before filing the case on behalf
of Johnson, the law firm sent ACC
a $15,000 time-limited settlement
demand. Briggs, ACC’s attorney, said
that the demand “set up” ACC for a
daily report WEDNEsday, march 22, 2006
potential bad faith claim by Allen,
leaving the insurance company on
the hook for the entire judgment in
Johnson’s favor.
According to an ACC brief, ACC
litigation representative Shanda
Barnes thought that Page, Scrantom’s
lawyer gave her an extension of time
for ACC to respond to the complaint
in the Johnson personal injury case
while she attempted to verify some
information.
Page, Scrantom denied giving
ACC an extension on the answer,
and ACC failed to answer Johnson’s
complaint, resulting in a $354,200
default judgment against Allen.
ACC unsuccessfully moved to set
aside the default, as in February 2002
Muscogee County State Court Judge
Maureen C. Gottfried found that no
extension on the answer had been
given, according to Page, Scrantom’s
brief. The judge also rejected ACC’s
arguments that she should disqualify
Page, Scrantom as having a conflict of
interest.
ACC paid the judgment, even
though the limit of its policy for Allen
was only $15,000. Briggs said that
ACC paid the full judgment because
arguably Allen had a bad faith claim
against ACC because of ACC’s
failure to settle within policy limits on
Johnson’s $15,000 demand.
‘Most respected law firms’
In October 2002, ACC sued
Page, Scrantom to recover what it
had paid on the judgment. Briggs
said that he argued that ACC still
had an attorney-client relationship
with Page, Scrantom when the firm
took Johnson’s case because ACC
had an expectation of an on-going
relationship.
As is customary in Columbus cases
against local law firms, the case went
before a visiting judge, Senior Judge
L.A. McConnell Jr.
Page, Scrantom argued to no avail
that McConnell should have granted
the law firm summary judgment. The
firm argued that there was no legal
authority to support ACC’s claim
that Page, Scrantom had a conflict
in representing Johnson and, even
if there were, ACC had waived any
conflict in failing to object to the firm’s
representation of Johnson promptly.
Young, one of the lawyers
representing the firm, said that
Page, Scrantom is one of the “most
respected law firms in Georgia.”
“They feel strongly that taking
a claim against an insured of a
company that they do a small amount
of business for over the years is not
inappropriate,” he added, “and
that the ABA opinion on the issue
indicates that they are correct, and
the states that have looked at it with
case law have indicated that they are
correct.”
The law firm also argued
unsuccessfully that Gottfried’s rulings
on the extension and conflict should
have disposed of the case against the
firm.
Without a written opinion or oral
explication of his reasoning against
summary judgment for the firm,
according to Buchanan, McConnell
sent the case to the jury.
Page, Scrantom objected to the
whole of McConnell’s charge to the
jury.
According to a transcript, at one
point during the charge, McConnell
said, “I’m talking in circles … but
I think you can get the idea there.”
When Buchanan objected that he
“simply did not understand the
charge,” McConnell responded,
“Well, I can’t argue with what you
said.”
However, McConnell ultimately
denied Page, Scrantom’s motion for
a mistrial, saying, “Well, I have no
problem understanding it.”
On February 17, after a week of
testimony and more than four hours of
deliberations, the jury awarded ACC
$335,000 in compensatory damages,
$127,131 in attorney fees and expenses
and $1 in punitive damages.
The jury foreperson, who asked
that her full name not be used, said
in an e-mail interview with the Daily
Report that the issue of the extension
to answer the compliant “was never
an issue in deliberation.”
“[O]ur deliberation was predicated
on the improper assignment of
‘Conflict Waived by the Client’ by
the Page Scrantom attorneys on the
Client Contact sheet,” the foreperson
wrote.
Young, one of the firm’s lawyers,
said that jurors told him they found
the jury instructions “extremely hard
to follow and understand.”
But the jury foreperson said simply
that the judge provided the jurors
“with in-depth instructions regarding
our responsibilities related to the
case” and answered three questions
posed by the jury during deliberations
“to our complete satisfaction and
understanding.”
The foreperson said that, except for
the issue of whether to award punitive
damages, the case was not a difficult
one to decide and provoked little
disagreement among jurors.
“[W]e unanimously believed that
Page-Scrantom acted in bad faith by
not securing their client’s approval
prior to taking the case and because
both the principals for the firm and
their expert witness admitted such
on the stand, we were compelled
to find in favor of [ACC],” said the
foreperson.
Clark D. Cunningham, an ethics
professor at Georgia State University
College of Law, said that the conflict
issue might have posed a factual
question for a jury as to whether
ACC reasonably thought that Page,
Scrantom was its counsel.
“If someone reasonably thinks
that a law firm is representing them,
generally speaking we’re going to let
that control,” said Cunningham. He
added that the issue is complicated
with insurance companies, however,
since insurance defense law firm firms
usually do not represent the insurance
companies directly and insurance
companies may have several different
defense counsel.
Buchanan said that the problem
with allowing the case to go the jury
is that it could create contradictory
rules around the state on the conflict
question. “The narrow question is
can a law firm that defends insureds
of Atlanta Casualty Company also
sue insureds of Atlanta Casualty
Company,” said Buchanan. “There
ought to be but one rule on what
attorneys can do in the state.
One of Page, Scrantom’s senior
partners said that the firm, which
houses more than two dozen attorneys, was very disappointed in the
trial’s outcome.
“We’re a group of lawyers, we get
along well, and our law firm is over a
hundred years old, and we take great
pride in it, so we do take it personally,”
said W. G. Scrantom Jr.