18
6
lNSunrRS' DurY ro Drreruo, Rese RvmoNS oF RrGHrs, nruo THe Dury
lruoepEruorrur Courusrt
to Appolr.lt
The Alaska Supreme Court has held that liability insurers have separate duties to
defend and to indemnífy their insureds. The duty to defend is broader than the duty to
indemnify.ut The duty to defend arises "if the complaint on its face alleges facts whjch,
standing alone, give rise to a possible finding of liability covered by the policy."ss lf the
complaint does not contain such allegations, there is a duty to defend where "the true
facts are within, or potentially_^within, the policy coverage and are known or reasonably
ascertainable to the insurer."s6
ln fact, in a case in which the Alaska Supreme Court assumed that the trial
court's instructions to the jury were valid (because the insurer did not argue that the
instructions misstated the law), the court accepted the principle that an insurance
company investigating a claim has an affirmative duty to diligently search for evidence
supporting coverage for the claim. The jury instruction in question told the jury that, if
the insurer merely seeks to discover evidence that defeats the claim, it holds its
interests above the interests of its insured.5T
ln cases where the insurer asserts either policy or coverage defenses, and
defends its insured under a reservation of rights, the Alaska Supreme Court has held
that there are various conflicts of interest between the insurer and the insured. For
example, where the insurer knows it can later assert non-coverage, it may only go
through the motions of defending, or it may defend in such a way as to increase the
likelihood of a verdict on an uninsured claim versus a covered claim. These conflicts
require the insurer to surrender its right to control the defense whenever the insured
refuses to accept the insurer's reseryation of rights.s8 Consequently, when the insurer
wishes to reserve its rights, and doing so creates a conflict of interest, then the insurer
must allow the appointment of independent counsel to defend the insured. The
independent counsel is selected by the insured.
Guidelínes regarding the duty to appoint independent counsel were codified by
the Alaska legislature in 1995 at AS 21.89.100. AS 21 .89.100(b) provides that
uo
tu
Sauer v. Home lndem. Co.,841 P.2d 176 (Alaska 1992).
Afcanv. MutualFire, Marine &tntand lns. Co.,5g5 P.2d638,64b(Alaska 1g7g).
56
Nat¡onal tndem. Co. v. Ftesher,469 P.2d 360, 366 (Alaska 1970); see a/so Fejes
984 P.2d 519,522 (Alaska 1999).
57
u'
v.
Great Divide tns. Co. v. Carpenter, Tg P.3d 599 (Alaska 2003).
CHI
of Ataska v. Emptoyers Rerns. Corp., 844 P .2d
At-RsxR Law SuuH¡nny
111
3 (Alaska 1 9g3).
Rev. 12105
Alaska lns. Co.,
19
reservations of rights regarding policy limits, punitive damages, or the fact that the
' insurer denies coverage for some of the claims in the action do not create conflicts
of
interest. Notwithstanding subsection (b), ¡f the insurer reserves its rights on an issue for
which coverage is denied, the insurer shall provide independent counsel to the insured.
Where the reservation creates a conflict of interest, insurers may require that
independent counsel have at least four years' experience in civil litigation, including
defense experience in the general subject area at issue.' The insurer may also require
independent counsel to have malpractice insurance. The insurer's obligation to pay the
independent counsel's fee is limited to the rate paid by the insurer to defense attorneys
in similar actions in the communíty where the action is being defended.
In cases where independent counsel must be appointed, independent counsel
and the insured are obligated to consult with the insurer regarding the civil action and
must disclose to the insurer all information relevant to the civil action, except information
that is privileged and relevant to disputed covera$e. Both independent counsel and the
counsel representing the insurer shall be allowed to participate in all aspects of the civil
action. The insured may waive the right to select independent counsel by signing a
statement as prescribed in the statute.ss
ln cases involving intra famity torts (e.g., child suing parent for injuries caused by
parent's negligence) the Alaska Supreme Court has held that the parent's liability
insurer is the real party in interest and that the insurer's interest in the action should be
disclosed to the jury in order to allow the jury to fully and fairly evaluate the case and the
testimony and to prevent undue confusion or prejudice.60 Because of the court's
concern that, in a lawsuit among family members, there is a danger of fraud and
collusion (such that the defendant-insureds might stand to gain monetarily from an
adverse verdict funded by the insurer) the court held that neglþent tortfeasors must be
prevented from sharing in any award resulting from their conduct. This is true whether
the negligent person would have benefited directly, as a specified beneficiary under the
wrongful death statute, or indirectly through intestate succession. However, this rule
does not result in a reduction of the damage award by the pro rata share otherwise
payable to the negligent party. lnstead, ineligible beneficiaries are deemed to have
renounced their right to recovery.
Appendices:
AS 21.89.100
ut
uo
See AS 21.89.100(Ð.
Myers v. Robertson, 891 P.2d 199 (Alaska 1995).
AusrR Lew Surr¡rlr¡Rnv
Rev. 12105
settleme¡L (a) ü
,
an iusu¡€r hen a diûJr to ilefeoil a¡ insured ruder a policy ofinsu¡a¡cg
intcrEst a¡is€s tbat impæes a iluty æ the insarer to prwide indepenileot
cou¡sel to the insureq tbe i¡so¡er ¡h'll provide initependent co¡msel to tbe insured
wdting waiees tåe rigbÈ ø independeot cormset.An insrranco
'i¡lesa the insu¡erl in
polþ may contain a ¡rovision tbat pvülee a metùoil dselecting independent co¡nsel
if öe provision coplies with this s€ction(b) For purpæee of this 8edüon, tbe foll'owing ato Dd q¡ûdih¡tê a conflict of interesb
(1) a daím of Punitive dqm¡gesi
(2) a daim 6f rlqnrges in erces8 of the policy tiñ;¡si
(3) cl¿ins c frgts i¡ a civil asEgq:forghich tbe instrer denies øverage
and a conflist of
'
1C¡
n
i,*"€ fu-which
cuverage is itenied" the
ðn$suuu.u'
insurc Bball provido indepeaileot cou¡s€l to ths
ingu¡ed as provided u¡der (a) srf -qi¡ eectiou
(d) If the insrreil selects independeot counsef at tåe insrreds etßpel¡se, the insu¡er
"
nay reqr¡ire tbat t¡€ independent cou¡cel bzee at leasü four yeas o'f ery€rien¡F in cffil
in the general subjecù area d issue iD tbe civil
Utgafiou, inctudiDg defense
' adiorr' and mnlpr¡ætice insu¡aDca. Unless d;h€rrige pùq,ei¡led iB tbe insurance policy, the
'
:'
.:
,r
¡
úligatiæ dtbe insrer to pay the fte ù¿rg€il by tho ind€rpentted cou¡sel is limitÆd.to
the rato tbat is arùuany paid by the instû€r to an aËcaey in ee ofdinry ootrre of
bneineng iBtåe defe¡rge ofa Fihil qrciyíl acûi@intbe conmruiþi¡çþ[6[lþs ¡l¡im ¡¡¡so
qis being defenile¿ In gsvidi¡Siridopendgnt counsel, ths Ínsreris not responsible fc
täe fees ¡nrl sesþ of rlefeniling aD allegation for whietr cûeera€Þ is Inûperly denied a¡il
ùallbe reapoostle onþ for the Ê¿s nnð çs6þ þ ildenil thoee alegalions fqwtich tùe
inswer eith€r res€¡ræs its position as to cæerage c accepts coverage lte independent
cour¡¡lE¡ rhaïi keeF deia.äed recor¡ls aävcaiiog fÊes aûd costs accûrdingly. A disputò
between the insorer and ingured rega¡ding attcacy fees tb¿t is lot resolyed by the
insurancs polisy or +.hi¡ se{tion shall be ¡eaoùnáil þ arbibatim u¡derAS 09.'[3.
(s) If the insued aelecùs indepeudeut counsel at tùe i¡sureds €rp€úse, tbe intlepeudent coulsel
"-d the i¡sued shall cousrrlt with tbe insurer oo all m¿tt.ers retatÍrg to the
cirril ¡6[¡¡ qnâ shalldisdæe to the i¡rsu¡er in a timel¡r no..er all infømatiæ ¡clerant
'
totåecivilacùion,excepûinfo¡æationtb¿tisgiv¡legeda¡¡drelevanttodisputedcnYenge.
'- Acl8ÍD of pivileæ is aubject to review in t.he a¡ryropriate cor¡¡L l¡fcm¿tion itÍsclosed by
. tùe iudepeodent cou¡sel or tùe insured iloee ¡ist waive anotber pa¡ty's rigbt to asselrt
pdyilege.
-õTi'¡"trr"¿
csu¡ser by signing a
'.:
nay waive tùe ¡igùt to 8ëletû ürdep€Ðitent
ltd€m€nü that reads subsùanüatry as follm*
I bave be€n ailvis€d of my rigLt to selecù ¡¡¿epenAmt counsel to represeot rr€ i¡r
}li.
l¡wsuit and of my ¡ighi und€r state law to haw all reasonable eryensea of an
. hdependent counsel paial by my iusuræ, I bave a¡so begn advis€d t¡åt tho Ataska
ü-- Sulreme Cou't has nrled tb¿t wben an i¡¡srær ilefends a¡ i¡st¡¡ed undrr-a ræee¡ration
..Eii. ddghts provision in an insurance polþ, tìere a¡e va¡iou¡ conflicts of iDterest tù¿t aris€
betweiln an insu¡er änil an s¡¡u¡eô I hsVe consiùlrqi firi¡ m¡rtte¡'fuliy u¡d at thie ài'¡e
I o- waiving Ey ¡igbt to Eel€út iDdependent col¡nsel I bsve authorized ny ineurer ¡6
. : s€l€{t a defe¡se cowsel to repreoent-me i¡, ]Ì¡n l¡wsuiL
1g¡ If * insred sel€sts ñd"p"".i*r counsãl urit€r this-¡t¡idor¡, Ìbth ttT colrnsel
regesent¡g the insu€r and independeut cormsel repesenting the insrlred shall þ
altoped to participate in, alt as1lecûs of tùe civil acti!û- Counsel ftr tho i¡st¡¡€r and insuÌed
shall cooperate fttly in' e¡"h"nging infcroalio thaÈ is cmsistent with ethfu8l aod l"gat
obligations to ths íngu¡ed. NqthiDg in tbis sectíon reliwes th€ insured of the atuty t0
cooperate fulty witb the ¡Dsu¡er as requir€d hy tüe tê¡ins oûtbe i¡su¡ance policy.
G) When an insured ie represoted by indepeodent corusel, tbe i¡srrer Esy settlo
dfuectly witb the plaíntiffif '\e eettlen€nt þçþf,6 ¿ll ¡r¡irn¡ based upon tbe alegatiqns
fuwùiùtbo insrrerpeviouslyru€rveditspgeitim asto coverage oraccepted coveragg
, rega¡Aess ofwhetùer the eettlenent ortingr'í¡hes ¡ll dain¡ sg¿iffi the instr€¿ (S 1û?
.
ù dl Sf,A 1995; am $l 34, 35 cb 26 SLA 19ft7)
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