In another instance of what appears to be the beginning of a trend, the Supreme Court of South Carolina recently held that an insurer may bring a malpractice action against counsel it hired to defend its insured. Sentry Select Ins. Co. v. Maybank, 2019 S.C. LEXIS 18 (S.C. Mar. 11, 2019).
An insured was sued, and its insurer retained counsel to defend. Counsel failed to timely respond to requests for admission. Anticipating that the court would deem the requests for admission admitted due to the lack of timely response, the insurer settled the claim for ten times the valuation the insurer had on the case prior to counsel’s failure to respond to the requests for admission. The insurer then sued counsel for malpractice, and the court certified to the Supreme Court of South Carolina the question whether an insurer may maintain a direct malpractice action against counsel it hired to represent its insured.
The Supreme Court held that it could but noted that the insurer may recover only for the attorney’s breach of his duty to his client, the insured, when the insurer proves the breach is the proximate cause of damages to the insurer. The Court emphasized that the retained attorney owes no separate duty to the insurer.