• Hassett's Objections: The Continuing Conflict: Reservations of Rights and Choice of Counsel
  • May 7, 2007 | Author: Lewis E. Hassett
  • Law Firm: Morris, Manning & Martin, LLP - Atlanta Office
  • The United States Court of Appeals for the Fourth Circuit recently addressed whether an insurer defending under a reservation of rights loses the right to choose counsel. Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C., Case No. 04-2048 (4th Cir., December 27, 2005). The insured was sued for sexual harassment and related claims. The insurer, under a general commercial liability policy, agreed to provide a defense for all claims, but reserved its right to refuse indemnification on claims other than for defamation and false imprisonment. Contending that the insurer's reservation of rights triggered a conflict of interest, the insured eschewed the insurer's appointed counsel and retained its own counsel. The insured then demanded reimbursement of its attorneys' fees and expenses and proceeded with the case with its own counsel and settled the claim. The insurer refused to indemnify the insured for the settlement or to reimburse for fees and expenses.