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Kurt Koepke and Lori Hiltabrand recently obtained a no liability judgment in a dog bite/animal liability case in Sangamon County, Illinois. Our client was a landlord who rented residential apartments. The Plaintiff was a guest of our client’s tenant. Plaintiff filed suit against our client after she was bitten by the tenant’s dog.  Plaintiff sought damages for personal injuries sustained from the dog bite.

Plaintiff argued that the no pet clause contained in the residential lease was enough to establish negligence on the part of the landlord in failing to enforce the provisions of the lease coupled with the fact that the landlord was aware that the dog had bitten a child approximately one week before.  Plaintiff also claimed the landlord was negligent in failing to warn the plaintiff of the dangerous propensities of the dog and failing to enforce the no pet clause in the lease. 

Koepke & Hiltabrand filed a Motion for Summary Judgment asserting that the landlord could not be liable as a matter of law.  After hearing the arguments of Ms. Hiltabrand and Plaintiff’s counsel, the court granted Judgment in favor of our client (the landlord) finding that he could not be held liable for Plaintiff’s claimed injuries. 

The court relied upon Howle v. Aqua Illinois, 978 N.E.2d 1132 (4th Dist. 2012) and Klitzka v. Hellios, 810 N.E.2d 252 (2nd Dist. 2004), finding that a landlord-tenant relationship without more is insufficient to establish ownership under the Animal Control Act and that the plaintiff had failed to prove that the landlord had any type of controlling interest in the dog at issue or that he had maintained control over the property.  The court also held that a landlord does not retain control over the property when he has the right to coerce the removal of the animal by threatening to terminate the tenancy.  Likewise, even if the landlord was aware of the animal’s aggressiveness, a duty, and by extension, liability does not flow because the landlord had no control over what occurred on the rental property. 

The attorneys at Koepke & Hiltabrand routinely litigate animal liability (including dog bite) cases. Contact our attorneys if you have any questions regarding animal liability claims. 

Lori Hiltabrand recently arbitrated an underinsured motorist personal injury claim. The claim arose from a minimal impact motor vehicle collision. The claimant had received a $25,000.00 settlement from the at fault driver’s automobile insurance carrier.  Claimant asserted an underinsured motorist claim against his insurance carrier pursuant to the provisions of his automobile insurance policy. 

He testified that his pain and suffered continued from the date of the accident at issue to the present. Claimant’s medical history consisted of over $20,000.00 in chiropractic care.  Additionally claimant asserted questionable lost earning claims. The arbitrators returned an award of $22,500.00 total.  Claimant did not recover any award due the coverable damages being reduced to $0 after the $25,000.00 set off was applied.

Jason G. Schutte, a partner at Koepke & Hiltabrand, recently published an article discussing conflicts of interest in the Illinois Bar Association's trial briefs newsletter.  

By: Jason G. Schutte

A conflict of interest can be described as a real or seeming incompatibility between one’s own private interests and one’s fiduciary duty.[i] Conflicts of interest occur in insurance situations when the interests of the insurance company (insurer) may be incompatible with the interests of the person or company insured under the insurance policy (the insured). 

These conflicts often occur when a lawsuit filed against an insured contains allegations that are not covered under the insurance policy (where there is no obligation to indemnify). The most common case occurs when a lawsuit is filed against an insured asserting a negligence cause of action along with willful and wanton allegations. The insured will want the insurer to provide them with a legal defense and indemnify them against any liability they face in the lawsuit; however, most insurance policies exclude from coverage (indemnity) any intentional, willful or wanton actions.

Insurers owe a duty to defend their insured when the insured is sued.  Also, they owe a duty to indemnify the insured for liabilities covered under the insurance policy. The duty to defend generally includes a right for the insurer to control the defense of the claim against their insured, which allows the insurer to protect their financial interest in the outcome of the litigation of the lawsuit against their insured and the potential liability they face through their obligation to indemnify.[ii]

The duty to defend the insured arises in a lawsuit when the allegations of the complaint allege facts within or possibly within the coverage provided by the insurance policy.[iii] The insurer’s duty to defend extends to cases where a plaintiff’s law suit asserts multiple theories of action against the insured, even though only one of those theories falls within the coverage afforded by the insurance policy.[iv] An insurer’s duty to defend their insured is broader than their duty to indemnify the insured for liability.[v] 

Hence, in our case listed above, the insurer would owe a duty to defend the lawsuit because negligence is commonly covered under liability policies even though willful and wanton actions due not fall within most coverage. The insurer would not be obligated to indemnify the insured for liability he faced for willful and wanton action since the insurance policy typically would not provide coverage (indemnity) for liabilities arising from this action.

This situation arguably creates a situation where an attorney retained by the insurer to provide the insureds defense present the defense in such a way as to shift liabilities outside the scope of coverage of the insurance policy.  This creates a conflict of interest because if the facts are presented in such a way that the actions of the insured are not covered by the policy, then the insurer does not have a financial obligation to indemnify.  Hence, it could be financially beneficial for the insurer, who is paying the attorney’s fees, to have the facts presented in such a fashion as to take liability outside of the policy’s coverage.  This would not align with the insured desire to be indemnified and protected by the insurance policy from liability.

Conflicts of interest can create serious ethical questions that prohibit an attorney from representing both the interests of the insurer and the insured.[vi] The question becomes, when is an insured not required to utilize an insurer-retained attorney in defending an underlying lawsuit?  Basically this situation is present when a conflict of interest occurs.

When a conflict arises, what are the insurer’s options?

An insurer may do one the following things when a conflict of interest has arisen between the insurer and the insured in order to satisfy their duty to defend the insured:

  1. An insurer may offer a defense provided by an attorney that is retained by the insurer after full disclosure of the potential conflict if accepted by the insured; 
  2. The insurer may waive any non-coverage defense they may have without asserting a reservation of rights or entering into a non-waiver agreement which will eliminate the conflict, allowing the insurer to control the defense of the claim with counsel selected by the insurer;
  3. If neither of the prior options occur, the insurer must allow the insured to select an attorney to represent him and control the conduct of the case, reimbursing the insured for reasonable costs.[vii]

If the insured chooses to hire his own counsel, an insurer will still be entitled to have an attorney of their choosing participate in the litigation of the pending claims.  This participation will be subject to the control of the insured’s attorney.  The insurer also maintains their right to raise a non-coverage defense when the insured is allowed to select their own counsel.[viii]

In Summary

Claims professionals will satisfy the insurer’s duty to defend while addressing any conflict of interest by first identifying the potential conflict, disclosing the potential conflict, then executing one of the three options listed above.  This action allows the insurer to satisfy their fiduciary duties to the insured, protect their own financial interest and avoid direct liability.

 
 


[i] Black’s Law Dictionary, Second Pocket Edition, West 2001;

[ii] Illinois Masonic Med. Center v. Turegum Ins. Co., 168 Ill.App.3d 158, 163 (1st Dist. 1988);

[iii] Maryland Cas. Co. v. Peppers, 64 Ill. 2d 187,  193(1976);

[iv] Peppers at 194;

[v] American Fam. Mut. Ins. Co. v. W.H. McNaughton Builders, Inc., 363 Ill.App.3d 505, 510 (2nd Dist. 2006);

[vi] Peppers at 198;

[vii] Peppers 198-199;

[viii] Peppers at 199;

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