Finding that lawyers who charge an insurance company excessive fees for defending an insured of the company “have been unjustly enriched at the insurer’s expense,” the Supreme Court yesterday held that the insurer in the case before it can directly sue the lawyers. In an opinion written by Justice Mariano-Florentino Cuéllar, the court in J.R. Marketing, L.L.C. v. Hartford Casualty Insurance Company reversed the Court of Appeal, First District, Division Three, which had concluded that the right to reimbursement ran only against the insureds. [Disclosure: Horvitz & Levy represents the insurer.]
Justice Goodwin Liu wrote a concurring opinion stating that “the trial court on remand should apply a presumption that [the attorney] fees were incurred primarily for the insured’s benefit” and that the insurer “should have to demonstrate that counsel misled the insured in the representation, acted without the insured’s express or implied authorization, contravened the insured’s instructions, or otherwise acted in a manner with little or no benefit to the insured.”
