Sicoli v. The Hartford Insurance Company of Illinois
1:12-cv-00508
W.D.N.Y.Jul 3, 2013Background
- July 16, 2007: Benjamin Sicoli struck Thomas Rall while Sicoli was performing construction work; Rall sued Sicoli in Erie County (two related actions were later consolidated).
- Sicoli was insured by Hartford Insurance Company of Illinois with a $100,000 liability policy; Hartford retained counsel (initially Walter Pacer, then Susan Owens and later Dennis Mescall) and paid defense costs.
- Sicoli was criminally convicted arising from the accident (assault in the third degree and reckless endangerment); convictions were affirmed on appeal.
- While a summary-judgment motion on negligence (filed by Rall) was pending, Hartford’s relationship with Pacer ended; the motion was unopposed and granted, establishing negligence via collateral estoppel.
- Sicoli (later deceased) and his estate claim Hartford provided an inadequate defense and breached the insurance contract and committed legal malpractice; the Rall case ultimately settled for $325,000, with Hartford paying the $100,000 policy limit and the estate contributing $225,000.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hartford can be liable for legal malpractice or negligence in retaining/controlling defense counsel | Estate alleges Hartford controlled/used attorneys who were its employees/agents, so Hartford is directly liable for inadequate defense | Hartford argues Feliberty bars direct or vicarious malpractice claims against insurers that retain independent counsel and that retained counsel exercised independent professional judgment | Denied summary judgment on malpractice: factual dispute exists whether retained counsel were independent or Hartford employees/agents; triable issue precludes resolution at this stage |
| Whether Hartford breached its duty to defend by merely assigning counsel | Estate contends appointing counsel is insufficient if insurer interferes or fails to provide adequate defense | Hartford contends it satisfied duty by assigning Pacer and later other attorneys who handled defense | Denied: duty-to-defend satisfaction is fact-based and unresolved; appointment alone does not automatically satisfy duty |
| Whether Hartford breached its duty to indemnify (contract claim) | Estate alleges breach of contract including indemnification | Hartford points out it tendered and paid the policy limits toward settlement; thus no indemnity breach | Granted in favor of Hartford: summary judgment dismissing indemnity-breach claim because Hartford paid policy limits toward settlement |
| Whether alter-ego or veil-piercing theories support liability | Estate suggested Hartford “family tree” issues implying control | Hartford denies and notes complaint lacks specific alter-ego pleading | Court did not rely on alter-ego arguments to decide motion; denied Hartford summary judgment on malpractice without resolving alter-ego theory |
Key Cases Cited
- Feliberty v. Damon, 72 N.Y.2d 112 (N.Y. 1988) (insurer generally not vicariously liable for malpractice of retained independent counsel; insurer barred from practicing law and must rely on independent counsel)
- Vermont Teddy Bear Co., Inc. v. 1-800 Beargram Co., 373 F.3d 241 (2d Cir. 2004) (summary judgment movant bears burden of showing no genuine dispute of material fact)
- Dean v. City of Buffalo, 579 F. Supp. 2d 391 (W.D.N.Y. 2008) (degree of employer control over methods and means is key to employee vs. independent contractor determination)
- Young v. Nationwide Mut. Ins. Co., 21 A.D.3d 1099 (App. Div. 2d Dept. 2005) (generally insurers not vicariously liable for lapses of retained independent counsel)