INDEPENDENT COUNSEL ISSUES UNDER TEXAS INSURANCE LAW Presenters ROBERT D. ALLEN, Dallas Meckler Bulger Tilson Marick & Pearson, LLP PAUL K. STAFFORD, Dallas The Stafford Law Firm Author ROBERT D. ALLEN Meckler Bulger Tilson Marick & Pearson, LLP 10,000 North Central Expressway, Suite 1450 Dallas, Texas 75231 State Bar of Texas 9 th ANNUAL ADVANCED INSURANCE LAW COURSE April 12-13, 2012 Dallas CHAPTER 15
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INDEPENDENT COUNSEL ISSUES UNDER TEXAS ... COUNSEL ISSUES UNDER TEXAS INSURANCE LAW Presenters ROBERT D. ALLEN, Dallas Meckler Bulger Tilson Marick & Pearson, LLP PAUL K. STAFFORD,
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PAUL K. STAFFORD E-Mail: [email protected] Paul K. Stafford earned a Bachelor of Science in Political Science from Texas A&M University in 1990. Mr. Stafford earned a Juris Doctorate from Texas Tech University School of Law in 1994. Mr. Stafford is licensed by the State of Texas and in the Federal District Court, Northern, Eastern, and Western Districts of Texas. Between 1994 and 1998, Mr. Stafford served first as an Assistant District Attorney in Denton County, Texas, followed by service as an Assistant District Attorney in Dallas County, Texas. While in Dallas, Mr. Stafford served as a felony prosecutor in the Organized Crime Division. Mr. Stafford has been practicing general civil litigation since 1998. Currently, he is the proprietor of The Stafford Law Firm in downtown Dallas – a litigation firm focusing on the areas of commercial, business, and insurance litigation. Previously, he practiced at Amis & Bell in Arlington, Texas before joining Werstein, Smith & Wilson in January, 2002. Mr. Stafford then became Senior Trial Attorney in the Dallas office of Hughes & Luce LLP (now Kirkpatrick & Lockhart Preston Gates Ellis LLP) practicing in the areas of Business Litigation, Commercial Litigation, and Insurance Law, as well as White Collar Crime Defense. Mr. Stafford was named a Rising Star by Texas Monthly magazine for three consecutive years (2005; 2006; 2007), and a Super Lawyer in 2009. In 2008, Stafford was named one of the Eight Top Lawyers in Dallas by Eclipse magazine. Mr. Stafford is an active member of the Dallas Bar Association (“DBA”), serving as the Chair of the DBA’s Board of Directors in 2008, and currently serving as the DBA’s Second Vice President. In 2004, Mr. Stafford served as co-chair of the DBA’s Minority Participation Committee, which received the 2004 Jo Anna Moreland Outstanding Committee Award. In 2005, Mr. Stafford served as co-chair of the DBA’s Admissions & Membership Committee. In 2006, Mr. Stafford served as co-chair of the Equal Access to Justice Campaign (raising approximately $540,000 for pro bono legal services in Dallas County) and was named Dallas Bar Association Outstanding Minority Attorney. In 2007, Mr. Stafford served as Chair of the Equal Access to Justice Campaign (raising approximately $575,000 for pro bono legal services in Dallas County). In 2008, Mr. Stafford served as co-chair of the DBA’s Judiciary Committee, co-chair of the DBA’s Bench Bar Committee, and chair of the DBA’s “A Bar For All” bar-assessment committee. This year, Mr. Stafford is co-chair of the DBA’s Mentoring Committee, and serves on the Law Jam II Committee. Mr. Stafford has served on the Board of Trustees of the Dallas Bar Foundation since 2005, and is a member of the Dallas Association of Young Lawyers Foundation. In addition, Mr. Stafford served as 2002 President of J. L. Turner Legal Association. Mr. Stafford is an Adjunct Professor at Texas Tech University School of Law, having taught Insurance Law (2002; 2005; 2008; 2009), Trial Advocacy (2004), and
Interviewing & Counseling (2007; 2008). In 2007, Mr. Stafford was named an Outstanding Alumnus by the Black Law Student Association at Texas Tech University School of Law. Mr. Stafford is active in the North Texas community, serving on a variety of boards and commissions in the area. Mr. Stafford serves on the Board of Directors of Camp John Marc: Special Camps for Special Kids, as well as being a volunteer with Big Brothers Big Sisters. Mr. Stafford is a proud Aggie, serving as an active member of the Texas A&M Association of Former Students (Board of Directors, 2007 - present), The Black Former Student Network (2007-2008 Chair), the Dallas A&M Club, the Texas A&M Liberal Arts Development Council, and as a founding member of the Department of Political Science Former Student Advisory Board. Mr. Stafford is also an active member of the Texas Tech Alumni Association and the Black Law Students Alumni Association. Mr. Stafford is a 2003 German Marshall Fund, American Marshall Memorial Fellow, and currently serves on the Board of Trustees of the German Marshall Fund of the United States (based in Washington, D.C.). During his Fellowship in 2003, Mr. Stafford traveled to Brussels, Belgium, where he met with officials from the European Union and NATO to discuss a variety of transatlantic issues. Mr. Stafford also traveled to The Netherlands, where he discussed various legal issues with officials from The Hague, The United Nations Criminal Tribunal for Yugoslavia, and the World Court. Mr. Stafford also met with political, professional, and civic leaders in Italy, Slovakia, and France. In 2005, Mr. Stafford traveled to Rome, Italy to attend the Marshall Seminar on Southern European Affairs (February, 2005); he also moderated a panel on ‘Multilateral/Multinational Organizations’ at the Marshall Forum on Transatlantic Affairs, Schloss Elmau, Germany (April, 2005). Paul also attended the Marshall Forum in Tremezzo, Italy (March, 2006) and in Schloss Elmau, Germany (June, 2007). In July of 2007, Mr. Stafford was a guest lecturer on “The State of Transatlantic Relations” at HTW University of Applied Sciences – Saarbrucken, Saarland, Germany. Throughout the years, Paul Stafford has been a speaker and lecturer on a variety of political, social and legal issues of local, national and international significance. These issues and topics have included community affairs, social commentary, terrorism and homeland security, commercial litigation, insurance law, criminal law, trial advocacy and strategy, as well as interacting with the media regarding specific clients, cases, issues, or topics. Mr. Stafford is married to Telea Johnson Stafford and has three daughters.
Independent Counsel Issues Under Texas Insurance Law Chapter 15
TABLE OF CONTENTS
I. WHEN DOES THE INSURED POSSESS THE RIGHT TO INDEPENDENT COUNSEL? .......................... 1 A. Downhole Navigator v. Nautilus ................................................................................................................ 1 B. Partain v. Mid-Continent Specialty ............................................................................................................ 2
II. INTERPLAY OF DUTY TO DEFEND AND THE INSURED‟S PROSECUTION OF CLAIMS FOR
AFFIRMATIVE RELIEF. ................................................................................................................................. 3 A. Standard for Segregating Attorneys‟ Fees.................................................................................................. 3
i
Independent Counsel Issues Under Texas Insurance Law Chapter 15
1
INDEPENDENT COUNSEL ISSUES
UNDER TEXAS INSURANCE LAW
This paper will address two of the developing
issues in Texas Insurance Law regarding independent
counsel issues. First, the paper will analyze the
development of the latest progeny of Northern County
Mut. Ins. Co. v. Davalos, 140, S.W.3d 685, 690 (Tex.
2004) on when a “disqualifying conflict” occurs that
will allow an insured to select counsel of its own
choosing to defend it. Also, the paper will discuss
how courts handle the allocation of fees between an
insured‟s prosecution of claims for affirmative relief
and defending covered claims.
I. WHEN DOES THE INSURED POSSESS
THE RIGHT TO INDEPENDENT
COUNSEL?
An ongoing and developing issue in Texas
insurance jurisprudence concerns whether a liability
insurer‟s act of agreeing to defend its insured under a
reservation of rights creates a material conflict of
interest that enables the insured to select counsel of its
own choosing. Indeed, this issue was recently
answered in the negative by a Houston Federal
Magistrate in Downhole Navigator, L.L.C. v. Nautilus
Ins. Co., 2011 WL 4889125 (S.D. Tex. 2011) and by a