Scottsdale, AZ (June 10, 2009) – The United States Court of Appeals for the 7th Circuit has affirmed a trial court victory in favor of the firm’s client, National Casualty Company. In addressing and clarifying several issues that are important to the insurance industry, the Court found that National Casualty did not breach its contract of insurance by failing to provide independent legal counsel selected by the insured; otherwise known as Peppers counsel in reference to the case Maryland Cas. Co. v. Peppers. The ruling addressed the fact that the carrier’s defense under a reservation of rights did not create conflict of interest such as to cause the carrier to lose the right to control the insured’s defense. The court further clarified Illinois law that the mere possibility of a claim for punitive damages does not automatically create a conflict of interest that entitles the insured to independent counsel at the insurer’s expense.

In so holding, the Court stated:

“[T]here was no evidence that the underlying plaintiffs would seek punitive damages if and when they actually filed suit. Moreover, even if they filed suit, there is no evidence that the punitive damages requested would be so disproportionate to the compensatory damages requested such that a Nandorf conflict would ensue. Therefore, the specter of punitive damages in this case is merely speculative and does not create an ‘actual’ conflict.”

National Casualty Company was represented by Meagher & Geer partners Kurt Zitzer and Tom Crouch.

The law firm of Meagher & Geer, P.L.L.P. represents leading businesses, public entities, non-profit organizations, and individuals nationwide. The firm, founded in 1929, offers more than 75 lawyers focusing on litigation, insurance coverage, professional liability, products liability, mass tort/toxic tort, employment practices, construction, real estate, estates and trusts, intellectual property, and corporate/business services. We serve our clients from offices in Minnesota and Arizona.