State Farm Mutual Automobile Insurance Co. v. K.A.W.

Following a car accident, David Wilkerson and his wife and daughter retained the law firm of Sheldon Schlesinger (defendant), bringing suit against insurers State Farm Mutual Automobile Insurance Company (plaintiff), Interstate Fire Casualty Company (plaintiff) and Continental Casualty Company (plaintiff). The Wilkersons filed a separate malpractice suit against healthcare providers who treated their daughter’s injuries, in which they were also represented by the Schlesinger firm. After the Schlesinger firm determined that David’s negligence may have played a part in the accident, David fired the firm as his counsel in the personal injury action. Mrs. Wilkerson and her daughter then amended the complaint to add David as a defendant. The Schlesinger firm continued as Mrs. Wilkerson’s counsel, and David consented to be sued up to his insurance-coverage limit. As the parties who would be liable for damages assessed against David, the insurance companies moved to disqualify the Schlesinger firm from the personal injury suit, contending that the firm could potentially use confidential information learned during its representation of David, against him. David filed an affidavit consenting to the firm’s representation of his wife and daughter. The trial court declined to disqualify the firm, concluding that the insurance companies lacked standing to request disqualification considering David’s consent, and that they failed to prove that they would be prejudiced were the firm not disqualified. The court of appeal denied the insurance companies’ petitions for writ of certiorari. The companies appealed.