Truck Insurance Exchange v. Fireman’s Fund Insurance Co.

Truck Insurance Exchange (Truck) (plaintiff) defended an insured in asbestos-related litigation that cost Truck more than $17 million in legal fees. Truck sued Fireman’s Fund Insurance Company (FFIC) and other insurers (defendants) for contribution and indemnity. When the court disqualified the law firm that represented Truck, Truck asked Crosby, Heafey, Roach & May (Crosby) to take over the representation. However, Crosby had already been representing Fireman’s Fund Credit Union (FFCU), an FFIC affiliate, in two wrongful-termination suits for several months. Crosby ran a computerized conflicts check, discovered the conflict, and asked FFIC to consent to the adverse representation. In the alternative, Crosby offered to withdraw from representing FFCU, help FFCU transition to new counsel, and waive its fees in the wrongful-termination cases. FFIC refused to consent and wanted Crosby to continue representing FFCU in the wrongful-termination cases. Crosby nonetheless accepted representation of Truck and moved to withdraw from representing FFCU. Crosby notified the court that FFCU had retained substitute counsel, transferred the case files, and transitioned the matters to new counsel. Meanwhile, FFIC moved to disqualify Crosby from representing Truck, arguing the automatic-disqualification standard for conflicts between current clients applied. Crosby countered that FFIC was a former client, meaning the court could disqualify Crosby only if the two matters were substantially related, giving Crosby access to confidential information that would be helpful to Truck in the asbestos cases. Truck argued Crosby had no confidential information useable against FFIC because the matters were not connected. The trial court applied the automatic-disqualification rule used in concurrent-representation cases and disqualified Crosby. Truck appealed, arguing the court applied the wrong standard.