State Farm Mut. Auto. Ins. Co. v. Hansen

Stephen Hansen was injured when Brad Aguilar struck Hansen’s vehicle. Hansen sued Aguilar, who was insured by State Farm Mutual Automobile Insurance Company. State Farm agreed to defend Aguilar under a reservation of rights. Aguilar agreed to a settlement with Hansen in which he assigned his rights against State Farm to Hansen. Hansen filed this action in federal district court alleging, among other claims, that State Farm breached a contract in its representation of Aguilar. The federal district court concluded that State Farm breached its contractual duty to defend Aguilar because it did not provide Aguilar with independent counsel of his choosing. State Farm moved for reconsideration. The federal district court granted the motion in part and certified two questions to the Supreme Court concerning Nevada’s conflict-of-interest rules in insurance litigation. The Supreme Court answered (1) Nevada law requires an insurer to provide independent counsel for its insured when a conflict of interest exists between the insurer and its insured; and (2) an insurer is only obligated to provide independent counsel when an actual of conflict exists, and a reservation of rights letter does not create a per se conflict of interest. View "State Farm Mut. Auto. Ins. Co. v. Hansen" on Justia Law