- Business Law
- Consumer Law
- Employment Law
- Insurance Law
O.K. Now that you have gotten over the indignation of having been served with a frivolous lawsuit which is wholly devoid of merit, there are some steps that you need to take to make sure that your rights are preserved.
First, neatly write in the upper right corner of the top page (which could either be the summons or the complaint or cross-complaint, as the case may be) the date, time, manner of receipt (personal delivery, mail, overnight mail, shoved under your door after work and found the next business day whatever) and your name. This is important to be able to determine whether there has been effective service and if so, when the responsive pleading, e.g., an answer, is due so that a default is not entered.
Second, if the complaint was received by you with a Notice and Acknowledgement form to be signed and returned, do not sign and return that form without speaking to your lawyer. Signing and returning the Notice and Acknowledgement form constitutes an acknowledgement that you have been validly served with the summons and complaint which may not be in your best interests and that act starts the time running to file a responsive pleading before. The downside of not signing and returning the Notice and Acknowledgement form is that if you fail to do so, the plaintiff (or cross-complainant, as the case may be) will be entitled to recover the costs of subsequently serving you. Also, don’t be lulled into thinking that just because the complaint you received was received with a notice and acknowledgement that your initial receipt was not valid service anyway.
The time for filing and serving a responsive pleading varies depending upon the jurisdiction and type of case. In California, generally you have 30 days from the service of the complaint but it could be as little as 5 days to file an answer or demurrer to an unlawful detainer lawsuit. Also, if the case is filed in a United States District Court, you have only 20 days to file and serve a responsive pleading and if you want a jury, you need to file a timely jury demand as well.
Third, as soon as possible, send the summons and complaint (or cross-complaint) and all of the papers your received to your lawyer and your insurance company or insurance agent and demand that the insurer defend and indemnify the lawsuit and indicate how it was received (this is where the notes you made upon receipt come in handy). It is better practice to do so by certified mail or facsimile and to keep a printed report from your fax machine which shows that the facsimile was received. The important thing is to get a written acknowledgment and proof that the tender has been received.
Also, if you are tendering the lawsuit to your insurance agent, be sure that agent is an agent for your insurer as opposed to just an insurance broker who may have obtained your insurance policy from the insurer or a managing agent for the insurer. In that event, your insurance broker is not the insurance company’s agent and your will need to be sure that the lawsuit is tendered directly to the insurance company. Often, the policy states where to tender your lawsuit so check if that is the case. In addition, some insurers do not count receipt of a lawsuit by their agent as receipt by the insurer unless and until it is received by the insurer.
If the lawsuit arose out of an automobile accident, then tender the lawsuit to the insurer of the automobile and any insurer who issued excess/umbrella coverage over and above that automobile policy. If you are a company and the lawsuit arose out of an automobile accident involving your employee’s driving an automobile that is not owned by your company, hopefully you purchased non-owned automobile coverage and you will then tender the lawsuit for defense and indemnity to your general liability insurer who issued that coverage.
If the lawsuit arose out of alleged acts or omissions other than those which arise out of the ownership, maintenance or use of a motor vehicle and other than a business pursuit, then tender the lawsuit to your homeowner’s insurer and the insurer who issued any excess or umbrella coverage over that primary homeowner’s policy.
If you are a company, then tender your defense and indemnity to your general liability insurer.
If you are a professional and the lawsuit alleges an error or omission in the course of your professional services, then tender the lawsuit to your errors and omissions insurer.
If you are a director on a board of directors in a corporation or an association, then tender your defense to your directors and officer’s liability insurer.
The above is, of course, not a complete list.
Not every lawsuit is potentially covered by an insurance policy. The issue of whether an insurance policy provides a defense or indemnity for a lawsuit involves a careful study of the insurance policy by a qualified lawyer who specializes in insurance coverage, together with the allegations of the complaint (or cross-complaint) and in some instances, other information which discloses the nature of the claims of the plaintiff (or cross-complainant) which are not alleged.
If your insurer denies your tender of the lawsuit for defense and indemnity, it may be incorrect and you should consult an insurance coverage lawyer to be sure that the denial is correct. The defense cost of even frivolous or unmeritorious lawsuits can mount rapidly.
The above examples are general only and may not apply to your lawsuit. When in doubt, it is safer to tender your defense and indemnity to your insurance company than not to tender.
Upon tendering your defense to your insurance company for a defense and indemnity, the insurer sometimes has to investigate a coverage issue and may want to take a recorded of you or to obtain a signed statement. When an insurer has a coverage issue, it generally issues a letter indicating that its investigation is under a reservation of rights or a non-waiver to later deny or limit the coverage depending on the outcome of its investigation. You have a duty to cooperate with your own insurance company in its investigation of the facts as they pertain to your defense of the lawsuit and regarding the coverage issue. However, if there is a coverage issue, you should consult a lawyer before giving a recorded or signed statement to your insurance company and even then, obtain an agreement that the insurer will transcribe the recorded statement and provide you with a copy.
Under no circumstances should you give a recorded or signed statement to the insurer for the other party. You are not obligated to do so and by doing so, your imprecise statements may be used against you at a later date. If you asked the other party’s insurer for a copy of the transcript of its insured’s statement, you can be assured that it won’t be provided to you, so why should you give the other party’s insurer free discovery?
Your insurer may agree to defend, but only under a reservation of rights. Sometimes, your insurer’s reservation of rights letter gives you the right to select an attorney of your choosing but paid for by your insurer and in that event, you need your own insurance coverage attorney to advise you if you have that right.
Also, even if you are not entitled to a defense through an attorney of your choice, often it is advisable for you to hire your own attorney as monitoring counsel to be sure that the insurer is providing you a complete defense so that it doesn’t try to save defense costs on a judgment it may not be obligated to pay. The reason that an insurer might have the obligation to defend a lawsuit but not pay a judgment is that the insurer’s duty to defend is broader than its duty to indemnify a settlement with its written consent or a judgment in that lawsuit.
Finally, start gathering all of the documents (including electronic data, such as scanned images, electronic mail and attachments) and prepare a chronology of events to give to your lawyer to assist in your defense. Be sure to label the chronology as Attorney-Client Communication or words to that effect.
By taking the foregoing steps upon receipt of a lawsuit, you can assist your insurance company and your lawyer in making sure that your rights are not prejudiced and that you receive a full and complete defense to the lawsuit.