In a motor vehicle accident action involving multiple parties, a municipality brought a motion seeking an order requiring an insurer to defend it and allow it to retain counsel of its own choosing without reporting obligations to the insurer.
The municipality and insurer had partially settled the duty-to-defend issue, leaving the court to determine whether counsel retained by the municipality must report to the insurer that also insured another adverse party.
The court held that a conflict of interest existed because one insured was suing another insured in the same litigation and coverage issues remained live.
Given the conflict and the solicitor-client relationship, counsel retained by the municipality was not required to report to the insurer.
