Parsons v. Continental National American Group
Supreme Court of Arizona
550 P.2d 94 (1976)
After Smithey assaulted the Parsons (plaintiffs), his parents' insurer, CNA (defendant), hired an attorney to defend Smithey and his parents in the resulting tort suit while reserving its rights under an intentional-act exclusion; that same attorney, after interviewing Smithey and reviewing his file as his own defense counsel, reported back to CNA his belief that Smithey's acts were deliberate, and CNA then used that information (through the same law firm) to successfully defend a subsequent garnishment action denying coverage. The Parsons appealed after the trial court ruled for CNA, and the appeals court reversed; CNA sought review.
Whether an insurer in a garnishment action is estopped from denying coverage under its policy when the information used to defend the garnishment action came from confidential information the insured's own attorney obtained while previously representing the insured in the underlying tort action.