Worker was pulled into a laser cutting machine at assembly plant, insured by Granite State. The injuries were horrific, and Worker sued. Insurer, Granite State, retained a claims adjuster, York. York told the plant that it was the authorized representative of Granite; York secured an extension to answer the complaint; investigated the lawsuit and potential coverage issues; and, sent a letter to the plant stating that the handling of the claim would progress as seamlessly as possible. But, the claim was not covered under the Granite policy. Neither Granite nor York ever had communicated to the plant whether they believed Granite had a duty to defend the plant; but the suit was not defended and $3,866,462 was awarded to the worker on default. The plant then assigned all claims it may have had against Granite and York to the Worker. In exchange, Worker agreed not to collect against the plant. Then Granite and York get sued. York moved for dismissal. The Seventh Circuit, relying in part on New York law, held that an insurance adjuster owes no legal duty to the insured. Case against York dismissed.
Lodholtz v. York Risk Servs. Grp., Inc., No. 14-2571 (7th Cir. 2015)