Can the lawyer who represents a vehicle owner in a tort suit also file a coverage declaratory judgment action naming both the owner and the liability carrier as plaintiffs?

Plain-English summary

A head-on collision was caused by Driver A, who was operating Vehicle X owned by Owner B. Owner B contended that Driver A took the vehicle without permission and without reasonable grounds to believe he could use it, and Owner B had reported the vehicle stolen. Firm F represented Owner B in the tort action brought by the other vehicle's occupants, raising defenses of lack of agency and lack of permissive use. The carrier asked Firm F to bring a declaratory judgment action, in both its name and Owner B's, to determine whether the carrier had to provide coverage to Driver A. The inquiry asked whether Firm F could file that declaratory judgment action naming both the carrier and the owner as plaintiffs.

The opinion answered yes. In the declaratory judgment action over coverage for Driver A, the interests of Owner B and the insurance carrier would not be in conflict, because both sought a determination that the non-permissive driver was not covered.

Currency note

This opinion was issued in 1989, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could one firm represent both the owner and the carrier in the coverage action?

A: Yes. The opinion concluded that the owner's and carrier's interests in the declaratory judgment action over coverage were not in conflict.

Q: Why was there no conflict?

A: The opinion concluded that both the owner and the carrier sought the same determination, that the non-permissive driver was not covered, so their interests aligned in that action.

Background and rules framework

The opinion did not cite a numbered Rule of Professional Conduct. It resolved the question on the conflict-of-interest principle that a single lawyer may represent multiple parties whose interests, in the specific proceeding, are aligned rather than adverse. Here both the owner and the carrier shared the goal of establishing that the non-permissive driver fell outside coverage.

Citations and references

Rules of Professional Conduct:

• The opinion analyzed the question under general conflict-of-interest principles without citing a specific rule number.

See also

• NC Ethics Op. RPC 103: representation of insured and insurer
• NC Ethics Op. RPC 112: representation of insured and insurer
• NC Ethics Op. RPC 110: attorneys retained by liability and UIM insurers

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-59/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

This case involves a head-on accident in which the driver (Driver A) at fault was driving a vehicle (Vehicle X) owned by another individual (Owner B). According to Owner B, Driver A took Vehicle X without his permission or consent and without having any reasonable grounds to believe that he could operate the vehicle. In fact, Owner B subsequently reported Vehicle X as being stolen.

Firm F has been retained to represent Owner B in a tort action brought by the occupants of the other vehicle involved in the collision. The defense to the tort action is lack of agency, lack of permissive use, and lack of any reasonable grounds Driver A could have had to believe he could use the vehicle.

The carrier has also requested that Firm F initiate a declaratory judgment action both in its name and in the name of Owner B to determine whether or not the carrier must provide coverage to Driver A.

Can Firm F, as attorney for the owner in the tort claim, file a DJA naming both the liability carrier and owner as plaintiffs?

Opinion:

Yes. In the declaratory judgment action the interests of Owner B and the insurance carrier would not be in conflict.