(a)If the provisions of a policy of insurance impose a duty to defend upon an insurer and a conflict of interest arises which creates a duty on the part of the insurer to provide independent counsel to the insured, the insurer shall provide independent counsel to represent the insured unless, at the time the insured is informed that a possible conflict may arise or does exist, the insured expressly waives, in writing, the right to independent counsel. An insurance contract may contain a provision which sets forth the method of selecting that counsel consistent with this section.
(b)For purposes of this section, a conflict of interest does not exist as to allegations or facts in the litigation for which the insurer denies coverage; however, when an insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim, a conflict of interest may exist. No conflict of interest shall be deemed to exist as to allegations of punitive damages or be deemed to exist solely because an insured is sued for an amount in excess of the insurance policy limits.
(c)When the insured has selected independent counsel to represent him or her, the insurer may exercise its right to require that the counsel selected by the insured possess certain minimum qualifications which may include that the selected counsel have (1) at least five years of civil litigation practice which includes substantial defense experience in the
subject at issue in the litigation, and (2) errors and omissions coverage. The insurer’s obligation to pay fees to the independent counsel selected by the insured is limited to the rates which are actually paid by the insurer to attorneys retained by it in the ordinary course of business in the defense of similar actions in the community where the claim arose or is being defended. This subdivision does not invalidate other different or additional policy provisions pertaining to attorney’s fees or providing for methods of settlement of disputes concerning those fees. Any dispute concerning attorney’s fees not resolved by these methods shall be resolved by final and binding arbitration by a single neutral arbitrator selected by the parties to the dispute.
(d)When independent counsel has been selected by the insured, it shall be the duty of that counsel and the insured to disclose to the insurer all information concerning the action except
privileged materials relevant to coverage disputes, and timely to inform and consult with the insurer on all matters relating to the action. Any claim of privilege asserted is subject to in camera review in the appropriate law and motion department of the superior court. Any information disclosed by the insured or by independent counsel is not a waiver of the privilege as to any other party.
(e)The insured may waive its right to select independent counsel by signing the following statement:
“I have been advised and informed of my right to select independent counsel to represent me in this lawsuit. I have considered this matter fully and freely waive my right to select independent counsel at this time. I authorize my insurer to select a defense attorney to represent me in this lawsuit.”
(f)Where the insured selects independent counsel pursuant to the provisions of this
section, both the counsel provided by the insurer and independent counsel selected by the insured shall be allowed to participate in all aspects of the litigation. Counsel shall cooperate fully in the exchange of information that is consistent with each counsel’s ethical and legal obligation to the insured. Nothing in this section shall relieve the insured of his or her duty to cooperate with the insurer under the terms of the insurance contract.
Notes of Decisions
Travelers Casualty Insurance Co. of America v. Hirsh (2016)
ca9 · cites it 8×
“The panel held that because Travelers’ causes of action for declaratory judgment, unjust enrichment, breach of Cal. Civ. Code § 2860 (d), and concealment were not based on an act in furtherance of Hirsh’s right of petition or free speech, they did not “arise from” protected…”
Gafcon, Inc. v. Ponsor & Associates (2002)
calctapp · cites it 3×
“Together, the team occupies one side of the litigating arena.” In certain circumstances (discussed more fully in pt.”
First Pacific Networks, Inc. v. Atlantic Mutual Insurance (1995)
cand · cites it 11×
“2d 153 (1994), reh’g denied (that court strongly implied that California Civil Code section 2860 preserves the attorney-client privilege between the insured and its Cumis counsel against invasions by the carrier); see also Spectra-Physics, Inc.”
Continental Casualty Co. v. St. Paul Surplus Lines Insurance (2010)
caed · cites it 9×
“California courts have upheld the validity of the Cumis decision, and the substantive elements of Cumis have been codified in California Civil Code Section 2860.”). A year later, Continental, on behalf of both Tasq and Crown, settled the Coupe action for $3.”
Assurance Co. of America v. Haven (1995)
calctapp · cites it 8×
“(Civ. Code, § 2860, subds. (d), (f).) We conclude the answer is yes where these failures encompassed nonprivileged information known to Cumis counsel and precluded the insurer, as alleged here, from timely asserting a complete defense to an entire action or to a cause of action…”
Buss v. Superior Court (1997)
cal · cites it 2×
“In exchange for the added expense of defending claims not potentially covered, the insurer acquires a freer hand and enhanced control in the defense of those claims that are potentially covered.”
United States Fidelity & Guaranty Co. v. Superior Court (1988)
calctapp · cites it 8×
“Civil Code section 2860 provides, in part: “(a) If the provisions of a policy of insurance impose a duty to defend upon an insurer and a conflict of interest arises which creates a duty on the part of the insurer to provide independent counsel to the insured, the insurer shall…”
Seltzer v. Barnes (2010)
calctapp · cites it 2×
“) Finally, respondent contends the negotiations were unlawful under Civil Code section 2860, subdivision (f).”
Frazier v. Superior Court (2002)
calctapp · cites it 4×
“This is just because Longo, the insurer’s counsel who had every right to attend the depositions on behalf of the insurer (Civ. Code, § 2860, subd. (f)), agreed to cover the depositions for the insured’s counsel.”
Swanson v. State Farm General Insurance (2013)
calctapp · cites it 6×
“) As the court explained in Cumis, “the Canons of Ethics impose upon lawyers hired by the insurer an obligation to explain to the insured and the insurer the full implications of joint representation in situations where the insurer has reserved its rights to deny coverage.”
— Cal. Civil Code § 2860(a) — 10 cases
Continental Casualty Co. v. St. Paul Surplus Lines Insurance (2010)
caed
“California courts have upheld the validity of the Cumis decision, and the substantive elements of Cumis have been codified in California Civil Code Section 2860.”). A year later, Continental, on behalf of both Tasq and Crown, settled the Coupe action for $3.”
First Pacific Networks, Inc. v. Atlantic Mutual Insurance (1995)
cand
“2d 153 (1994), reh’g denied (that court strongly implied that California Civil Code section 2860 preserves the attorney-client privilege between the insured and its Cumis counsel against invasions by the carrier); see also Spectra-Physics, Inc.”
— Cal. Civil Code § 2860(b) — 7 cases
— Cal. Civil Code § 2860(c) — 10 cases
— Cal. Civil Code § 2860(d) — 3 cases
First Pacific Networks, Inc. v. Atlantic Mutual Insurance (1995)
cand
“2d 153 (1994), reh’g denied (that court strongly implied that California Civil Code section 2860 preserves the attorney-client privilege between the insured and its Cumis counsel against invasions by the carrier); see also Spectra-Physics, Inc.”
Continental Casualty Co. v. St. Paul Surplus Lines Insurance (2010)
caed
“California courts have upheld the validity of the Cumis decision, and the substantive elements of Cumis have been codified in California Civil Code Section 2860.”). A year later, Continental, on behalf of both Tasq and Crown, settled the Coupe action for $3.”
— Cal. Civil Code § 2860(f) — 1 case
Continental Casualty Co. v. St. Paul Surplus Lines Insurance (2010)
caed
“California courts have upheld the validity of the Cumis decision, and the substantive elements of Cumis have been codified in California Civil Code Section 2860.”). A year later, Continental, on behalf of both Tasq and Crown, settled the Coupe action for $3.”
Annotations are extracted automatically from the opinions in the
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