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August 2010

Insurance Quarterly Newsletter

Welcome to Gordon & Rees's Insurance Law Quarterly Newsletter. On a quarterly basis we provide important information about the latest legal developments affecting the ever-changing world of insurance law. Each issue focuses on one topic or area of insurance law through in-depth articles on current and complex issues, combined with practical advice. We also keep you up-to-date on successful outcomes and some of the interesting cases that are being handled by our Insurance Group.

This quarter, we focus on the area of "Cumis Counsel" and how different states address the relationship between defense and coverage counsel. In Section I, Christopher Wagner reviews the three main approaches to conflict of interest issues. In Section II, we review important developments in the Cumis Counsel case law. And in Section III, we provide an update of the latest News, Results and Publications of Gordon & Rees's entire Insurance Group.

If you have any questions about this issue of the Insurance Law Quarterly Newsletter, please contact:

Arthur Schwartz

Arthur Schwartz, Partner
Ph: (415) 986-5900

Christopher Wagner

Christopher Wagner, Partner
Ph: (213) 576-5000

Linda Clapham

Linda Clapham, Partner
Ph: (206) 695-5100

Ryan Brown

Ryan Brown, Partner
Ph: (213) 576-5000


  1. Insurance Defense Conflicts of Interest: Three Main Approaches

  2. Recent Developments in Cumis Counsel Case Law

  3. About Gordon & Rees's Insurance Practice Attorneys


Christopher Wagner

Christopher Wagner reviews the conflicts of interest that arise when a liability insurer appoints defense counsel to defend its policyholder while simultaneously reserving its rights to deny coverage. Read the full article

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Resolution of Bad Faith Claim Required Before Parties Could Arbitrate Cumis Counsel Fees Issue

Intergulf Development v. Superior Court of San Diego (Interstate Fire & Casualty Company) 183 Cal.App.4th 16, 107 Cal.Rptr.3d 162, 10 Cal. Daily Op. Serv. 3737, 210 Daily Journal D.A.R. 4406 (2010)

The California Court of Appeal for the Fourth Appellate District was presented with the issue of whether an insurer is entitled to binding arbitration of an alleged Cumis fee dispute in an action against the insurer for breach of contract and bad faith, where there has been no determination that the insurer had a duty to defend or whether the insurer had satisfied its obligations under Civil Code section 2860. The Court of Appeal held the trial court erred in treating the case as a fee dispute subject to section 2860(c) and ordering arbitration of the Cumis fee dispute. Central to the case were issues regarding bad faith and breach of contract, which needed to be resolved first, before the Cumis fee dispute could be arbitrated. Read the complete case summary

Independent Counsel Fee Disputes Must Be Arbitrated Even When Brought In Conjunction With Non-Arbitrable Issues

Compulink Mgmt Center, Inc. v. St. Paul Fire and Marine Ins. Co. 169 Cal.App.4th 289, 87 Cal.Rptr.3d 72, 08 Cal. Daily Op. Serv. 15,244, 2008 Daily Journal D.A.R. 18,431 (2008)

The California Court of Appeal, Second District, reversed the trial court's decision denying an insurer's motion to compel arbitration of a dispute over independent counsel fees. The Court of Appeal held this dispute must be determined through arbitration even though it was included among other claims not subject to arbitration, including breach of contract and breach of the implied covenant of good faith and fair dealing. Read the complete case summary

Fee Dispute Between Insurer And Cumis Counsel Subject To Arbitration Even If Insurer Does Not Appoint Defense Counsel

Long v. Century Indemnity Company 163 Cal.App.4th 1460, 78 Cal.Rptr.3d 483, 08 Cal. Daily Op. Serv. 7499, 2008 Daily Journal D.A.R. 9027 (2008)

The California Court of Appeal, Second Appellate District, affirmed an order of dismissal following a trial court's ruling sustaining an insurer's demurrer, without leave to amend. The action involved a fee dispute between the insurer and independent counsel (aka "Cumis counsel"). The Court held the fee dispute must be arbitrated pursuant to California Civil Code section 2860 ("Section 2860"). The Court further held an insurer's refusal to arbitrate the fee dispute did not confer jurisdiction on the court to decide the matter. Instead, the insured must petition to compel the insured to arbitrate. Read the complete case summary

Please click here to view more summaries of recent significant case law

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Over 45 lawyers at Gordon & Rees dedicate their practice to representing many of the largest domestic and foreign insurers doing business in the United States. Gordon & Rees's lawyers assist clients with advice, litigation, and training. Our experience spans from: coverage disputes under general liability, property, professional liability, and specialty lines of coverage; to ERISA, life and & health; to litigation involving the business of insurance (including sales practices, annuities, and other insurance products); to defense of "bad faith" claims; to appellate advocacy. We tackle the most difficult problems, and provide our clients with the tools to address any aspect of the smallest to largest claims to land on their desks. Click here to meet our lawyers.

Gordon & Rees's insurance lawyers understand the risks involved in insurance disputes and in litigation in general. We are successful in negotiation, motion practice, and in trying cases before jury and judge. Click here to view our recent Results.

Our lawyers are also active speaking, writing, providing seminars, and blogging about insurance issues. Click here to view our recent Publications and click here to view the latest News, including past and future speaking engagements.

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