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March 2012

Insurance Law 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 edition focuses on one topic or area of insurance law through in-depth articles on current issues, combined with practical advice. We also keep you up-to-date on successful outcomes and some of the interesting cases that our Insurance Group is handling.

This quarter, we focus on California and some of the issues that claims handlers, especially those unfamiliar with California law, frequently ask about.  In future quarterly newsletters, we will focus on other challenging jurisdictions: Florida, Illinois, and Washington. Click on those states if you want to learn more about the lawyers in those offices who handle insurance matters.

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



Athur Schwartz

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



  1. About G&R's Insurance Practice Attorneys

  2. From the Left Coast: Three Frequently Asked Questions

  3. Independent counsel: What is "Cumis"?

  4. Policy limits demands: What is an insurer to do?

  5. Insurer Reimbursement: Get on the "Buss"

  6. Recent Successes




Over 70 lawyers at Gordon & Rees dedicate all or a large part of their practice to representing many of the largest domestic and foreign insurers doing business in the U.S.  Gordon & Rees lawyers assist clients with advice, litigation, and training.  Our experience encompasses a wide-range of insurance products, issues, and litigation strategies. 

We have experience with coverage disputes under many types of policies: general liability, property, professional liability, directors & officers, fidelity, surety, cyber crimes, environmental liability, employment liability, technology, and other specialty lines of coverage.  We have lawyers that focus on ERISA benefits and fiduciary duty litigation, health care business, and benefit disputes.  We also have lawyers that handle life insurance and annuity disputes, class actions, bad faith suits, 17200 /RICO claims, and FINRA arbitrations.

Our practice also encompasses the business of insurance, disputes with agents and brokers, and insurance policy drafting.

Gordon & Rees lawyers have experience in advice and counseling, alternative dispute resolution, and litigation through appeal.  We try cases in both state and federal court.

We are responsive.  We are available and give our clients' matters the attention they need and deserve.  The most difficult problems are the ones we want to handle.  We provide our clients with the tools to address the variety of claims that land on their desks, including training seminars on claims regulations, updates on state law, and review of claims handling issues.  Click here to meet our lawyers.

We get results.  G&R's insurance lawyers understand the risks involved in most insurance disputes and in litigation in general.  Click here to view our recent Results.

We are resourceful and a resource.  Our lawyers are also active speaking, writing, providing seminars, and blogging about insurance issues.  Click here to view our recent Publications.

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II. From the Left Coast: Three Frequently Asked Questions

We frequently get questions about California law in three areas where California may differ from other states.  Those areas are: (1) the obligation to provide the insured with independent defense counsel; (2) policy limit demands; and (3) the insurer's right to recover from the insured for defense costs or indemnity payments when the policy does not cover all or part of the claim. We provide a brief description of these issues with some answers and pointers.  This is not intended as advice, but to educate and provide the tools to identify the issues and determine whether further evaluation or legal advice is needed.


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III. Independent counsel: What is "Cumis"? 


Vanessa Beary


Vanessa Beary

What is "Cumis"?

a. An English cucumber
b. A spice commonly found in curry dishes
c. California's right to independent counsel
d. Puffy or cotton-like clouds

Answer: "c" – the seminal California case on when an insurer is required to provide its insured with independent counsel – that is, the insured's right to select its own counsel. To read more about this, click here.


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IV. Policy limits demands: What is an insurer to do?


Sarah Turner

Laura Smith  
Policy limits demands can be a powerful tool for plaintiffs' counsel and can cause headaches for claims handlers.  Depending on the circumstances, an insurer that misses an opportunity for a reasonable settlement of a claim against its insured may be liable for the full amount of a later judgment, regardless of the policy limits.  Policy limits demands can feel like a set up, and sometimes they are.  What factors should claims handlers consider in evaluating them? To read more about this, click here.

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V. Insurer reimbursement: Get on the "Buss" 



What happens when a claim is tendered for defense and it has 20 causes of action, only one of which is potentially covered by the policy? It may be a claim "thrown in" to try to trigger coverage (e.g., false imprisonment in a corporate disagreement, defamation in patent litigation, or negligence in a contract dispute). Under California law, if there is a duty to defend one aspect of the case, there is a duty to defend the entire case. Hogan v. Midland Nat. Ins. Co., 3 Cal.3d 553, 563 (1970). Defense costs are bound to be substantial.  What can an insurer do in that situation? To read more about this, click here.


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Seattle partner Don Verfurth and associate Sally Kim prevailed on a summary judgment motion in a case where the plaintiff demanded $1.865 million from Gordon & Rees's insurance company client under ORS 742.031, which permits a claimant to collect judgment unpaid by an insured from the insurer. Read the complete summary of this result

San Francisco Senior Counsel Leslie Crary received a decision in favor of a Gordon & Rees insurer client following a bench trial on December 28, 2011.  The decision sets the stage for recovery of over $7.3 million in defense costs paid by the client under two first-layer umbrella policies, as well as damages. Read the complete summary of this result

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D&O and Shareholder Litigation

D&O and Shareholder Litigation