Principal fields of study include: duty to defend, conflicts of interest, reservations of rights, Cumis counsel, lawyers’ ethical obligations, reasonableness of attorney fees, insurer reimbursement claims, good faith reliance on counsel, insurer good or bad faith, insurance coverage in construction defect, professional liability, personal injury, many business and personal torts, products liability, malicious prosecution, false imprisonment, libel, slander, wrongful eviction, invasion of privacy, discrimination, sexual harassment, and pollution claims. Represented insurance companies or policyholders in coverage disputes. Defended policyholders for insurers in a wide variety of liability suits.
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- 2 General Credits
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- Basic liability insurance concepts:
- McCarren Ferguson Act delegates insurance law to the states.
- Policy contract language is standardized and universal,
- Model codes have been enacted in many states, including the Field Code (Cal. Civ. Code § 2778) and the Unfair Claim Handling Practices Act (Cal. Ins. Code § 790.03(h).)
- California is an incubator of duty to defend law: Gray v. Zurich and Cumis.
- “Insurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.” (Cal. Ins. Code § 22.)
- Liability insurance contract construction - The Lord giveth and the Lord taketh away.
- Two primary promises.
- Three categories of issues often arise regarding the duty to defend:
- Defense trigger;
- Control of the defense; and
- Encouraging prompt and equitable settlements.
- How to Trigger the Duty to Defend – or not
- Upon notice of a claim, the insurer must respond with a “Yes”, “No”, or “Maybe” to coverage:
- Summary of familiar principles MV Transport
- Duty to investigate. An insurer cannot reasonably and in good faith deny payments to its insured without thoroughly investigating the foundation for its denial.
- Plead into or out of coverage.
- How to gain control of the defense – or not.
- Three tussles arise whenever any conflict of interest emerges, Liability dispute, Coverage contest, Ethical Imbroglio.
- Questions of fact and conclusions of law.
- The facts of any coverage contest and any ethical imbroglio are dynamic, unlike the static facts of the liability dispute. Facts are usually poorly developed.
- The applicable law: 50 State Survey.
- Cooperation clause and collusion are commonly asserted defenses that are usually groundless.
- How to encourage prompt and equitable settlements.
- Immediately identify and challenge all fiduciary breaches
- Breach of the duty to defend may free the policyholder to control settlement.
- Three things scare liability insurers, Fear of the unknown; Fear of making bad law; Fear of bad faith liability.
Goals may differ.
Alliances may differ.
Timing always differs.
Burdens always differ.
Applicable law usually differs.
Leverage is held by the powerful policyholder.
- Magic Bullets:
- Coverage Questionnaire.
- Ethical Compliance Questionnaire.
- Annotated versions.