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Case Briefs

By ALM Staff | Law Journal Newsletters |
February 01, 2004

Insurer May Be Obligated to Pay for Defense of Uninsured Party

In Gray Cary Ware & Freidenrich v. Vigilant Insurance Co., 2004 Cal. App. LEXIS 27 (Cal. Ct. App. Jan. 12, 2004, modified, Feb. 4, 2004), a California Court of Appeal addressed the scope of California Civil Code section 2860. Section 2860, the so-called “Cumis” statute, requires an insurer to provided independent counsel to an insured in specified situations. It also mandates that “ any dispute concerning attorneys' fees not resolved by [the] methods [specified in the section] shall be resolved by final and binding arbitration.”

A law firm and one of its private investigators were named by Deepak Chopra as defendants in a lawsuit and the investigator was named by Chopra as a defendant in another lawsuit. The firm's insurer consented to the firm defending itself. The firm did so, but also decided that it was important to its own defense to ensure that the investigator was represented in both lawsuits. Therefore, it paid for separate counsel for the investigator in both lawsuits. A dispute then arose between the firm and the insurer as to whether the insurer was obligated to pay for the investigator's separate defense.

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