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Selecting Defense Counsel and Controlling the Defense: Who Makes the Call When Rights are Reserved?
Where an insurer accepts a tender of defense unconditionally, the insurer generally has the right to select counsel to defend the policyholder. There, the policyholder and the insurer share identical interests in seeing the matter resolved in their favor. Logic suggests that that even if a reservation of rights letter were issued to a policyholder, the insurer would still be able to select counsel to defend the policyholder. This is so because the attorney enrolling as counsel for the policyholder, although paid by the insurer, would be ethically obligated to represent the interests of the policyholder ' his client ' to the best of his abilities and to place the interests of the policyholder first. However, many courts have found that when an insurer offers a defense under a reservation of rights, a conflict of interest exists between the insurer and the insured relating to the defense of a suit against the insured. Therefore, the insured may, if he so elects, select independent counsel whose reasonable fees are to be paid by the insurance company. See Todd R. Smyth, Duty of Insurer to Pay for Independent Counsel When Conflict of Interest Exists Between Insured and Insurer, 50 A.L.R. 4th 932.
According to the Alaska Supreme Court, defending under a reservation of rights can create special obligations for an insurer, and various conflicts of interest between an insurer and an insured arise when a defense is tendered pursuant to a reservation of rights. CHI of Alaska, Inc. v. Employers Reinsurance, 844 P.2d 1113, 1116 (Alaska 1993). For instance, if the insurer believes that it can later prevail on a coverage motion, it may only offer a token defense and may not be motivated to seek the best resolution for the client. Second, if only some of the claims are covered, the insurer might control the defense in such a manner as to make the plaintiff's verdict greater under an uninsured theory of recovery. Finally, there is the risk that the insurer may gain access to confidential or privileged information in the process of forming the defense that the insurer may later use to its advantage in litigation concerning coverage. Id.
The issues recognized by the Alaska Supreme Court have surfaced on numerous occasions. In a seminal case well known to coverage lawyers, San Diego Navy Federal Credit Union v. Cumis Ins., 208 Cal. Rptr. 494, 162 Cal. 3d 358 (Cal. App. 4th Dist. 1984), the court found that a conflict exists where multiple theories of recovery are alleged and some theories involve conduct not covered under the policy. To eliminate the perceived conflict, the court held that an insurer has to pay for independent counsel selected by the insured. Cumis was eventually codified by the California legislature in Cal. Civ. Code '2860. Under California law, once the duty to defend attaches, the insurer is obligated to defend against all of the claims involved in the action, whether covered or not covered. Cort v. St. Paul Fire and Marine Ins. Companies, Inc., 311 F.3d 979, 983 (9th Cir. 2002).
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.