Quote:
Originally posted by honest_rob
What is the name of your state? California
Can anyone shed light on the legal term "Cumis Counsel" and how one would exercise it?
My understanding of it is an individual has the right to "Cumis Counsel" provided by his/her auto insurance carrier if the attorney originally assigned was not acting in the best interest of the insured. BTW....I'm being sued for bodily injury resulting from an auto accident. |
My response:
A liability insurance policy typically confers upon the insurer both the obligation to defend and the right to control the defense of suits against the insured. This right ordinarily entitles the insurer to select defense counsel for the insured. However, if a disqualifying conflict of interest arises between the insurer and the insured, the insurer's duty to defend the insured may require it to furnish independent counsel (commonly referred to as "Cumis counsel") for the insured. [See Ca Civil § 2860(a)]
Such a conflict of interest may arise when an insurer reserves its right to contest coverage and the determination of whether coverage exists depends upon resolution of facts at issue in the underlying lawsuit. [See San Diego Fed. Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, 364, 208 Cal.Rptr. 494, 498]
Because of such conflict, the insurer is no longer entitled to control the defense. Independent counsel (Cumis counsel) is required to protect the insured's interests. Because the insurer is contractually obligated to defend the insured, it must pay the cost of such independent counsel. [Bogard v. Employers Cas. Co. (1985) 164 Cal.App.3d 602, 611, 210 Cal.Rptr. 578, 584]
Independent counsel must be provided for the insured when resolution of a third party claim will bear directly on the outcome of the coverage dispute between the insurer and the insured. [San Diego Fed. Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, 364, 208 Cal.Rptr. 494, 498]
Independent counsel (Cumis counsel) must be provided where the insurer proposes to settle a third party claim for more than its policy limits without the insured's consent, as the insurer would be settling the case with the insured's money, not just its own. [Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1396, 25 Cal.Rptr.2d 242, 258]
The insurer is under both a statutory and a contractual obligation to pay fees and costs incurred by the independent counsel selected by the insured. [Ca Civil § 2860(a); San Diego Fed. Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, 369, 208 Cal.Rptr. 494, 501-502]
Although paid by the insurer, Cumis counsel represents solely the interests of the insured. No attorney-client relationship exists between Cumis counsel and the insurer. [Rockwell Int'l Corp. v. Sup.Ct. (Aetna Cas. & Sur. Co.) (1994) 26 Cal.App.4th 1255, 1267, 32 Cal.Rptr.2d 153, 160--"the attorneys were retained to represent Rockwell and only Rockwell"]
Even so, by statute, Cumis counsel owes certain duties to the insurer. The independent counsel must:
-- timely "inform and consult with the insurer on all matters relating to the action"; and
-- disclose to the insurer "all information concerning the action except privileged materials relevant to coverage disputes . . ." [Ca Civil § 2860(d) (emphasis added)]
"(B)oth the counsel provided by the insurer and independent counsel selected by the insured shall be allowed to participate in all aspects of the litigation . . ." [Ca Civil § 2860(f)]
Where the insurer questions coverage and provides a defense subject to a reservation of rights, a conflict of interest exists that may require the insurer to provide independent "Cumis counsel" for the insured. The insured is entitled to a relationship with that counsel free from fear of disclosure of privileged communications. [Rockwell Int'l Corp. v. Sup.Ct. (Aetna Cas. & Sur. Co.), supra, 26 Cal.App.4th at 1263, 32 Cal.Rptr.2d at 158--drafters of cooperation clause never intended it as waiver]
Duty to defend issues typically arise in connection with coverage disputes between the insurer and insured; i.e., where there is some question whether a particular third party claim falls within the coverage of the policy. In such cases, when called upon to defend the insured, the insurer must decide upon one of the following responses (see Truck Ins. Exch. v. Sup.Ct. (Cherng) (1996) 51 Cal.App.4th 985, 993-994, 59 Cal.Rptr.2d 529, 533-534):
-- First, the insurer may accept defense of the lawsuit without raising any objection to coverage. But doing so waives the insurer's right to raise coverage defenses later (The insurer may still deny coverage, however, in seeking contribution from other insurers on the risk for settlement and defense costs.)
-- Second, the insurer may simply refuse to furnish a defense. But this is risky.
-- Third, the insurer may defend on a "reservation of rights" basis. This means it will hire a defense lawyer for the insured and retain some control over the defense but still reserve its rights under the policy, including the right to withdraw that defense and to deny coverage of any judgment obtained by the third party against the insured.
If the reservation of rights creates a conflict of interest between the insurer and insured, the insured has the right to demand independent counsel (so-called "Cumis counsel").
-- Finally, while the underlying action is pending, the insurance carrier can file an action for declaratory relief seeking a declaration that it owes no duty to defend or indemnify the insured.
Good luck to you.
IAAL
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