Wins

Plaintiff insureds owned a residential property where a squatter died in during a fire. The insureds tendered the defense of the ensuing lawsuit to their insurance carrier, which hired counsel to defend the insureds. Purportedly dissatisfied with appointed counsel’s performance, the insureds demanded independent “Cumis” counsel of their choosing. The carrier denied the request; the insureds retained counsel at their own expense; and the carrier eventually settled the lawsuit at no cost to the insureds.

Nonetheless, the insureds sued, seeking a declaration that the insurance carrier had to pay for the costs they had incurred in hiring independent counsel. The trial court dismissed the claim on demurrer.

GMSR represented the carrier on appeal. In a published decision, the Court of Appeal affirmed the judgment, holding that the insureds were not entitled to Cumis counsel.  Appointed counsel had no incentive to work against the insureds’ interests, so there was no conflict of interest requiring Cumis counsel. The source of the insureds’ dissatisfaction—appointed counsel’s honest evaluation of the case—was simply what lawyers are supposed to provide to their clients. A concurring opinion—splitting from the majority on whether a demurrer is the proper procedure for disposing of a deficient declaratory relief claim—will likely provoke further developments on this issue.

Click here to read the Court of Appeal Opinion:  Nede Mgmt., Inc. v. Aspen American Ins. Co. (2021) 68 Cal.App.5th 1121 [Second District, Division 8]