The State Bar of California
Insurance Law Committee of the Business Law Section
APPELLATE LAW UPDATE
December 9, 2011
Submitted by H. Thomas Watson
Horvitz & Levy LLP
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SUPREME COURT: The California Supreme Court did not publish any recent insurance law opinions.
COURT OF APPEAL: The California Court of Appeal recently published the following decisions that may be of interest to attorneys practicing insurance law:
1. When an insured sues its insurer for breach of contract and bad faith based on the insurer’s delay in agreeing to pay for Cumis counsel, the court must adjudicate the breach and bad faith issues before the court may compel the parties to arbitrate a Cumis fee dispute under Civil Code section 2860, subdivision (c). (Janopaul + Block Companies, LLC v. Superior Court (St. Paul Fire and Marine Ins. Co.)(Nov. 17, 2011, D059282) __ Cal.App.4th __ [2011 WL 5581840] [Fourth Dist., Div. One].)
2. Insurance broker is not negligent as a matter of law for failing to procure coverage for insureds’ previously owned property where insureds requested higher limits to ensure adequate protection against “any possible lawsuit that could happen in the future.” Broker did not assume a duty to recommend specific coverage for previously owned property merely by representing he was an insurance expert generally and offering to consult regarding insurance needs. Broker’s statement that he “could not imagine any claim that . . . would not be covered” did not misrepresent the scope of potential coverage being procured. (Wallman v. Suddock (Nov. 17, 2011, B224601) __ Cal.App.4th __ [2011 WL 5598214] [Second Dist., Div. Four].)
3. Insurance commissioner had no obligation to defend or to share the cost of defending bankrupt insured of insolvent insurance company where (1) insured’s bankruptcy stay was lifted only to the extent the claimants could seek to recover against the insured’s insurance policies, and (2) claimants forfeited their right to recover against the insolvent insurer’s policy by failing to comply with the commissioner’s claim procedures. (Jones v. Golden Eagle Ins. Corp. (Nov. 28, 2011, A129089) __ Cal.App.4th __ [2011 WL 5903813] [First Dist., Div. One].)
NINTH CIRCUIT COURT OF APPEALS: The Ninth Circuit Court of Appeals did not publish any recent decisions regarding insurance law.