Defendant insurer appealed from the Superior Court of San Diego County (California), which determined defendant was obligated to defend plaintiff county in two underlying lawsuits brought against plaintiff. Plaintiff appealed from that part of the judgment that defendant was responsible only for 50 percent of defense costs and that the hourly attorney fee rate defendant was required to pay was statutorily limited under Cal. Civ. Code 2860(c).
California Business Lawyer & Corporate Lawyer, Inc. counsels on PAGA Statue of Limitations
Overview
Plaintiff county was sued in two actions based on its operation of a landfill. The court affirmed the decision that defendant insurer had a duty to defend plaintiff in the two landfill actions. Both underlying complaints sought recovery for damages the nature and kind against which defendant agreed to insure and raised the potential that plaintiff would be found liable for property damage occurring during the effective period of defendant’s policy. Since the alleged damages potentially occurred during a time when defendant’s policy was in effect, the underlying actions triggered defendant’s duty to defend and thus required defendant to defend plaintiff. The court reversed the decision that defendant was only required to pay 50 percent of the defense costs. Once defendant’s duty to defend was triggered by the existence of the potential for coverage, plaintiff was entitled to a complete defense. Plaintiff was not an insurer for purposes of allocation of costs and defense of the underlying actions. Cal. Civ. Code § 2860(c), which limited attorney’s fees, was inapplicable because no Cumis conflict of interest existed.
Outcome
The court affirmed the decision that defendant insurer had a duty to defend plaintiff county in two underlying lawsuits and reversed the decision that defendant was only obligated to pay 50 percent of defense costs. Both underlying actions raised the potential that plaintiff was liable for the type of damage that defendant’s policy covered. Once defendant’s duty to defend was triggered, defendant was required to give a complete defense.
