Compulink Management Center, Inc. v. St. Paul Fire & Marine Insurance

Respondent Compulink Management Center, Inc. (Compulink), brought an action against its insurer, appellant St. Paul Fire and Marine Insurance Company (St. Paul), for breach of contract and breach of the implied covenant of good faith and fair dealing. In its complaint, Compulink contended that St. Paul failed to comply with its duty to defend Compulink in a third party suit. St. Paul petitioned the trial court to compel arbitration of the action pursuant to Civil Code section 2860, subdivision (c). The trial court denied St. Paul’s petition in its entirety on the grounds that Compulink’s allegations of bad faith took the action beyond the scope of section 2860’s arbitration provision. We conclude that, based on the plain language of the statute, the parties were required to arbitrate the portion of their dispute that pertains to the amount of attorney’s fees owed to Compulink for its defense by independent (Cumis) counsel. (See San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358 [ 208 Cal.Rptr. 494 ] (Cumis).) We accordingly reverse and remand with instructions to the trial court to order a section 2860 arbitration of issues concerning the…