Dynamic Concepts, Inc. v. Truck Insurance Exchange

— This appeal is brought by an insured who demanded its liability insurer immediately provide independent counsel pursuant to Civil Code section 2860 when the insurer agreed to defend under a reservation of rights in an action involving covered and uncovered claims. The insured’s ultimatum to its insurer was to retain Cumis counsel forthwith or be considered as not having provided a defense at all. The insured unilaterally settled the case, even though the insurer appointed defense counsel, without allowing that attorney to participate because of the reservation of rights.

The insured’s unseemly haste to resolve a dubious Cumis situation reminds us of the farmer who pulled up his crops each night to see how they were growing. We decline to adopt a rule that would encourage insureds to cultivate conflicts with carriers rather than resolve them. We appreciate the insurer’s obligation to provide a competent and ethical defense for an entire complaint, but no breach of the insurer’s duty of defense has been established here to justify the insured’s drastic decision to immediately settle the underlying action and exclude the insurer from participating in the…