James 3 Corp. v. Truck Insurance Exchange

James 3 Corporation and its president, James R. Stanclift, were sued by a competitor in federal court. They tendered the defense of the lawsuit to their business liability insurer, Truck Insurance Exchange (Truck), which accepted the tender subject to a reservation of rights. Truck then retained counsel to provide the insureds with a defense. The insureds objected to being represented by retained defense counsel and, citing an alleged conflict of interest, demanded that Truck allow them to choose their own counsel. Truck refused, and the insureds filed the instant declaratory relief action in the superior court. The trial court granted summary judgment in favor of Truck, finding that there was no actual conflict of interest. The insureds appeal from the ensuing judgment and from an earlier discovery order. We shall affirm the judgment.

Facts

Plaintiffs James 3 Corporation, doing business as Sugar Sweet Syrup Company, Inc., and Sugar Sweet’s president, James R. Stanclift, manufactured and sold beverage syrups to 7-Eleven and other stores for use in frozen carbonated beverages, more commonly known as “Slurpees.” From December 28, 1992, to December 15, 1996, plaintiffs…