Intergulf Development LLC v. Superior Court

This case presents the question whether an insurer is entitled to binding arbitration of an alleged Cumis fee dispute pursuant to Civil Code section 2860, subdivision (c) in an action by the insured against the insurer for breach of contract and bad faith where there has been no determination that the insurer had a duty to defend and the parties dispute whether the insurer satisfied that duty and its obligations under Civil Code section 2860. (See San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358 [ 208 Cal.Rptr. 494 ] (Cumis), superseded by Civ. Code, § 2860 as stated in Derivi Construction & Architecture, Inc. v. Wong (2004) 118 Cal.App.4th 1268, 1276, fn. 1 [ 14 Cal.Rptr.3d 329 ]; undesignated statutory references are to the Civil Code.) Having considered the argument and additional briefing submitted by the parties following transfer from the Supreme Court, we conclude that the court erred in treating this case as a fee dispute subject to section 2860, subdivision (c), and ordering arbitration before questions of bad faith and breach of contract were resolved. Accordingly, we grant the relief requested.

FACTUAL AND PROCEDURAL…