Novak

What duty, if any, does counsel provided by an insurer owe to the insured in negotiating a partial settlement of claims when independent counsel for the insured has been provided pursuant to Civil Code section 2860? By statute such counsel has a duty not to exclude independent counsel from participating in settlement negotiations, and must cooperate fully in the exchange of information consistent with his or her obligation to the insured. (§ 2860, subd. (f).) Accordingly, we reverse the summary judgment in favor of respondent attorneys and direct the trial court to enter an order granting summary adjudication in favor of appellant insured on the issue of duty.

I. Background

Appellant John Novak is a licensed carpenter doing business under the name Parcon Industries. At the time in question he was insured by Acceptance Insurance Company (Acceptance) under a commercial general liability policy. Pursuant to that policy Acceptance agreed to indemnify Novak, up to policy limits, for all sums Novak became legally obligated to pay as damages because of “bodily injury and property damage liability” or “personal and advertising injury liability.” Acceptance also had the duty to…