Hartford Casualty Insurance v. J.R. Marketing, L.L.C.

Filed 8/10/

IN THE SUPREME COURT OF CALIFORNIA

HARTFORD CASUALTY INSURANCE )

COMPANY, )

) Cross-complainant ) and Appellant, ) ) S211645 v. ) ) Ct.App. 1/3 A133750 J.R. MARKETING, L.L.C., et al., ) ) San Francisco County Cross-defendants ) Super. Ct. No. CGC-06-449220 and Respondents. ) ____________________________________)

This court has long maintained that if any claims in a third party complaint against a person or entity protected by a commercial general liability (CGL) insurance policy are even potentially covered by the policy, the insurer must provide its insured with a defense to all the claims. (E.g., Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081.) The insurer’s provision of an immediate, complete defense in such a “mixed” action, we have explained, is “prophylactically” necessary, even if outside of the policy’s strict terms, to protect the insured’s litigation rights with respect to the potentially covered claims. (Buss v. Superior Court (1997) 16 Cal.4th 35, 49…

This court has long maintained that if any claims in a third party complaint against a person or entity protected by a commercial general liability (CGL) insurance policy are even potentially covered by the policy, the insurer must provide its insured with a defense to all the claims. (E.g., Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081 [ 17 *992 Cal.Rptr.2d 210 , 846 P.2d 792 ].) The insurer’s provision of an immediate, complete defense in such a “mixed” action, we have explained, is “prophylactically” necessary, even if outside of the policy’s strict terms, to protect the insured’s litigation rights with respect to the potentially covered claims. (Buss v. Superior Court (1997) 16 Cal.4th 35, 49 [ 65 Cal.Rptr.2d 366 , 939 P.2d 766 ] (Buss).) Nevertheless, we concluded in Buss that the insured would be unjustly enriched at the insurer’s expense if not ultimately required to bear the cost of litigating those claims for which the insured had never purchased defense or indemnity protection. Accordingly, we held in Buss that the insurer may seek reimbursement from the insured of defense fees and expenses solely attributable to the claims that were clearly…

Concurring. — “From the very nature of equity, a wide play is left to the conscience of the chancellor in formulating his decrees, that justice may be effectually carried out.” (Bechtel v. Wier (1907) 152 Cal. 443, 446 [ 93 P. 75 ].) Carrying out justice in this fee dispute is perhaps easier said than done, since no party appears blameless here. Today’s opinion foregrounds Squire Sanders (US) LLP’s behavior, casting the law firm as the undeserving recipient of millions of dollars in unreasonable legal fees and thus an appropriate target for Hartford’s unjust enrichment action. But there are other parts to the story. Hartford spent years attempting to avoid its duty to defend, and as Squire Sanders was racking up the disputed fees, J.R. Marketing, L.L.C., was not exactly a helpless bystander.

Hartford issued J.R. Marketing a general commercial liability policy in the summer of 2005. Pursuant to the policy, Hartford promised to defend and indemnify J.R. Marketing against claims for various business-related damages. In September 2005, J.R. Marketing found itself a defendant in a third party lawsuit in Marin County. Hartford refused to defend J.R. Marketing on the ground that the…