Gray Cary Ware & Freidenrich v. Vigilant Insurance

Civil Code section 2860 (all undesignated statutory references are to this code) requires that an insurer provide independent counsel to its insured in certain conflict situations, and subdivision (c) of this section requires the arbitration of “any dispute concerning attomey[] fees . . ..” In this appeal we address the question of whether this section encompasses disputes between an insurer and its insured over the insurer’s responsibility for defense expenses incurred by the insured’s independent counsel. We conclude section 2860 does not require the arbitration of disputes regarding defense costs and we affirm the trial court’s denial of a petition to compel arbitration under section 2860.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Gray Cary Ware & Freidenrich (Gray Cary) filed an action on behalf of one of its clients against a business associate of Deepak Chopra and two other Chopra business associates. Chopra then sued Gray Cary, its private investigator, Richard Post, and others in an action entitled Chopra v. Schoville *1189 (Super. Ct. San Diego County, 1997, Nos. N73690 and 713143 (the underlying action)), alleging the parties conspired to invade Chopra’s…