Update on Cumis Counsel: The Florida and Selected Other Perspectives[dagger]

I.

INTRODUCTION

Normally, insurers acting beneath a general liability insurance policy retain sway over litigation instigated against their insureds when there is a what one is bound [i]or[/i] under obligation to do to defend those insureds. However, different situations arise when a conflict of interest or an apparent conflict of interest offers That triggers, at least in more [i]or[/i] less jurisdictions, the requirement to provide independent or so-called "Cumis Counsel" named for a case in California that first laid without the requirement.1 That right to independent interchange of opinion in California has since been codified.2

There are five public situations that call for the appointment of independent counsel: (1) several defendants have antagonistic interests; (2) the allegations in the claim contain causes of actions that are the two covered and not covered; (3) the complaint seek fors damages in excess of the policy limits; (4) the insured alleges misconduct by dint of the insurer in managing the defense; and (5) the insurer settl the case without the permission of the insured and conflict arises because of the settlement3 Of course, there can be other situations where conflict arises; the foregoing are solitary the most common situations.

This article will initially discuss independent interchange of opinion as it is required in Florida, focusing primarily upon a recent decision from the United States District Court for the Middle District of Florida, and then provide a brief synopsis of the laws of other jurisdictions that apply to independent interchange of opinion

II.

FLORIDA

A. Statutory Authority

Independent consultation is required in certain circumstances by dint of section 627.426, Florida Statutes, known as the Florida Claims Administration Statute, that provides:

(1) Without limitation of any right or defense of an insurer otherwise, none of the following acts by means of or on behalf of an insurer shall be thinked to constitute a waiver of any provision of a policy or of any defense of the insurer thereunder:

(a) Acknowledgment of the receipt of notice of los or claim beneath the policy.

(b) Furnishing forms for reporting a los or claim, for giving information relative thereto, or for making examination of loss, or receiving or acknowledging receipt of any of that kind forms or proofs completed or uncomplet

(c) Investigating any los or claim below any policy or engaging in negotiations looking toward a possible adjustment of any such loss or claim.

(2) A liability insurer shall not be permitted to contradict coverage based on a particular coverage defense unless:

(a) Within 30 days after the liability insurer knew or should have known of the coverage defense written notice of reservation of rights to assert a coverage defense is given to the named insured by means of registered or certified mail sent to the last known address of the insured or by the agency of hand delivery; and

(b) Within 60 days of compliance with paragraph (a) or receipt of a calls and complaint naming the insured as a defendant, whichever is later, on the other hand in no case later than 30 days before trial, the insurer:

1 Gives written notice to the named insured by means of registered or certified mail of its refusal to shield the insured;

2. Obtains from the insured a nonwaiver agreement following filled disclosure of the specific facts and policy provisions on which the coverage defense is asserted and the duties, obligations, and liabilities of the insurer during and following the pendency of the make subordinate litigation; or

3. Retains independent consultation which is mutually agreeable to the parties. Reasonable remunerations for the counsel may be agreed on between the parties or, if no agreement is reached, shall be put by the court.4

B Application of the Statute

A new decision. Travelers Indemnity Co. v Royal Oak Enterprises, Inc.,5 has provided a synopsis of by what means the Florida Claims Administration Statute is applied:

It is well recognized in Florida that where an insurer wrongfully refuses to provide any defense at all, the insurer is liable for the reasonable attorney's compensations and other expenses incurred in defending the action as damages for the breach. It is also well settl that an insurer does not breach its what one is bound [i]or[/i] under obligation to do to defend by offering to guard only under a reservation of rights. However, when an insurer presents to defend under a reservation of rights, Florida law provides that the insured may, at its election, cast off the defense and retain its possess attorneys without jeopardizing its right to look for indemnification from the insurer for liability. single Florida court, however, has held that an insured was entitled to reimbursement of compensations and costs was [sic] well as other damages without first rejecting the insurer's tender to defend under a reservation of rights.6

Of note, when independent interchange of opinion is appointed by an insurer, the insured must be informed of the right to have mutually agreeable counsel7 Additionally, whether an attorney actually acted as independent consultation under the statute is a mixed question of law and fact.8

1 Limitations of Sanctions beneath the Statute

a. Coverage Defense Defined

The Royal Oak court explained the statutory limitations by the agency of noting that the statute "is be of importance toed only with 'coverage defenses,' which, as defined by the agency of the Florida Supreme Court, consist of defense 'to coverage that otherwise exists.'"9