THE BUSS RULE[1]
“In a ‘mixed’ action, for what specific defense costs may the insurer obtain reimbursement from the insured? ¶ The answer is: Defense costs that can be allocated solely to the claims that are not even potentially covered. ¶ The reason is this. [A]s to [such] defense costs the insurer has not been paid premiums by the insured.”[2] “[A] ‘mixed’ action, [is one] in which some of the claims are at least potentially covered and the others are not.”[3]
RESPONSE OPTIONS[4]
When an insurer asserts a Buss claim, then like a game of chess, it becomes the policyholder’s turn to move. In doing so, the policyholder may protect one’s own interests. “Through reservation, the insurer gives the insured notice of how [the insurer] will, or at least may, proceed and thereby provides [the insured] an opportunity to take any steps that it may deem reasonable or necessary in response.”[5]
There are several response options the policyholder may consider:
1. The most common response by a policyholder to an insurer’s gambit to perfect a reimbursement claim is to do nothing. Most policyholder meekly acquiesce to whatever the insurer chooses to do.[6]
2. The policyholder may politely request that please waive or limit its Buss reimbursement claim.[7]
3. The policyholder may politely request that dependent counsel please comply with Rule 3-310.[8]
4. The policyholder may politely request in a non-privileged, open letter that independent counsel please send to the insurer for direct payment monthly invoices that identify fees and costs allocable to claims that are never even potentially covered.[9]
5. The policyholder may follow-up on the foregoing initial letters by considering one or more of a series of polite letters to the insurer[10] and to dependent counsel.[11]
6. Litigation response options to addressed in Practice Pointer: Procedural Alternatives to Determine Disqualifying Conflicts.
[1] See, Article: Buss Defense Cost Reimbursement.
[2] Buss v. Superior Court (1997) 16 Cal.4th 35, 52-53 (Buss).
[3] Buss, supra, 16 Cal.4th at 47.
[4] See, Practice Pointer: Buss Settlement Reimbursement – Response Options.
[5] Buss, supra, 16 Cal.4th at 61, fn. 27.
[6] See, Practice Pointer: Acquiescence Is Dangerous.
[7] See, Model Letter: Please Waive or Limit Buss Reimbursement Claim.
[8] See, Model Letter: No Consent Without Ethical Compliance.
[9] See, Model Letter: Please Allocate for Buss Claim.
[10] See, Model Letters: Please provide details of basis for reservation of rights, Please provide investigation, Please clarify if insurer agrees unqualifiedly to defend and pay for independent counsel, and Insurance company evidence development.
[11] See, Model Letters: Dependent counsel please disclose conflicts of interest, Withhold CCP §283 authority to bind , No Rule 3-310(F) consent to compensation, Withhold B&P §6104 authority to appear, Ethical compliance questionnaire and Ethical compliance questionnaire cover letter, Dependent counsel evidence development, Dependent counsel presigned verification forms.