ANNOTATED REQUESTS FOR ADMISSION TO LIABILITY INSURER

LEGEND

To do a "search and replace" on a wordprocessor for the following terms and replace them with correct names.

&InsCo& means the client's insurance company.

&Plaintiff& means the plaintiff who sued the defendant/policyholder/client.

&Client& means the defendant/policyholder/client.

Atty, Bar #_

Tele:

Fax:

E-mail:

Attorneys for Plaintiff,

&Client&

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

&Client&

Plaintiff,

vs.

&InsCo& AND DOES 1-250,

Defendants.

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CASE NO.

Requests for Admission

Date for Production:

Complaint filed:

Trial Date:

Demanding Party:	&Client&

Set Number:	One

Responding Party:	&InsCo&

Pursuant to Code of Civil Procedure § 2033.010 et. seq, the demanding party identified above demands that the responding party identified above admit the truth of matters of fact, opinion relating to fact, or application of law to fact, serve a verified response to this request within 30 days from the date of service of this request.

Definitions:

"claim for a defense" means a first party claim by a policyholder to &InsCo& that it provide a defense to a policyholder in any third party liability claim or lawsuit.

"dependent counsel" means licensed attorney(s) selected by &InsCo& who have a legal, business, financial, professional, or personal relationship with &InsCo&.

"disqualifying conflict of interest" means a conflict of interest which creates a duty on &InsCo&'s part to provide independent counsel to its policyholder.

"independent counsel" means licensed attorney(s) selected and directed by a policyholder who have no legal, business, financial, professional, or personal relationship with &InsCo&.

"policyholder" means a person or entity that qualifies as an insured under a liability policy.

"reservation of rights" means any communication by &InsCo& to its policyholder that it may deny coverage to the policyholder.

"reserves its rights" means that &InsCo& communicates to its policyholder any reservation of rights.

Request for Admission #1:

Admit that upon receiving a claim for a defense, &InsCo& has a duty to begin any necessary investigation of the claim within 15 calendar days.

Request for Admission #2:

Admit that upon receiving a claim for a defense, &InsCo& has a duty to accept or deny the claim for a defense in whole or in part within 40 calendar days.

Request for Admission #3:

Admit that upon receiving a claim for a defense, &InsCo& has a duty to complete its investigation within 40 calendar days.

Request for Admission #4:

Admit that upon receiving a claim for a defense, &InsCo& has a duty to communicate any reservation of rights within 40 calendar days.

Request for Admission #5:

Admit that &InsCo& has a duty to disclose to a policyholder all policy benefits that may apply to a claim for a defense.

Request for Admission #6:

Admit that when &InsCo& reserves its rights to deny coverage, it has a duty to provide its policyholder a written statement listing all bases, including all policy provisions, for such denial and the factual and legal bases for each reason given for such denial which is then within its knowledge, including an explanation of the application of each policy provision to the claim.

Request for Admission #7:

Admit that upon reserving its rights, &InsCo& has a duty to disclose that its policyholder has a right to independent counsel unless its reservation of rights creates no disqualifying conflict of interest.

Request for Admission #8:

Admit that &InsCo& has a duty to cooperate with its policyholder to determine the extent of &InsCo&'s liability for all policy benefits that may apply to a claim for a defense.

Request for Admission #9:

Admit that upon receiving any communication from a policyholder regarding a claim that reasonably suggests that a response is expected, &InsCo& has a duty to furnish the policyholder with a complete response based on the facts as then known by &InsCo within 15 calendar days.

Request for Admission #10:

Admit that &InsCo& has a duty to pay for independent counsel to represent its policyholder when its policy imposes a duty to defend and its reservation of rights creates a conflict of interest which creates a duty to provide independent counsel to its policyholder.

Request for Admission #11:

Admit that &InsCo& has a duty to provide independent counsel to its policyholder when its reservation of rights is not limited to grounds to later deny coverage that have nothing to do with the issues being litigated in an underlying liability lawsuit.

Request for Admission #12:

Admit that the provisions of Civil Code section 2860 do not apply unless the existence of a duty to defend and a disqualifying conflict of interest are established by a judicial determination or an unconditionally agreement.

Request for Admission #13:

Admit that &InsCo& has a duty to pay the full amount of independent counsel's reasonable and necessary fees and costs within 40 calendar days if the provisions of Civil Code section 2860 do not apply.

Request for Admission #14:

Admit that &InsCo& has a duty to not delay or deny policyholder's claim for a defense through independent counsel on the basis that responsibility for payment should be assumed by others.

Dated: , 2018

By:______________________________

Attorney for Plaintiff, &Client&

Annotations

Request #1: Cal. Code Regs. § 2695.5(e)(1).

Request #2: Cal. Code Regs. § 2695.7(b)(1).

Request #3: Cal. Code Regs. § 2695.7(b)(1); "For the insurer to fulfill its obligation not to impair the right of the insured to receive the benefits of the agreement . . . it is essential that an insurer fully inquire into possible bases that might support the insured's claim." (Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 819; Hughes v. Blue Cross of No. Calif. (1989) 215 Cal.App.3d 832, 846.) "[I]t is essential that an insurer fully inquire into all possible bases that might support the insured's claim. . . . [The adequacy of investigation is among] the most critical factors bearing on the insurer's good faith. The insurer's duty to investigate is not limited to the facts and coverage theories advanced by the insured. Its duty extends to whatever facts or coverage theories would support recovery under the policy. The insurer must fully inquire into possible bases that might support the insured's claim." (Jordan v. Allstate Ins. Co. (2007) 148 Cal.App.4th 1062, 1072 (citations and internal quotation marks omitted.).)

Request #4: Cal. Code Regs. § 2695.7(b)(1).

Request #5: Cal. Code Regs. § 2695.4(a).

Request #6: Cal. Code Regs. § 2695.7(b)(1).

Request #7: See, Duty to Advise of Right to Independent Counsel "It hardly needs to be added that no insurance policy can validly diminish a lawyer's duty to his insured client." (Hartford Acc. & Indem. Co. v. Foster 528 So.2d 255, 269 (Miss. 1988).) "[A]ny policy, arrangement or device which effectively limits, by design or operation, the attorney's professional judgment on behalf of or loyalty to the client is prohibited by the Code, and, undoubtedly, would not be consistent with public policy. (Givens v. Mullikin Ex Rel. McElwaney, 75 S.W.3d 383, 394 (Tenn. 2002).)

Request #8: Cal. Code Regs. § 2695.4(a).

Request #9: Cal. Code Regs. § 2695.5(b).

Request #10: Civil Code § 2860(b).

Request #11: "Thus, when the reservation of rights is based on coverage disputes that have nothing to do with the issues being litigated in the underlying action there is no conflict of interest, and no duty to appoint independent counsel." (Long v. Century Indemnity Co. (2008) 163 Cal.App.4th 1460, 1470 (citations and ellipsis omitted).)

Request #12: "[I]n the absence of a stipulation or unconditional agreement between the insurer and insured, unless and until there has been a judicial determination of an insurer's duty to defend and the existence of a conflict of interest, the provisions of Civil Code section 2860 are inapplicable." (Handy v. First Interstate Bank (1993) 13 Cal.App.4th 917, 926.)

Request #13: "The general measure of damages for breach of [the] duty to defend consists of the insured's cost of defense in the underlying action, including attorney fees. [Citation.]' (Intergulf Development LLC v. Superior Court (2010) 183 Cal.App.4th 16, 20.) This is so because "[a]n insurance company may not wrongfully refuse to defend its insured and thus force the insured into the position of having to engage outside counsel, and then, because the defense was not handled in a manner to the liking of the company, refuse to hold the insured harmless against payment of fees for all services reasonably performed in such defense." (Arenson v. National Auto. & Cas. Ins. Co. (1957) 48 Cal.2d 528, 538.) Thus, even if the insurer could have provided a defense at its own expense at a lesser cost, if it breaches the duty to defend, it is responsible to pay for all of the attorney fees reasonably incurred by its insured in obtaining a defense.

The rate limitations of section 2860 provide that "the insurer's obligation to pay fees to the independent counsel selected by the insured is limited to the rates which are actually paid by the insurer to attorneys retained by it in the ordinary course of business in the defense of similar actions in the community where the claim arose or is being defended." (Civ. Code, § 2860, subd. (c).)

Several California appellate opinions have all decided the same way: when the insurer breaches the duty to defend, and its obligation to pay defense costs would have otherwise been limited by section 2860, the section 2860 limitation does not apply to the attorney fees the insurer failed to pay. Instead, the insurer must pay the usual measure of damages for breach of the duty to defend, the reasonable attorney fees actually incurred by its insured in obtaining a defense. (Janopaul K Block Companies, LLC v. Superior Court (2011) 200 Cal.App.4th 1239, 1249; The Housing Group v. PMA Capital Ins. Co. (2011) 193 Cal.App.4th 1150, 1157; Intergulf Development LLC v. Superior Court, supra, 183 Cal.App.4th at p. 20. See also Atmel Corporation v. St. Paul Fire & Marine (N.D. Cal. 2005) 426 F.Supp.2d 1039, 1047.)

There are at least two reasons why this is the correct result. First, it is mandated by the language of the statute. . . . [S]ection 2860 is not triggered at all unless there is first a duty to defend and a conflict of interest requiring the provision of independent counsel. Without the establishment of these requirements, there is no duty to provide independent counsel, and the cost limitations of section 2860 never come into play. An argument that § 2860 applies because if it had defended the insured in the underlying action, the insurer would have done so under a reservation of rights misses the point because as numerous courts have recognized, "[t]o take advantage of the provisions of [section] 2860, an insurer must meet its duty to defend and accept tender of the insured's defense, subject to a reservation of rights. [Citations.] Here, it is undisputed that [the insurer] did not defend [its insured] in the [underlying a]ction, and thus the Court concludes defendant cannot avail itself of the protections and limitations set forth in [section] 2860." (Atmel Corp. v. St. Paul Fire & Marine, supra, 426 F.Supp.2d at p. 1047.)

Second, policy reasons support the conclusion that section 2860's rate limitations cannot apply retroactively to attorney fees incurred by the insured when the insurer was not providing a defense. "If [the insurer] owes any defense burden it must be fully borne [citation] with allocations of that burden among other responsible parties to be determined later. [Citations.] As the trial court here reasoned, an acceptance of [the insurer's] position—that 'insurers always can take advantage of [section] 2860 despite immediately failing to meet their burden to defend—would encourage insurers to reject their Cumis obligations for as long as they chose because they knew they could invoke the limitations and remedies of section 2860 at any time." (The Housing Group v. PMA Capital Ins. Co., supra, 193 Cal.App.4th at p. 1157.)

As a general rule, an insurer who breaches the duty to defend is liable for the reasonable attorney fees incurred by the insured in obtaining a defense. If an insurer could retroactively rely on section 2860, an insurer that breached the duty to defend could reduce the damages it owed simply by establishing that it also breached the duty to provide independent counsel. This is nonsensical. An insurer that breached the duty to defend must make its insured whole with respect to defense costs reasonably incurred; an insured should not be left with partial recovery simply because the insurer would have had a conflict of interest requiring it to provide independent counsel, had the insurer accepted its duty to defend.

Request #14: Cal. Code Regs. § 2695.7(e).