Rate Restrictions Apply No Earlier Than When Insurer Agrees to Pay for Prospective Dates Onward.
Although unpublished, insurance practitioners will want to read City Art, Inc. v. Superior Court (Travelers Property Cas. Co. of America), Case No. B256132 (2d Dist., Div. 3 Dec. 9, 2014) (unpublished).
In granting an insured's writ petition, the appellate court determined that the Cumis counsel rate restrictions under Civil Code section 2860 only apply after the insurer actually commences paying for independent counsel, meaning the date upon which it agrees to pay but not for retroactive dates even if it purports to apply the rate restrictions retroactively. The retroactivity rule espoused by the insurer was soundly rebuffed, because "[i]f an insurer could retroactively rely on section 2860, an insurer that breached the duty of defend could reduce the damages it owed simply by establishing that it also breached the duty to provide independent counsel. This is nonsensical [given the general rule that an insurer who breaches the duty to defend is liable for the reasonable attorney fees incurred by the insured in obtaining a defense]." (Slip Opn., p. 17.)
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