Insurance Company May Stop Paying For Cumis Counsel After Withdrawing Its Reservation Of Rights.

The trial court granted summary judgment to an insurance company after determining it did not breach its insurance contract with its insured by refusing to pay any attorney fees incurred by the insured’s Cumis Counsel [San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, [208 Cal.Rptr. 494, (Cumis)], after the company withdrew its reservation of rights. The appellate court posed the issue before it as follows:  “An insurer agrees to provide a defense with a reservation of rights and approves independent counsel selected by the insured to represent the insured in an underlying tort action, pursuant to Civil Code section 2860 and Cumis, 162 Cal.App.3d 358, [208 Cal.Rptr. 494]. The insurer subsequently withdraws all reservations of rights and coverage defenses that give rise to the insured’s right to Cumis counsel. Must the insurer continue to pay the insured’s Cumis counsel after the insurer’s withdrawal of the Cumis-triggering reservations eliminated the conflict that created the need for Cumis counsel?” The reviewing court answered the question in the negative.  (Swanson v. State Farm General Insurance Company  (Cal. App. Second Dist., Div. 7; September 23, 2013) 219 Cal.App.4th 1153, [162 Cal.Rptr.3d 477].)