Does independent (Cumis) counsel for an insured defended under a reservation of rights owe the insurer a duty to file a summary judgment motion the client wants withheld, and must counsel file a cross-complaint counsel believes is frivolous?

Plain-English summary

Counsel represented a client who was a defendant in a civil action and was insured under a liability policy. The insurer disputed coverage, reserved its rights, and allowed the client to select independent defense counsel whom the insurer compensated, while the insurer's own counsel monitored the action. Counsel prepared a summary judgment motion he believed had merit. Before filing, the client asked counsel to prepare a cross-complaint, but the time to assert cross-complaints had expired and the trial court had already denied a similarly situated co-defendant leave to file a similar cross-complaint, affirmed on appeal. After reviewing the facts and law, counsel was convinced the cross-complaint would be deemed frivolous and declined to file it. Dissatisfied, the client then instructed counsel not to file the summary judgment motion pending a search for new counsel.

On the first question, the committee identified San Diego Federal Credit Union v. Cumis Insurance Society as holding that a conflict can arise where a lawyer is retained to represent both insurer and insured, and that the insurer may not compel the insured to surrender control of the litigation. It identified that independent counsel owes ethical duties to the insured, not the insurer (citing Employers Insurance of Wausau v. Seeno Construction). The committee identified that, while California Civil Code section 2860 may require counsel to disclose unprivileged information about the motion to the insurer and to consult, counsel may ethically refuse to file the motion even after a demand by the insurer, because counsel acts as the insured's independent counsel and should not surrender decision-making control over the client's litigation; such a surrender could violate the duty to act competently under Rule 3-110 and breach counsel's fiduciary duty. The committee noted in a footnote that whether the client's instruction breaches a contractual cooperation duty owed to the insurer is a legal question beyond its purview.

On the second question, the committee identified Business and Professions Code sections 6068(c) and (d) and Rule 5-200, which prohibit advancing totally meritless and frivolous positions, and referenced Code of Civil Procedure section 128.5 and Federal Rule of Civil Procedure 11. It concluded that if counsel has determined in good faith, after thoroughly reviewing the relevant facts and law, that seeking leave to file the cross-complaint would violate these prohibitions, counsel may ethically decline the client's request.

Currency note

This opinion was issued in 1991, before California's November 1, 2018 adoption of the renumbered Rules of Professional Conduct. It interprets former Rule 3-310(B) (joint representation conflicts), former Rule 3-110 (competence), and former Rule 5-200 (duties to the tribunal), along with Business and Professions Code sections 6068(c) and (d); these correspond to current Rules 1.7, 1.1, 3.1, and 1.2. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

View original opinion

Common questions

Q: Who is the client of independent counsel paid by an insurer under a reservation of rights?

A: Per the opinion, the insured. Relying on Cumis and Seeno Construction, the committee identified that independent counsel owes ethical duties to the insured, not to the insurer that pays the bills.

Q: Can the insurer force independent counsel to file a summary judgment motion the insured wants withheld?

A: Per the opinion, no, on the ethics question. The committee concluded counsel may ethically refuse to file the motion even after the insurer demands it, because counsel should not surrender control of the client's litigation to the insurer.

Q: Must counsel file a cross-complaint the client wants if counsel thinks it is frivolous?

A: Per the opinion, no. The committee concluded that if counsel, after thorough review, determines in good faith that the filing would be frivolous and without merit, counsel may ethically decline under Business and Professions Code sections 6068(c) and (d) and Rule 5-200.

Background and rules framework

The opinion interprets former California Rule 3-310(B) (concurrent-representation conflicts), corresponding to ABA Model Rule 1.7; former Rule 3-110 (competence), corresponding to Model Rule 1.1; former Rule 5-200 and Business and Professions Code sections 6068(c) and (d) (duties not to advance frivolous matters), corresponding to Model Rule 3.1; and the allocation of decision-making authority between lawyer and client, paralleling Model Rule 1.2. The conflict analysis rests on the Cumis line of California insurance-defense cases and Civil Code section 2860.

Citations and references

Rules of Professional Conduct (former):

• California Rule 3-310(B) (joint representation)
• California Rule 3-110 (competence)
• California Rule 5-200 (duties to the tribunal)

Statutes:

• California Business and Professions Code sections 6068(c) and 6068(d)
• California Civil Code section 2860 (independent counsel and coverage disputes)
• California Code of Civil Procedure section 128.5; Federal Rule of Civil Procedure 11

Cases:

• San Diego Federal Credit Union v. Cumis Insurance Society, Inc., 162 Cal.App.3d 358 (1984)
• Employers Insurance of Wausau v. Albert D. Seeno Construction, 692 F.Supp. 1150 (N.D. Cal. 1988)
• Executive Aviation, Inc. v. National Insurance Underwriters, 16 Cal.App.3d 799 (1971)
• Clark v. State Bar, 39 Cal.2d 161 (1952), fiduciary duty to client

See also

• LACBA Ethics Op. 528: Insurance Defense Counsel and Coverage-Conflict Withdrawal
• LACBA Ethics Op. 532: Lawyer Indemnity of Opposing Party as a Settlement Condition
• LACBA Ethics Op. 482: Representations to Opposing Counsel and the Court About an Expert

Source

• Landing page: https://lacba.org/?pg=ethics-opinions
• Original PDF: https://lacba.org/docDownload/2010979