California Appellate Law Blog : California Appellate Lawyer & Attorney: Archer Norris Law Firm: Trial, Business, Torts: Sacramento, Bay Area, Los Angeles, California

In Compulink Managements Center, Inc. v. St. Paul Fire and Marine Ins. Co., et al California’s Second District ruled that, regardless of Compulink’s claims for bad-faith, the parties’ dispute over the reasonableness of independent counsel’s fees must be arbitrated pursuant to Cal. Civil Code Section 2860.

Not a very glamorous subject, I know, but an important decision for many litigators wanting to get paid by their client’s insurers. 

Civil Code Section 2860 mandates arbitration of any dispute over the reasonableness of independent counsel’s attorney’s fees that must be paid by an insurer. Here, the court clarifies whether, when a coverage action is brought alleging numerous and various claims against the carrier, only one of which happens to be a dispute over the reasonable of independent counsel’s fees, the arbitration of the fee issue is still required. Their answer was “yes”.

The trial court had denied St. Paul’s petition to compel arbitration, stating that Compulink’s bad faith claims took the action beyond the purview of Section 2860. The Second District disagreed, finding that the plain language of the statute required arbitration of any fee dispute and did not provide for an exception in cases where bad-faith allegations were made by the insured.

The opinion is pretty straightforward. What the opinion fails to address, however, are the practical implications of such a ruling. For instance, what about where the insured claims that not only is he owed fees paid to independent counsel, which haven’t been paid by the insurer at all, but that the insurer is also liable for bad-faith.

Can you try such a case without bifurcating the duty to defend and the bad-faith claims? Can the arbitrator determine the reasonableness of the fees before the court determines whether the insurer had a duty to defend in the first place? Why would you want him/her to? And to throw another kink into the process, the court made clear that the mandatory arbitration of Section 2860 applies only to attorney’s fees, not all defense fees and costs (e.g. expert fees).

The legislature intended the mandatory arbitration provision of Civil Code 2860 to prevent the state’s judicial system from bearing the cost of fights over the reasonable of attorneys’ fees -- An understandable and prudent motive. Yet, as in many things, the practical implications may achieve quite the opposite effect.

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This week the California Supreme Court dealt a blow to the holiday spirit of "do unto others" with its decision in Van Horn v. Watson, ruling that a woman who pulled her friend from the car following an accident and caused her paralysis could be tried for causing the injuries.

Relying on the principle, "that one who assumes to act, even though gratuitously, may thereby become subject to a duty of acting carefully, if he acts at all." Artiglio v. Corning, Inc. (1998) 18 Cal.4th 604, 613, the Court held that there was no immunity for a Good Samaritan not performing emergency medical services.

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Last week a friend at work asked me to sit as a judge for a class he teaches in appellate advocacy at JFK Law School.  After a certain amount of polite grumbling (it required driving into SF in rush hour traffic) I agreed.  As I was subsequently sitting in that traffic, I began pondering what ultimate wisdom I could impart to these students about oral advocacy.  The entire drive over (which was long to say the least) I considered the pearls of wisdom Ric had imparted to me before my first oral argument, comments by Justice Scalia and Bryan Garner from their amazing seminar I attended last summer . . . By the time I reached the 9th Circuit's courthouse in SF, I was feeling very blessed to have such amazing mentors in my own career.

By the time I left, I had to chuckle.  I walked into the 9th Circuit that evening thinking I was doing a favor for a friend and a service for some law students.  After I got over the initial uncomfortableness with donning an actual robe and sitting at the bench (it felt somehow sacrilegious . . . like dressing as a priest while attending the church Halloween party) I realized that watching a serious of students argue from the judge's perspective was probably one of the most valuable learning experiences I've ever had in oral advocacy.  No amount of seminars, CLE classes, or even actual arguments, can truly give you a chance to view an argument from that perspective. 

The students did a great job.  But, listening to how they formed their arguments and the syllogisms they used was so important.  It was easy, at times, to lose track of where they were going with their reasoning when it was not extremely clear, succinct, and laid out at the beginning of their arguments.  Using indicators to tell us that they were now moving to a different area of their arguments was extremely helpful.  And most interesting was my almost visceral reaction when one student claimed he was citing the statute and ended up quoting a portion of the legislative history.  It was not intentional -- and he was nervous -- but the misquote jumped out at me and made it very hard for me to follow the remainder of his argument.  Moreover, I found myself becoming very suspicious of his other arguments and wanting to turn to the record after each statement he made in order to check its veracity.

Not that any of these are new tips on oral argument, but I don't know that anything can compare to actually experiencing how helpful and important these things are to the justices sitting in front of you.

Long story short:  If you get an opportunity to participate in such an exercise, I highly recommend it.  It is a great public service, and you may learn more than you anticipate.

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