Dec 17, 2008 Robert A. Olson
Clarifying a line of published authority, Court of Appeal holds that policyholder must arbitrate attorney fee claims in insurance bad faith action arising out of carrier’s defense of lawsuit against insured

Compulink Management Center, Inc. v. St. Paul Fire & Marine Ins. Co. (2008) 169 Cal.App.4th 289 (California Court of Appeal, Second Appellate District, Division Seven) [published]. An insured sued GMSR’s insurance carrier client for insurance bad faith arising in part out of a dispute concerning the payment of attorney’s fees to independent counsel representing the insured. Relying on an existing published decision, the trial court refused to compel a Civil Code section 2860 arbitration of the attorney fee dispute because that was not the sole dispute between the parties. The Court of Appeal, agreeing with GMSR, concluded that the prior appellate decision had misconstrued early authority. The court here held that where an attorney fee dispute exists regarding fees to be paid to independent counsel, Civil Code section 2860 requires arbitration of that dispute, notwithstanding that there are other disputes between the parties.