Truck Insurance Exchange v. Dynamic Concepts, Inc.

Opinion

CROSBY, J.

Truck Insurance Exchange appeals from the denial of its petition to compel binding arbitration to resolve a dispute with its insured, Dynamic Concepts, Inc. We again reject Dynamic’s request to dismiss the appeal and affirm on the merits.

[1149]

I

Dynamic, named as a defendant in a federal lawsuit, immediately tendered its defense to Truck. Truck promptly accepted the defense under a reservation of rights

1

and selected a law firm to defend its insured. Dynamic refused the insurer’s designation of counsel, hired an attorney, and demanded that Truck pay the fees.

2

Truck declined, noting it “fail[ed] to see any conflict with respect to the defense of our insured in this action and, therefore, [did] not recognize this as a

Cumis

situation.” Dynamic filed a complaint for bad faith insurance practices and declaratory relief. Truck quickly responded with a petition to compel arbitration.

3

Truck contended Dynamic’s suit was nothing more than a “dispute concerning attorney’s fees [which, per the mandates of Civil Code section 2860, subdivision (c),] shall be resolved by final and binding arbitration by a single neutral arbitrator selected by the parties to the dispute.” Dynamic disagreed, arguing the issue was whether “a conflict of interest [had arisen] which create[d] a duty on the part of the insurer to provide independent counsel to the insured.” (Civ. Code, § 2860, subd. (a).) This question, claimed Dynamic, was not intended by the Legislature to be resolved via the mandatory, binding arbitration provisions of subdivision (c) of section 2860.

The superior court denied the petition, and Truck appealed. On September 25, 1991, this court denied Dynamic’s motion to dismiss the appeal as having been taken from an nonappealable order. The next day we denied Truck’s petition for extraordinary relief and request for an immediate stay of