Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_10-cv-00446/USCOURTS-cand-3_10-cv-00446-5/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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1 All parties have consented to my jurisdiction for all

proceedings including entry of final judgment, pursuant to 28

U.S.C. § 636(c).

1

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JAMES RIVER INSURANCE

COMPANY, an Ohio

Corporation,

Plaintiff(s),

v.

DIANA’S CARE HOME, a

business entity form

unknown, et al.,

Defendant(s).

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No. C10-0446 BZ

ORDER DENYING MOTION TO

APPOINT CUMIS COUNSEL

James River Insurance Company filed this action to

rescind a residential care facility general liability

insurance policy it issued to defendants Nestor Castaneda and

Diana Castaneda dba Diana’s Care Home and which also covers

the Castanedas’ employee Estrella Rothstein (Collectively

referred to as the Castanedas).1

 James River contends that on

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2 These facts are gleaned from uncontested

representations made during oral argument and from facts stated

in the declarations filed by the respective parties. To the

extent they contain hearsay, there were no objections.

3 James River initially also sought declaratory relief

that its policy did not provide coverage for the acts alleged

in Reyna but in response to a motion to dismiss has amended the

complaint to eliminate the declaratory relief claim.

2

April 29, 2009, the Castanedas’ made material

misrepresentations in applying for the policy. 

On November 11, 2009, a wrongful death action titled

Reyna v. Castaneda, et al. was filed in Alameda County

Superior Court. The complaint in Reyna alleges that the

Castanedas negligently cared for the decedent in violation of

California’s Elder Abuse laws, which proximity caused his

death. The Castanedas tendered the defense of Reyna to James

River, which accepted under a reservation of rights. It has

been represented to the Court that Reyna is not being actively

prosecuted. This lawsuit followed. 

James River initially appointed James Zenere, Esq. To

represent the Castanedas in Reyna. Recognizing the

possibility of a conflict with its insureds, James River

advised them of their right to independent counsel.2

Thereafter, James River was contacted by Michael Cohen, Esq. 

Mr. Cohen stated that the Castanedas wished him to represent

them as independent counsel pursuant to California Civil Code

§ 2860 in defending Reyna, and that he had also been retained

to defend this rescission action.3 James River apparently

vetted Mr. Cohen and found him unsuitable. James River then

provided the Castanedas with a list of attorneys that it

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4 The Castanedas have cited no authority of this court

to require James River to pay for two counsel selected by the

insured. Section 2860(f) does contemplate that the insurer may

continue to retain the attorney it selected after th insured

selects independent counsel. Here, the Castanedas wish to

select both independent counsel and counsel for the insurer. 

Nor has James River asked that counsel for the insurer be

appointed. Mr. Zenere’s appointment has been terminated.

5 James River does not dispute that a conflict exists

such as to require it to appoint independent counsel.

3

believed were experienced in elder abuse litigation. Mr.

Cohen assisted the Castanedas in screening this list and

ultimately concluded that David Beach, Esq. was a good choice

to represent the Castanedas. James River then appointed Mr.

Beach as independent counsel for the Castanedas in Reyna. 

The Castanedas have now moved for an order appointing Mr.

Cohen as independent counsel in Reyna. As Mr. Cohen explained

during argument, he wishes me to appoint him as independent

counsel under § 2860 and to keep Mr. Beach in as co-counsel,

representing the interests of James River.4

California Civil Code § 2860 provides that when specified

conflicts of interests appear “the insurer shall provide

independent counsel to represent the insured.” § 2860(a). 

The section further provides:

 “When the insured has selected independent

counsel to represent him or her, the insurer may

exercise its right to require that the counsel

selected by the insured possess certain minimum

qualifications which may include that the selected

counsel have (1) at least five years of civil

litigation practice which includes substantial

defense experience in the subject at issue in the

litigation, and (20) errors and omissions coverage.” 

§ 2860(c).5 Here, James River asserts it declined to appoint

Mr. Cohen because it was not satisfied as to his

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qualifications or his malpractice coverage. 

Neither side has cited and the Court has not found any

reported case which discusses the insured’s rights in the

event the insurer rejects the insured’s choice of counsel. 

Prior to the enactment of the statute, in conflict situations

the insured appears to have had the unfettered right to select

counsel and require the insurer to pay for it. See Executive

Aviation, Inc. v. National Ins. Underwriters, 16 Cal. App. 3d

799 (1971). Section 2860 gives the insurer, who may

ultimately pay for both the defense and the indemnity, some

say in the selection process. 

While no case has considered the process the insured is

to follow if she wishes to challenge the insurer’s rejection

of her counsel of choice, it would seem to me that the insured

first has to show that she has selected a particular

independent counsel to represent her. The burden would then

shift to the insurer to establish that it exercised its rights

under § 2860 properly. The burden would then shift back to

the insured to establish that the insurer violated her rights

under § 2860 so as to require that a different counsel be

appointed. 

Having considered the showing made by both parties, I

have concluded that the Castanedas have failed to persuade me

to appoint Mr. Cohen to replace Mr. Beach. First, defendants

have failed to establish that they want Mr. Cohen to represent

them in Reyna or are dissatisfied with Mr. Beach. While Mr.

Cohen has averred that “defendants duly retained their herein

counsel of record both to represent them as cumis and to

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5

represent them herein,” (Cohen Dec. ¶ 5) this is a somewhat

self serving statement by Mr. Cohen who is seeking

appointment. The only declaration filed by defendants in

support of this motion was by Diane Castaneda and she does not

state that she wishes Mr. Cohen to represent her or that she

is dissatisfied with Mr. Beach. According to James River, 

Mr. Beach contacted it and stated that he had been selected as

independent counsel by the Castanedas to defend them in Reyna. 

James River had vetted Mr. Beach, determined he was qualified

and agreed to let Mr. Beach act as independent counsel. Mr.

Cohen admits in his declaration that Mr. Beach, who is “a

specialist in among other things insurance defense of Elder

Abuse cases, may be for various reasons particularly

appropriate to represent these Defendants in the particular

underlying case.” (Cohen Dec. ¶ 7) Finally, the Castanedas

within the last month executed notices substituting Mr. Beach

for Mr. Zenere as their attorney in Reyna. For all these

reasons, defendants have failed to establish that they wish

Mr. Cohen and not Mr. Beach to represent them in Reyna.

Nor have defendants established that James River violated

their rights under § 2860 in declining to appoint Mr. Cohen. 

James River has established that it objected to Mr. Cohen

because he did not have five years of civil litigation

experience in the “subject at issue” in Reyna, which James

River deems to be principally defending elder abuse cases. As

James River explains, the curriculum vitae which Mr. Cohen

submitted listed 30 years of civil litigation experience,

primarily representing plaintiffs in personal injury, medical

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malpractice and wrongful death actions, and minimal experience

in elder abuse law. James River further avers that “Mr. Cohen

has yet to provide James River with a list of any cases he has

actually tried, let alone the sole elder abuse case he claims

to have litigated on behalf of a ‘single Board and Care Home’” 

(Oppos. p. 4, ll, 12-14). James River also was concerned that

his $100,000 errors and omissions policy, which is reduced by

defense costs, was inadequate for the representation he was

seeking. 

Ultimately, I remain unpersuaded that the Castanedas’

rights under § 2860 have been violated. Mr. Cohen does not

deny that his 30 years of experience was principally

representing plaintiffs in personal injury, medical

malpractice and wrongful death cases and not in defending

those cases. While Mr. Cohen disputes somewhat that elder

abuse law experience is necessary, having reviewed the Reyna

complaint, I agree with James River that it is desirable.

Moreover, on behalf of the Castanedas, he has admitted that

Mr. Beach, who is apparently an expert in elder abuse

litigation, may be “particularly appropriate” counsel to

defend the Castanedas in Reyna. Cohen Dec. ¶ 7. Finally, I

have experienced occasional difficulty in following some of

Mr. Cohen’s rambling and unfocused arguments.

Nor do I find that James River’s concern about Mr.

Cohen’s malpractice coverage to be unreasonable. Were Mr.

Cohen appointed and were he to commit malpractice in defending

Reyna, a $100,000 policy which is reduced by the cost of 

defense does not seem to be adequate in a wrongful death

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6 This does not mean that such a $100,000 policy would

never be adequate.

7 Following the hearing, Docket No. 85 was filed

purporting to be a declaration of either Michael Cohen or

William Green, attaching a letter from an insurer offering to

provide Mr. Cohen with a $1 million professional liability

policy. Assuming this policy were to issue, it does not change

the reasonableness of the decision made by James River months

ago. If anything, it is a tacit admission by Mr. Cohen that

his coverage had been inadequate.

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case.6 Significantly, there is no declaration from the

Castanedas averring that they understand the limits on Mr.

Cohen’s malpractice coverage and are prepared to accept those

risks. To the extent that these low limits present a risk to

James River, see Assurance Co. Of America v. Naven, 32

Cal.App. 4th 78, 88, (1995), it plainly is not prepared to

accept them.7

For all the foregoing reasons, the Castanedas’ motion to

appoint Mr. Cohen as cumis counsel and to appoint Mr. Beach as 

defense counsel is DENIED.

Dated: June 9, 2010

Bernard Zimmerman 

 United States Magistrate Judge

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