Source: http://dutytodefend.com/duty-to-advise-settlement/
Timestamp: 2019-04-22 08:36:09+00:00

Document:
Regardless of whether an insurer says accepts full coverage (“Yes”), denies all coverage (“No”), or reserves its rights to later deny coverage (“Maybe”), a conflict of interest may arise among the policyholder, the insurer and their common lawyer if the plaintiff offers to settle the lawsuit for a sum within the policy limit. Both the insurer and dependent counsel have a duty to advise the policyholder regarding settlement opportunities that could affect the policyholder’s interests.
“[S]ince [dependent counsel] was representing two parties with divergent interests, insofar as the settlement of the case was concerned, [dependent counsel] labored under the duty of [disclosure] to enable each of his clients to make free and intelligent decisions regarding the subject matter of the representation. [Dependent counsel’s] duty, therefore, included the obligation to attempt to effectuate a reasonable settlement.
 Miller v. Elite Ins. Co. (1980) 100 Cal.App.3d 739, 756 (citations omitted).
 Commercial Standard Title Co. v. Superior Court (1979) 92 Cal.App.3d 934, 941.
 Lysick v. Walcom (1968) 258 Cal.App.2d 136, 151 (Lysick).
 Betts v. Allstate Ins. Co. (1984) 154 Cal.App.3d 688, 703.
 Id. at 715-716 (citations and quotation marks omitted).
 Novak v. Low, Ball & Lynch (1999) 77 Cal.App.4th 278, 283.
 Lysick, supra, 258 Cal.App.2d at 149.
 Fireman’s Fund Ins. Co. v. Superior Court (1977) 72 Cal.App.3d 786, 790.
 Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1396.

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