Wallis v. Centennial Ins. Co., No. 08-02558 WBS GGH, 2009 WL 1325950 (E.D. Cal. May 12, 2009)
The underlying action alleged unfair competition, interference with contractual relations and prospective economic advantage, misappropriation of trade secrets, and conversion. The carrier, Centennial, provided the defense under reservation of rights, including the right to seek reimbursement. Independent counsel was retained and paid legal fees and costs.
Trade secrets under protective order were exposed by the plaintiffs’ attorneys. Their conduct led to a joint and several award of sanctions. The Wallis plaintiffs, who are the plaintiffs herein, and were the defendants in the suit by Mendoza, allegedly violated the protective order by disclosing confidential information in an improper public disclosure. It filed suit against the carrier for bad faith and received a counterclaim challenging the reasonableness of independent counsel’s fees as well as seeking reimbursement for monies paid.
Recognizing that reimbursement is available to a carrier that did not owe a defense duty under Scottsdale Ins. Co. v. MV Transp., 36 Cal. 4th 643, 659, 663 (2005), the court denied the motion to dismiss the insurer’s third party complaint seeking reimbursement.
The court did not reach the merits as to whether a defense was owed or not or whether the fees of counsel were reasonable.
