Insurer’s Right to Arbitration Denied Where Insured Failed to Make Timely Payments of Defense Fees

Housing Group v. PMA Capital Ins. Co., 123 Cal. Rptr. 3d 603, 609 (2011)

The court equated a failure to defend with a denial of a defense because it evidenced non-performance precluding it from securing a right to arbitrate a dispute over the reasonableness of rates under Cal. Civ. Code §2860(c), citing Atmel Corp. v. St. Paul Fire & Marine Ins. Co., 426 F. Supp. 2d 1039, 1047 (N.D. Cal. 2000).

[A]n acceptance of Caliber One’s position-that “insurers always can take advantage of [section] 2860 despite immediately failing to meet their burden to defend,”-would encourage insurers to reject their Cumis obligations for as long as they chose because they knew they could invoke the limitations and remedies of section 2860 at any time.

  

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