Centex appeals from a final judgment after the trial court granted St. Paul's motion for summary adjudication of Centex's seventh cause of action. Centex argues any possible or pоtential conflict is legally sufficient to require St. Paul to provide independent counsel. We disagree. Alternatively, Centex contends independent counsel was required because counsel appointed by St. Paul could influence the outcome of the coverage dispute and St. Paul controlled both sides of the litigation. Because Centex has failed to establish a triable issue of material fact regarding these assertions, we affirm the judgment.
I. BACKGROUND
The underlying action was initiated by homeowners from two residentiаl developments in Rocklin against Centex for alleged defects to their homes. Centex did not directly perform any of the construction on these homes. On March 30, 2012, Centex tendered its defense of the action to St. Paul as an additional insured pursuant to Ad Land's policy. St. Paul agreed to defend Centex subject to a reservation of rights. The reservation of rights reserved St. Paul's right to deny indemnity to Centex for any claims by the homeowners not covered by the policy, including claims of
On July 12, 2012, Centex filed a cross-complaint against subcontractors including Ad Land alleging breaches of written, oral and implied contracts to indemnify, defend and obtain insurance, as well as causes of action for equitable indemnity, contribution and repayment, and deсlaratory relief. The cross-complaint included a seventh cause of action for declaratory relief against St. Paul that sought a declaration that Centex was entitled to independent counsel under section 2860 because St. Paul's reservation of rights created significant conflicts of interest.
St. Paul moved for summary adjudication of Centex's seventh cause of action. In support of its motion, St. Paul introduced evidence that Lee only
The trial court granted St. Paul's motion for summary adjudication. The court held that St. Paul met its initial burden by establishing that its reservation of rights did not create a conflict of interest and did not affect coverage issues that could be controlled by Lee. Additionally, St. Paul sufficiently established that Lee does not have a conflict of interest. "St. Paul has also established that the other lawsuits and claims for reimbursement, subrogation, and contribution do not create a сonflict of interest. St. Paul has retained separate counsel, The Aguilera Law Group, to pursue its claims against Centex. [Citation.] Mr. Lee ... does not represent St. Paul."
The trial court determined Centex and Ad Land had similar interests to limit liability. "St. Paul has successfully negated the existence of a conflict between Mr. Lee and Centex that would put 'appointed counsel in the position of having to choose which master to serve.' "
Conversely, the trial court held Centex did not establish a triable issue of material fact. "The evidence clearly shows a conflict between St. Paul and Centex. It does not extend, however, to include Mr. Lee so as to invoke a triable issue regarding the appointment of independent counsel." In light of its decision to grant St. Paul's motion for summary adjudication, the trial court explained Centex's own motion for summary adjudication on its seventh cause of action was "dropped as moot."
A final judgment on the entire action was entered on November 18, 2015,
II. DISCUSSION
A. Standard of Review
We begin by summarizing several principles that govern thе grant and review of summary judgment motions under
"Although we independently assess the grant of summary judgment, our inquiry is subject to two constraints. Under the summary judgment statute, we examine the evidence submitted in connection with the summary judgment motion, with the exception of evidence to which objections have been appropriately sustained. [Citations.] ... [¶] Furthermore, our review is governed by a fundamental principle of apрellate procedure, namely, that ' "[a] judgment or order of the lower court is presumed correct," ' and thus, ' "error must be affirmatively shown." ' [Citations.] Under this principle, the [appellants] bear the burden of establishing error on appeal, even though [the respondent] had the burden of proving its right to summary judgment before the trial court. [Citation.] For this reason, our review is limited to contentions adequately raised in the [appellants'] briefs." ( Paslay v. State Farm General Ins. Co . (2016)
Centex's appellate briefing cites to evidence to which the trial court sustаined objections. Centex neither acknowledges these evidentiary rulings nor argues they were improper. "Because the [appellants] do not challenge these rulings on appeal, our review is limited to the evidence considered by the trial court." ( Paslay v. State Farm General Ins. Co ., supra ,
Centex also fails to support much of its briefing with necessary citations to authority or the record. (See In re S.C . (2006)
"Generаlly, an insurer owing a duty to defend an insured, arising because there exists a potential for liability under the policy, 'has the right to control defense and settlement of the third party action against its insured, and is ... a direct participant in the litigation.' [Citations.] The insurer typically hires defense counsel who represents the interests of both the insurer and the insured." ( Long v. Century Indemnity Co . (2008)
"[S]ection 2860 and California case law provide Centex, as an insured, with the right to obtain independent counsel paid for by [St. Paul], as Centex's insurer, whenever their competing intеrests create an ethical conflict for counsel." ( Centex Homes v. St. Paul Fire & Marine Ins. Co . (2015)
"(a) If the provisions of a policy of insurance impose a duty to defend upon an insurer and a conflict of interest arises which creates a duty on the part of the insurer to provide independent counsel to the insured, the insurer shall provide independent counsel to represent the insured unless, at the time the insured is informed that a possible conflict may arise or does exist, the insured expressly waives, in writing, the right to independent counsel. ...
"(b) For purposes of this section, a conflict of interest does not exist as to allegations or facts in the litigation for which the insurer denies coverage; however, when an insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim, a conflict of interest may exist."
Under section 2860, subdivision (b) and the relevant case law, "not every reservation of rights entitles an insured to select Cumis counsel." ( Dynamic Concepts, Inc. v. Truck Ins. Exchange (1998)
California law is settled that "there is no entitlement to independent counsel where the coverage issue is ' "independent of, or extrinsic to, the issues in the underlying action [citations]." ' [Citation.] Stated otherwise, 'where the reservation of rights is based on coverage disputes which have nothing to do with the issues being litigated in the underlying action, there is no conflict of interest requiring independent counsel.' " ( Gafcon, Inc. v. Ponsor & Associates, supra,
"A mere possibility of an unspecified conflict does not require indеpendent counsel. The conflict must be significant, not merely theoretical, actual, not merely potential." ( Dynamic Concepts, Inc. v. Truck Ins. Exchange , supra,
1. Any Possible Conflict Insufficient
Despite the well-established standards we have set forth above, Centex argues section 2860 codifies the right to independent counsel whenever " 'a possible conflict may arise,' " and attempts to disregard the applicable case law as consisting of "poorly-crafted language" that was not properly considered. We are not persuaded. Dynamic Concepts, Inc. v. Truck Insurance Exchange, supra,
To the extent Cumis, supra, 162 Cal.App.3d at pp. 371, fn. 7, 375,
2. Rule 3-310(C)(1) of the Rules of Professional Conduct Is Inapplicable
Centex asserts rule 3-310(C)(1) of the Rules of Professional Conduct requires the appointment of independent counsel in the event of any potential conflict.
While we generally conceptualize defense counsel as representing the interests of both the insurer and the insured ( Long v. Century Indemnity Co., supra,
Even if rule 3-310(C)(1) did technically apply to insurer-insured relationships, Centex acknowledges it is only triggered when there is a reasonable likelihood an actual conflict will arise. ( In re Celine R. (2003)
3. No Control Over Outcome of Coverage Issue
We turn now to the question of whether Centex was entitled to independent counsel under section 2860 and the relevant case law. Again, "a conflict of interest does not arise every time the insurer proposes to providе a defense under a reservation of rights. There must also be evidence that 'the outcome of [the] coverage issue can be controlled by counsel first retained by the insurer for the defense of the [underlying] claim.' " ( Gafcon, Inc. v. Ponsor & Associates, supra,
4. St. Paul Did Not Control Both Sides of the Litigation
Centex's claim that St. Paul controls both sides of the litigation also fails.
III. DISPOSITION
The judgment is affirmed. St. Paul Fire and Marine Insurance Company shall recover its costs on appeal. ( Cal. Rules of Court, rule 8.278(a)(1) & (2).)
We concur:
HULL, Acting P. J.
DUARTE, J.
Notes
Undesignated statutory references are to the Civil Code.
San Diego Federal Credit Union v. Cumis Ins. Society, Inc . (1984)
All other claims in the underlying action and cross-action were settled or dismissed.
Undesignated rule references are to the Rules of Professional Conduct.
Rule 3-310(F) applies to situations where an attorney accepts compensation for representing a client from someone other than the client. The Discussion to the rule cites Cumis and explains that "Paragraph (F) is not intended to abrogate existing relationships bеtween insurers and insureds whereby the insurer has the contractual right to unilaterally select counsel for the insured, where there is no conflict of interest."
"We are not bound by an ethics opinion." (Gafcon, Inc. v. Ponsor & Associates, supra ,
"This reference obviously is not to admissible evidence in the record that indicates a triable issue of fact exists." (Guthrey v. State of California, supra,
Centex filed a motion requesting that we take judicial notice of information regarding a separate lawsuit between the parties. We deferred ruling on the request for judicial notice and now deny it, without reaching the merits, on the ground that it is immaterial to our conclusion on appeal.