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Erica has extensive experience handling claims under a variety of insurance policies, including general liability, directors’ and officers’ liability, aviation, employment practices liability, property and business interruption policies. She works with policyholders to ensure that their claims are properly presented to insurers, in order to obtain the maximum possible insurance recovery. Erica advocates on behalf of her clients to resolve any coverage disputes that may arise during the course of a claim, taking a practical and proactive approach to negotiation with insurers. In cases where a negotiated resolution is not possible, Erica litigates insurance coverage disputes. She has substantial coverage litigation experience, both at the trial and appellate levels.

In June, I blogged about County of Los Angeles Board of Supervisors v. Superior Court, 235 Cal. App. 4th 1154 (2015). In that case, the California Court of Appeal (Second Appellate District) concluded that legal defense bills qualified as privileged attorney-client communications, and therefore need not be produced in response to a California Public

Recently, the California Court of Appeal decided County of Los Angeles Board of Supervisors v. Superior Court, 235 Cal. App. 4th 1154 (2015), a case considering whether the Los Angeles County Sheriff's Department could be required to produce legal defense bills in response to a California Public Records Act request.  While not an insurance case, the case could have implications for a common practice in the insurance context: submitting defense bills to the insurer.

The Board of Supervisors court held that attorney billing statements are “confidential communications” within the meaning of California Evidence Code Section 952, and therefore their production could not be compelled.  Significantly, the court held that the LA County Sheriff could not be required to simply redact portions of the attorney time descriptions that reflected attorney opinions or advice.  Indeed, the court concluded that a communication between attorney and client, arising in the course of representation for which the client sought legal advice, need not include “legal opinion or advice” at all in order to qualify as a privileged communication.  Because the bills were, by definition, an attorney-client communication, they were privileged in their entirety.

This new ruling presents a conundrum for California insureds.  An insurance company that is footing the bill for the defense of a lawsuit will of course demand to see the bills, and as a practical matter it is unrealistic to expect that the insurer will pay them without being able to review the descriptions.  In situations where the insurer is defending without a reservation of rights, the insured's and the insurer's interests are completely aligned and the two are effectively joint clients.  But by providing the defense bills to an insurer who has reserved its right to deny coverage – or who has not yet taken a coverage position at all – is the insured waiving privilege?  If the plaintiff in the underlying lawsuit demands that the insured produce “all communications with its insurer,” could the insured then be required to produce its legal bills to plaintiff?

Continue Reading Submitting Your Defense Bills to Insurers Could Mean Waiving Privilege

A recent unpublished decision from California’s Second Appellate Division highlights one of the most common mistakes lawyers make when obtaining insurance coverage for the defense of a lawsuit:  accepting the insurer’s ultra-low hourly rate caps for charges incurred before the date on which the insurer actually acknowledged its defense obligation and began defending.

The case is City Arts, Inc. v. Superior Court (Travelers Property Casualty Company of America), B256132 (issued Dec. 9, 2014).  There, Travelers agreed that its obligation to defend an underlying lawsuit against City Arts was triggered no later than April 2009.  However, Travelers did not actually agree to begin reimbursing defense costs until February 2010.  (In the intervening 10 months, Travelers and City Arts exchanged a series of letters arguing about whether Travelers had a duty to defend, before Travelers finally relented in February 2010.)  Nevertheless, Travelers claimed that it could impose its hourly rate caps on all charges incurred from April 2009 forward.

Continue Reading CA Court of Appeals Confirms that Insured Need Not Accept 2860 Rate Caps For Work Done After Tender, But Before Insurer Accepts Defense

“The insurer’s obligation to pay fees to the independent counsel selected by the insured is limited to the rates which are actually paid by the insurer to attorneys retained by it in the ordinary course of business in the defense of similar actions in the community where the claim arose or is being defended.” 

The above sentence appears in California Civil Code section 2860(c); it limits a defending insurer’s obligation to provide independent counsel of the insured’s own choosing in cases where the insurer’s reservation of rights gives rise to a potential conflict of interest between the insurer and the insured. 

In California, insurers routinely insist that they pay no more than $225 per hour (or even less) to their retained defense counsel, and refuse to pay higher hourly rates to independent counsel. Clearly, the statutory language itself can be used to create leverage points in a negotiation with insurers about “2860 rates,” as it places the burden on the insurer to demonstrate that it routinely pays those rates to defend similar actions in that community. 

But before the insurer even announces its intent to impose 2860 rate caps, there are things an insured can do to place itself in a strong bargaining position regarding defense costs issues. By drafting a thoughtful and thorough notice letter, an insured can lay the groundwork (and create leverage) for future negotiations. 

Continue Reading Setting Up a Successful Negotiation Regarding “2860 Rates”

In May, California’s Second Appellate District affirmed a summary ruling that a Commercial General Liability insurer did not have a duty to defend a subcontractor who supplied faulty “seismic tie hooks” that were encased in concrete shear walls.  The case is Regional Steel Corporation v. Liberty Surplus Insurance Corporation, Cal. Ct. App. 2d Dist. B245961, and the court has just granted Liberty’s request to certify the case for publication. 

The Second Appellate District declined to follow the “incorporation doctrine,” adopted by the First Appellate District in cases such as Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co., 45 Cal.App.4th 1 (1st Dist. 1996), Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc., 78 Cal.App.4th 847 (2000).  At issue in Armstrong was the cost of removing asbestos-containing building materials, which had been installed in larger structures.  At issue in Shade Foods was a supply of ground almonds that was contaminated with wood chips, but had been incorporated into “nut clusters” for breakfast cereal.  In both cases, the First Appellate District held that the mere incorporation of these faulty products or material into third-party property constituted covered “property damage.” 

Continue Reading Newly-Published Regional Steel Case Raises More Questions Than It Answers

By Dennis Cusack and Erica Villanueva

Maintaining appropriate insurance is critical for the entire aviation industry.  Many US-based airlines, aircraft owners/financiers, and aircraft lease servicers devote significant resources at the front end setting up their insurance programs, maintaining schedules of insured assets, and making annual trips to London for meetings with the major players in the Lloyd’s aviation market.  But it is equally important that companies plan for the possibility of major claims under their policies.  Companies do not always anticipate some of the unique challenges that US-based insureds face when making a claim under their aviation policies.

Continue Reading Common Policyholder Pitfalls When Navigating London Aviation Insurance Claims

Over the past few days, there has been much hand-wringing over the Second Circuit’s decision in Mehdi Ali v. Federal Insurance Co., __ F.2d __ (2d Cir. 2013) in which the court declined to extend the holding of Zeig v. Massachusetts Bonding & Insurance Co. , 23 F.2d 665 (2d Cir. 1928), to the specific facts of the case before it. Commentators are chalking it up as a major victory for insurers, claiming that policyholders have now lost a key precedent, one which had previously allowed them to argue that an excess insurer can be required “drop down” to cover losses below its attachment point.

Not so fast.

As an initial matter, the Zeig case does not stand for the proposition described above. The Zeig case held that an excess insurer could be required to pay losses above its attachment point, if the insured had actually sustained those losses. In Zeig, an insured suffered a property loss which exceeded the limits of his primary policy, but settled with that insurer for less than the full primary policy limits. The Second Circuit reasoned that, because the insured could demonstrate that it had actually suffered property losses in excess of the primary limits, the excess insurer could be required to pay that portion of the loss which exceeded its attachment point.

Continue Reading Recent Media Coverage Overstates Impact of New Second Circuit Case Regarding “Drop-Down” Issue

You never get a second chance to make a first impression.

This adage is never more true than when tendering a claim to your client’s liability insurer. When the claim is tendered correctly, you can minimize delay, avoid disputes and establish a healthy working relationship with the insurer. Here are four simple guidelines for tendering

On November 23, 2010, the California Supreme Court declined review of the First Appellate District’s decision in Howard v. American National Fire Insurance Co., 187 Cal. App. 4th 498 (2010).  As I noted in a prior blog postHoward provides powerful, additional support for policyholders demanding that their liability insurer fund a settlement.


In a recent blog post, I cautioned that California insureds should question the conventional wisdom that "wage and hour" class actions simply aren’t covered under Employment Practices Liability (EPL) policies. A new order from the Central District of California lends further support for this view. In Professional Security Consultants, Inc. v. United States Fire