Strategies, Challenges, and Answers

State Farm Tries To Dodge The Single Shot Fired By The Policyholder That Nevada Follows California’s Cumis Rule

Cumis BriefThe Nevada Law Blogs are documenting the drama that plays itself out on the stage of the Nevada Supreme Court. This particular drama focuses on whether an insurance company can be obliged to pay the fees of an attorney hired by the policyholder because of an alleged conflict between the interest of the insurance company and its policyholder.

We described this epic show down comparing it to an old west gunfight. We introduced the characters and the issues HERE and HERE. We outlined the arguments of State Farm in its Opening Brief HERE. The insurance industry filed an amicus brief HERE. Then the policyholder argued that Cumis is already Nevada law and the court simply needs to say as much. HERE. The Nevada Homebuilders filed its own amicus brief arguing to their own benefit that the court should reject Cumis and follow a bright line rule that says that independent counsel is required any time the insurance company issues a reservation of rights letter. HERE.

Now we arrive at the climax of our tale. State Farm has filed its Reply Brief. State Farm points out that the policyholder fired only one shot in this gunfight, which was that it is a foregone conclusion that the Nevada Supreme Court has adopted Cumis. The policyholder says that this Court just needs to restate that law.

The Nevada Law Blogs predicted State Farm’s argument HERE. State Farm points out that Nevada is under no obligation to follow California law and that it would be inappropriate to do so. While it asks the court to ignore the amicus brief of the Homebuilders Association, State Farm responds that even the Respondent policyholder does not think the court should go that far as to require independent counsel every time a reservation of rights letter is issued. State Farm points out that the Respondent ignored virtually all of argument that it made against Cumis. The Respondent offered no rebuttal to the arguments as to why other courts have rejected Cumis, that the legislature should solve this issue and that it should not be subject to a duty that was not previously enunciated.

It will probably be months before the court issues a decision. In the meantime, we can examine some of the comments made by attorneys in other states about how their courts have tackled these issues. Those will be explored in a later post.

In the meantime, if you have questions about Cumis counsel in Nevada, please contact Mike Mills at 702/240-6060×114. He will discuss your question with you.

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