San diego navy federal credit union et al., Plaintiffs and Respondents, V. Cumis insurance society, inc., Defendant and Appellant Civ. No. 31043 Court of Appeal of California, Fourth Appellate District, Division One


(5) Attorneys at Law § 15.2--Attorney-client Relationship--Conflict of Interest and Remedies of Former Clients--Disclosure of Conflict; Consent to Representation



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(5) Attorneys at Law § 15.2--Attorney-client Relationship--Conflict of Interest and Remedies of Former Clients--Disclosure of Conflict; Consent to Representation. --When two clients have diverging interests, their counsel must disclose all facts and circumstances to both clients to enable them to make intelligent decisions regarding continuing representation. Before a lawyer may represent multiple clients he should explain fully to each client the implications of the common representation and should accept or continue employment only if the clients consent.
(6) Attorneys at Law § 15.2--Attorney-client Relationship--Conflict of Interest and Remedies of Former Clients--Disclosure of Conflict; Consent to Representation--Representation of Insurer and Insured. --The Canons of Ethics impose on lawyers hired by an insurer to defend an action against its insured an obligation to explain to the insured and the insurer the full implications of joint representation in situations where the insurer has reserved its right to deny coverage. If the insured does not give an informed consent to continued representation, counsel must cease to represent both. Moreover, in the absence of such consent, when there are divergent interests of the insured and the insurer brought about by the insurer's reservation of rights based on possible noncoverage under the insurance policy, the insurer must pay the reasonable cost for hiring independent counsel by the insured. The insurer may not compel the insured to surrender control of the litigation.
COUNSEL: Hardin, Cook, Loper, Engel & Bergez, Gennaro A. Filice III and Roberta E. Nalbandian for Defendants and Appellants.
Breidenbach, Swainston, Yokaitis & Crispo, W. F. Rylaarsdam, Jeanne E. Emrich, Bronson, Bronson & McKinnon, Paul H. Cyril, David W. Gordon, Ronald E. Mallen, Michael J. Brady, David R. Fuller and Raoul D. Kennedy, as Amici Curiae on behalf of Defendants and Appellants.
Saxon, Alt, Brewer & Kincannon and Mark A. Saxon for Plaintiffs and Respondents.
Leonard Sacks, Robert E. Cartwright, Harvey R. Levine, Wylie A. Aitken, Harlan Arnold, Glen T. Bashore, Ray Bourhis, Richard D. Bridgman, Edwin Train Caldwell, David S. Casey, Jr., Victoria De Goff, Douglas K. deVries, H. Grieg Fowler, Sanford M. Gage, Ian Herzog, G. Dana Hobart, Stanley K. Jacobs, John C. McCarthy, Timothy W. Peach, R. H. Sulnick, Arne Werchick and Stephen Zetterberg [***2] as Amici Curiae on behalf of Plaintiffs and Respondents.
JUDGES: Opinion by Gamer, J., * with Brown (Gerald), P. J. and Staniforth, J., concurring.
* Assigned by the Chairperson of the Judicial Council.



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