Hastings Law Journal


Rich Marotti


In 1984, California courts leapt to the forefront of protecting consumers of insurance with the decision in San Diego Navy Federal Credit Union v. Cumis Insurance Society, Inc. Several years later, the California General Assembly enacted California Civil Code section 2860. The statute was presumably established in response to the expansive Cumis decision. However, the bill containing the language that ultimately became section 2860 received little to no public comment, nor does it appear to have received much scrutiny from the assembly. It amounted to a backroom deal among special interest groups that was revealed only a few days before it was submitted to the governor. The suspicious origins of the bill make it questionable whether strong consideration was given to the underlying thought in Cumis. As a result, section 2860 distorts the problem and solution identified in Cumis, and California courts are, accordingly, constrained from fixing the problem as originally envisioned in Cumis. This Note will examine Cumis, it's progeny, the history of California Civil Code section 2860, and it's subsequent application by California courts. After pointing out the problems with both the code section and its judicial application, this Note will survey the solutions that other states have proposed to the problems recognized in Cumis. Finally, a revision of section 2860 will be proposed. The revision focuses on clearly defining "conflict of interest" within the statute to better remedy the problems first recognized by the Cumis court.

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