Developments of Interest

New Cases of Interest - July 22, 2013

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Hartford Casualty Insurance Company v. Marketing, LLC (2013) 216 Cal.App.4th 1444.  The court holds that when an insurer wrongfully fails to honor its duty to defend, it is thereafter barred from challenging the fees charged by independent counsel and the insurer was held to have forfeited its statutory right to protection against excessive fees under Civil Code §2860, as well as to otherwise control the defense.  The right to control the defense necessarily includes financial decisions about the rate paid to independent counsel and the cost effectiveness of a particular defense tactic.

SB Liberty, LLC v. Verde Association, Inc. (2013) 217 Cal.App.4th 272.  The court finds that an LLC which owns property within a homeowners association cannot send their attorney to the homeowners meeting on the owner's behalf even with written authorization to do so, and the attorney was properly excluded from an association board meeting.  The attorney was himself not a member nor a manager of the LLC and the court found that because the attorney was not a person authorized to manage the owner's business and affairs (Corporations Code §§17150, 17151(a)), he did not have a right to attend board meetings.  Civil Code §1363.05.  The court also found that the written authorization he was provided did not qualify as a proxy under Corporations Code §7613 and the owner was not permitted to transfer its rights arising from ownership in the association without a proxy.  Corporations Code §7320(a)(1).  The Association's Board had the right to determine how it would conduct its own meetings which included the power to prevent a non-member from attending and participating in those meetings.  Corporations Code §7210.  The owner of the unit remained free to attend the Board meetings through its members or its manager, and the exclusion of its attorney therefore did not cause irreparable harm.

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