A recent Law 360 story by Hope Patti, “SoCal Edison Says Insurer Can’t Cut LA Wildfire Defense Fees”, reports that an insurer must pay in full Southern California Edison Co.'s counsel fees related to more than 20 negligence suits over the September 2020 Bobcat wildfire, the company told a California federal court, saying the carrier forfeited the right to limit counsel fees when it breached its insurance contract.  The utility company argued in a motion for partial summary judgment that Greenwich Insurance Co. cannot rely on California Civil Code Section 2860 to impose lower billable rates on SoCal Edison's defense counsel.

The insurer is required to comply with U.S. District Judge John F. Walter's January ruling in which he held that Greenwich breached its duty to defend and must reimburse SoCal Edison's defense fees and costs incurred in the underlying suits, the utility company said.  "Indeed, California law is clear that a breaching insurer loses its rights to control the insured's defense, choose the insured's counsel, and limit defense counsel's rates to rates paid to insurer appointed counsel," SoCal Edison said, adding that "Greenwich cannot now, after being found in breach, find safe harbor in Section 2860's fee provisions."

SoCal Edison and parent company Edison International were hit with a number of suits in Los Angeles Superior Court after the Bobcat wildfire broke out in the Angeles National Forest in September 2020.  The suits alleged that the fire may have been caused by tree branches and other vegetation that came into contact with SoCal Edison's conductors.  The company sought coverage from Greenwich under a commercial general liability policy that the insurer issued to Utility Tree Service LLC, which SoCal Edison hired to provide vegetation services where the fire started, but the insurer repeatedly denied its duty to defend.

SoCal Edison filed the present action in August, seeking a declaration that the insurer owes coverage under the CGL policy and asserting claims for breach of contract and bad faith.  In December, Greenwich told the court it has no defense obligations to the utility company because the underlying suits don't accuse UTS of negligence.  However, the court ruled in January that SoCal Edison clearly established that Greenwich has a duty to defend.  "Notwithstanding this court's order, Greenwich has refused to reimburse Edison's fees in full, instead advising that it would pay only a fraction of the fees incurred by significantly reducing the hourly rate of Edison's defense counsel," SoCal Edison said.

Because Greenwich breached its duty to defend, the insurer cannot take advantage of any rights it may have once had under Section 2860, including any statutory limitations on independent counsel's fees, SoCal Edison contended.  "Greenwich must be ordered to pay Edison's reasonable defense fees and costs in full and at the previously negotiated marketplace rates, for the Bobcat wildfire lawsuits until the lawsuits conclude," the company said, adding that its defense fees are contractual damages that the insurer must pay because of its breach.