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Schaefer v. Elder

California Court of Appeals, Third District, El Dorado

May 16, 2013

STEVE SCHAEFER, Plaintiff and Respondent,
v.
KELLY ELDER, Defendant and Respondent CASTLEPOINT NATIONAL INSURANCE COMPANY, Intervener and Appellant.

Ordered Date 6/12/13

APPEAL from a judgment of the Superior Court of El Dorado County, Super. Ct. No. PC20070686 Nelson Keith Brooks, Judge. Affirmed.

Grant, Genovese & Baratta, James M. Baratta, Lance D. Orloff, and Michael S. Frey for Intervener and Appellant.

Palmer J. Swanson, Leo L. Ashley III, Law Office of Eugene P. Haydu, and Eugene P. Haydu for Plaintiff and Respondent.

Murphy, Campbell, Guthrie & Alliston, George E. Murphy, George A. Guthrie, and Jon Douglas Durham for Defendant and Respondent.

NICHOLSON, J.

This is a case in which an insurer provided representation to an insured, with a reservation of rights, for an action brought by a third party. The trial court (1) determined that, because of a specific conflict of interest, the insured in this case has a right to independent counsel rather than counsel provided by the insurer and (2) disqualified counsel that had represented the insured and insurer simultaneously. The insurer appeals, contending that (1) the insured is not entitled to independent counsel and (2) disqualification of counsel that had represented both the insured and the insurer was error. We conclude that the trial court did not err and therefore affirm the court’s order.

FACTS AND PROCEDURE

Plaintiff Steve Schaefer contracted with defendant Kelly Elder, doing business as Elder Construction, to design and build a residence for Schaefer in El Dorado County. Later, Schaefer sued Elder, alleging causes of action for breach of contract, negligence, breach of implied warranty, strict liability, money lent, diversion of funds, failure to enter into a written contract, and excessive down payment.

Elder tendered the defense of the action to his insurer, CastlePoint National Insurance Company (formerly known as SUA Insurance Company), and CastlePoint appointed counsel of its choice, the law firm of Koeller, Nebeker, Carlson & Haluck to represent Elder, subject to a reservation of rights. CastlePoint also filed separately a declaratory relief action against Elder to determine whether the insurance policy provided coverage for the claims Schaefer made against Elder.

Elder hired a different law firm to move to disqualify the Koeller firm and to determine Elder’s right to independent counsel. CastlePoint opposed the motion. The trial court granted Elder’s motion, disqualifying the Koeller firm and determining that Elder has a right to independent counsel.

CastlePoint appeals.

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