August 16, 2005 |

Insurance Coverage, Appellate

We represented a company with several pending claims under its D&O insurance (see December 2005 and May 2006). These included an investigation by the Department of Justice and an investigation by the Securities Exchange Commission. In the course of the pending coverage litigation the insurers sought to obtain discovery, from our client, regarding the underlying claims. We requested that the court issue a stay on discovery into the underlying claims on the basis that an insurer, who has contacted to protect the insured, should not be causing potential problems for the insured (see, generally, Haskell v. Superior Court). The trial court disagreed and ordered discovery to continue. We filed a Writ of Mandate with the Court of Appeal and a request for immediate stay (statistically we had a 2% chance, but we felt that we had good cause). The Court of Appeal issued an Order to Show Cause and further ordered a stay on the trial court’s prior discovery rulings, pending full briefing and a hearing before the Court of Appeal. This avoided what would have been very difficult and expensive discovery.