Ninth Circuit upholds dismissal of Heard’s damages claim

Metropolitan News Enterprise

Tuesday, November 26, 2024

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Ninth Circuit upholds dismissal of Heard’s damages claim

The statement said counterclaims alleging that the insurer breached its duty to defend in the defamation lawsuit brought by actor Johnny Depp fail on legal grounds

By a MetNews staff member

The Ninth U.S. Circuit Court of Appeals ruled yesterday that actress Amber Heard’s counterclaims against an insurer allege that the airline breached its duty to defend her in the high-profile defamation lawsuit filed by her ex-husband, the actor/musician Johnny Depp, filed against her in 2019 – when it refused to provide her with independent legal representation after she claimed a conflict of interest, as no such conflict existed.

At issue was whether the carrier, New York Marine and General Insurance Company, created a conflict of interest when it agreed to defend it in the Depp litigation under a California liability policy, subject to a general reservation of rights in which it stated: “To the extent California law does not permit an insurer to indemnify the insured, no indemnity may be awarded.”

According to the decision of Div. from 1984. One of the Fourth District Court of Appeals in San Diego Federal Credit Union v. Cumis Insurance Society Inc.Under California law, an insurer is required to pay for independent counsel – now known as Cumis Legal Assistance – for an insured where the carrier provides representation but reserves the right to assert non-coverage at a later date because the reservation creates a potential conflict of interest.

Under California law, the attorney provided by the insurer has duties to both parties.

Underlying litigation

Heard informed New York Marine of the lawsuit about six months after Depp filed a complaint alleging that a December 18, 2018 Washington Post editorial Heard wrote in which she described herself as “a Public figure representing the domestic “identified abuse” contained defamatory statements. The lawsuit was filed in Virginia because The Washington Post’s Internet servers are located in that jurisdiction.

New York Marine agreed to allow Virginia firm Cameron McEvoy PLLC to continue to represent Heard in the matter. However, Heard demanded that the insurer appoint her new “independent” lawyer Cumis.

New York Marine denied their request.

Heard then retained her own “independent” lawyer and Cameron McEvoy withdrew. The Travelers Insurance Company – where Heard had taken out home contents insurance that supposedly covered damages arising from defamation allegations – stepped in and partially covered the costs of her new lawyers. In June 2022, a jury found that Heard had indeed acted intentionally and found her liable.

Heard was ordered to pay Depp $10.35 million in damages, but the parties agreed to settle the case for $1 million.

Travelers paid the full amount of compensation and New York Marine claims it donated $600,000 to Travelers for its share of the defense.

Insurance disputes

New York Marine filed suit against Heard in July 2022, demanding a declaration that it had failed in its duty to defend her when it pursued the appointment of Cameron McEvoy. The statement of claim cites Section 533 of the Insurance Law, which states that “an insurer shall not be liable for damage caused by the intentional act of the insured,” and asserts that the jury’s decision in the Depp litigation disqualified him from doing so from all further obligations towards Heard.

Heard counterclaimed, alleging that the company breached its duty to defend by refusing to appoint independent counsel and breached an implied duty of good faith and fair dealing.

Senior District Court Judge George Wu of the Central District of California dismissed Heard’s counterclaims with reservations. Wu acknowledged that the issues were complicated by the fact that the underlying litigation took place in Virginia and, under Virginia law, unlike California, an insurer-appointed defense attorney only represents and against the insured, not the insurer a duty of loyalty owes covered party.

In these circumstances, he argued that the ambiguous nature of the “election/conflict of law questions was irrelevant” as there was no conflict of interest that could potentially give rise to an appointment requirement Cumis Advice. He wrote: “The point here is that NY Marine’s ‘interests’ did not ‘conflict’ with those of Heard and a ‘conflict (did not) arise’ because Virginia’s attorneys had no obligation to NY Marine while.” They represented Heard.” ”

Wu concluded that dismissal of Heard’s counterclaims mooted any declaratory judgment claim.

The Ninth Circuit Judge affirmed this in a memorandum decision signed by District Judge Roopali H. Desai, Chief Judge Andrew D. Hurwitz and Second District Judge Barrington D. Parker, each of whom sat on the ballot.

No violation

Hurwitz, Desai and Parker wrote:

“New York Marine did not breach its duty to defend Heard. New York Marine agreed “to provide, at our expense, a defense by counsel of our choosing, even if the claim is without merit, false or fraudulent.” New York Marine fulfilled this duty by continuing to appoint Cameron McEvoy.”

They were unconvinced by Heard’s claim that a conflict of interest arose because the insurer reserved the right to deny coverage if her conduct was willful or willful, saying:

“There was no conflict of interest between New York Marine and Heard. Cameron McEvoy’s lawyers litigated the defamation case in Virginia, were members of the Virginia Bar Association, and were bound by the ethics rules of Virginia, not California. Unlike California, Virginia’s ethics rules provide that an attorney retained by an insurer has duties only to the insured, not the carrier.”

As a result, the committee came to the following justification:

“Therefore, potential disputes between an insurer and an insured over compensation do not place Virginia attorneys in a position of conflict. New York Marine was not required to provide Heard with independent counsel and therefore did not breach its duty to defend her.”

Implied agreement

Regarding Heard’s counterclaim for breach of the implied covenant of good faith and fair dealing, they noted:

“The district court did not err in dismissing Heard’s counterclaim for breach of an implied covenant of good faith and fair dealing. For Heard’s counterclaim to stand, she must have alleged facts that would establish that “(1) the benefits due under the policy were withheld; and (2) the reason for withholding benefits was unreasonable or without good cause.”

The lawyers noted in a footnote that “after dismissing her counterclaim for breach of contract, the district court granted Heard permission to amend her complaint in bad faith, but she declined to do so,” reasoning that “her violation of the “Implied contract action rested solely on it.” Allegation that New York Marine had failed to provide independent advice.” In these circumstances they held:

“New York Marine failed to fulfill its duty of defense under the policy… Heard therefore failed to plausibly allege facts supporting the withholding of any benefit owed under the policy.” The district court therefore correctly dismissed Heard’s breach of implied contract claim.”

They stated: “(b)Because we affirm the dismissal of Heard’s counterclaims, we also affirm the district court’s dismissal of New York Marine’s declaratory judgment action as moot.”

The case is New York Marine and General Insurance Company v. Heard23-3399.

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