California Civil Jury Instructions (CACI)

2321. Affirmative Defense—Insured’s Breach of Duty to Cooperate in Defense

[Name of defendant] claims that it does not have to pay the [judgment against/settlement by] [name of plaintiff] because [name of plaintiff] failed to cooperate in [his/her/its] defense. To succeed, [name of defendant] must prove all of the following:

1. That [name of plaintiff] failed to cooperate in the defense of the lawsuit against [him/her/it];

2. That [name of defendant] used reasonable efforts to obtain [name of plaintiff]’s cooperation; and

3. That [name of defendant] was prejudiced by [name of plaintiff]’s failure to cooperate in [his/her/its] defense.

To establish prejudice, [name of defendant] must show a substantial likelihood that, if [name of plaintiff] had cooperated, [name of defendant] would have [taken steps that would have substantially reduced or eliminated [name of plaintiff]’s liability] [or] [settled for a substantially smaller amount].

New September 2003

Directions for Use

The instructions in this series assume the plaintiff is the insured and the defendant is the insurer. The party designations may be changed if appropriate to the facts of the case.

This instruction is intended for use by an insurer as a defense to a breach of contract action based on a third party liability policy. This instruction also may be modified for use as a defense to a judgment creditor’s action to recover on a liability policy.

Depending on the facts of the case, the second element of this instruction may not always be necessary.

Sources and Authority

  • “The right of an injured party to sue an insurer on the policy after obtaining judgment against the insured is established by statute. An insurer may assert defenses based upon a breach by the insured of a condition of the policy such as a cooperation clause, but the breach cannot be a valid defense unless the insurer was substantially prejudiced thereby… [¶] The burden of proving that a breach of a cooperation clause resulted in prejudice is on the insurer.” (Campbell v. Allstate Insurance Co. (1963) 60 Cal.2d 303, 305—306 [32 Cal.Rptr. 827, 384 P.2d 155], internal citations omitted.)
  • “[W]e apprehend that Campbell stands for these propositions: (1) that breach by an insured of a cooperation . . . clause may not be asserted by an insurer unless the insurer was substantially prejudiced thereby; (2) that prejudice is not presumed as a matter of law from such breach; (3) that the burden of proving prejudicial breach is on the insurer; and (4) that, although the issue of prejudice is ordinarily one of fact, it may be established as a matter of law by the facts proved.” (Northwestern Title Security Co. v. Flack (1970) 6 Cal.App.3d 134, 141 [85 Cal.Rptr. 693].)
  • “ ‘[C]ooperation clauses serve an important purpose. “[A] condition of a policy requiring the cooperation and assistance of the assured in opposing a claim or an action lodged against him by an injured person is material to the risk and of the utmost importance in a practical sense. Without such cooperation and assistance the insurer is severely handicapped and may in some instances be absolutely precluded from advancing any defense.” . . . “[S]uch provisions ‘enable the [insurer] to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to facts, material to [its] rights, to enable [it] to decide upon [its] obligations, and to protect [itself] against false claims.’ ” . . . Where an insured violates a cooperation clause, the insurer’s performance is excused if its ability to provide a defense has been substantially prejudiced.’ ” (Belz v. Clarendon America Ins. Co. (2007) 158 Cal.App.4th 615, 626 [69 Cal.Rptr.3d 864].)
  • “[A]n insurer, in order to establish it was prejudiced by the failure of the insured to cooperate in his defense, must establish at the very least that if the cooperation clause had not been breached there was a substantial likelihood the trier of fact would have found in the insured’s favor.” (Billington v. Interinsurance Exchange of Southern California (1969) 71 Cal.2d 728, 737 [79 Cal.Rptr. 326, 456 P.2d 982].)
  • “[I]f the trial court finds . . . that the insurer failed to diligently seek its insured’s presence a finding that he breached the cooperation clause would not be justified.” (Billington, supra, 71 Cal.2d at p. 744.)
  • “[P]rejudice is not shown simply by displaying end results; the probability that such results could or would have been avoided absent the claimed default or error must also be explored.” (Clemmer v. Hartford Insurance Co. (1978) 22 Cal.3d 865, 883, fn. 12 [151 Cal.Rptr. 285, 587 P.2d 1098].)

Secondary Sources

Croskey et al., California Practice Guide: Insurance Litigation (The Rutter Group) ¶¶ 15:917—15:919

1 California Liability Insurance Practice: Claims & Litigation (Cont.Ed.Bar) Insured’s Role in Defense, §§ 11.2—11.26

4 California Insurance Law & Practice, Ch. 41, Liability Insurance in General, § 41.64[1]—[11] (Matthew Bender)