Ninth Circuit Says Amber Heard not Entitled to Independent Counsel in Johnny Depp Defamation Action

In 2018, the Washington Post published an opinion editorial by actress Amber Heard in which she claimed her ex-husband Johnny Depp had domestically abused her. Depp responded by suing Heard for defamation in Virginia. Heard retained a Virginia law firm to defend her. She tendered the suit to her liability insurer New York Marine six months later. New York Marine agreed to defend Heard while reserving the right to deny an indemnity obligation if her conduct was determined to be willful and intentional, conduct which is generally uninsurable under California law. Presumably the policy was issued to Heard in California. Although its policy provided that it had the right to choose counsel to defend Heard, New York Marine agreed to continue with the Virginia firm Heard had already retained. Heard then claimed that New York Marine’s reservation of rights entitled her to independent counsel (which is odd because she had already retained counsel of her choice). After New York Marine refused this request for new counsel, Heard went ahead and retained new counsel with Travelers apparently paying some of its fees under a separate liability policy. Heard’s original counsel ended up withdrawing and New York Marine subsequently reimbursed Travelers for some of the new firm’s fees. A judgment was ultimately entered against Heard in the defamation suit and it was ultimately settled by Travelers. New York Marine then filed suit against Heard in California federal court seeking a declaration that it had satisfied its duty to defend Heard. Heard counterclaimed for breach of duty to defend and bad faith. The trial court dismissed Heard’s counterclaims for failure to state a claim and then dismissed New York Marine’s request for declaratory judgment as moot. The Ninth Circuit Court of Appeals affirmed. The court held that, because the underlying suit was venued in Virginia and insured Heard was being defended by members of the Virginia bar who were thus bound by Virginia’s ethics rules rather than California’s, Virginia law applied.  Because Virginia’s ethics rules provided that, unlike California’s ethics rules, counsel retained by an insurer to defend an insured owes a duty only to the insured and not also the insurer, insured Heard had no right to independent counsel.  Therefore, New York Marine did not breach its duty to defend. New York Marine Ins. Co. v. Heard, No. 23-3399, No. 23-3585 (9th Cir. 11/25/2024).