Universal Underwriters Insurance v. M.F. Salta Co.
Docket: No. 04-56349
Court: Court of Appeals for the Ninth Circuit; December 21, 2006; Federal Appellate Court
The memorandum addresses a case involving the duties of an insurer to defend its insured under California law. It reiterates that courts review summary judgment grants de novo, focusing on whether genuine issues of material fact exist and if the law was applied correctly. An insurer's duty to defend includes providing a defense to minimize liability, and failure to do so can lead to liability for judgments exceeding policy coverage, but only after an adverse judgment against the insured. The document emphasizes that mere dissatisfaction with the insurer's defense does not permit the insured to settle a case independently without the insurer’s consent, unless the insurer has completely abandoned its duty to defend. The memorandum clarifies that California courts have not specifically defined the insurer's duty in scenarios where the insured retains its own counsel. However, it concludes that in this case, Universal Underwriters did not abandon M.F. Salta Co. Salta, as Salta intended to retain its own counsel and Universal acquiesced to this decision. Universal fulfilled its obligation to pay legal fees, and any delays in reimbursement did not prevent Salta’s counsel from proceeding with the litigation. Therefore, under California law, Salta should have gone to trial before seeking recovery from Universal for any judgment beyond its coverage. Instead, Salta improperly settled the case without informing or obtaining consent from Universal, leading to the affirmation of the district court's judgment. The disposition of the case is not for publication and cannot be cited in courts of the circuit except as allowed by specific rules.