Ninth Circuit Finds Excess Carrier Can Challenge Primary Insurer's Settlement Payment and Erosion of Limits

February 15, 2021
Tred R. Eyerly - Insurance Law Hawaii

The court found that the excess carrier had grounds to challenge the primary carrier's allocation of a settlement payment. Scottsdale Ins. Co. v. Certain Underwriters at Lloyds, London, 2020 U.S. App. LEXIS 39771 (9th Cir Dec. 18, 2020).

In the underlying case, Underwriters settled on behalf of the insured law firm under a professional liability policy. Scottsdale sued Underwriters for a declaratory judgment that the settlement did not erode the limits. Underwriters counterclaimed seeking equitable contribution. On cross motions for summary judgment, the district court concluded that: (1) Scottsdale could not challenge Underwriters' settlement payment and the corresponding erosion of policy limits, and (2) Underwriters was not entitled to equitable contribution from Scottsdale.

Mr. Eyerly may be contacted at te@hawaiilawyer.com



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