176 F.3d 482 (9th Cir. 1999), 97-16759, County of Santa Clara v. U.S. Fidelity & Guar. Co.

Docket Nº:97-16759.
Citation:176 F.3d 482
Party Name:COUNTY OF SANTA CLARA Plaintiff-Appellee, v. UNITED STATES FIDELITY & GUARANTEE COMPANY; Chicago Insurance Company; Stonewall Insurance Company; Yasuda Fire and Marine Insurance Company, Ltd. (UK); Turegum Insurance Company; Excess Insurance Company, Limited; Assicurazioni Generali S.P.A.; Certain Underwriters at Lloyd's of London; Stronghold Insur
Case Date:April 19, 1999
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 482

176 F.3d 482 (9th Cir. 1999)

COUNTY OF SANTA CLARA Plaintiff-Appellee,

v.

UNITED STATES FIDELITY & GUARANTEE COMPANY; Chicago Insurance Company; Stonewall Insurance Company; Yasuda Fire and Marine Insurance Company, Ltd. (UK); Turegum Insurance Company; Excess Insurance Company, Limited; Assicurazioni Generali S.P.A.; Certain Underwriters at Lloyd's of London; Stronghold Insurance Company, Ltd .; Unigard Security Insurance Company, Defendants,and

EMPLOYERS REINSURANCE CORPORATION, Defendant-Appellant.

No. 97-16759.

No. CV 97-20408 EAI

United States Court of Appeals, Ninth Circuit

April 19, 1999

Editorial Note:

This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA9 Rule 36-3 regarding use of unpublished opinions)

Argued and Submitted March 9, 1999.

Appeal from the United States District Court for the Northern District of California Edward A. Infante, Magistrate Judge, Presiding.

Before FERNANDEZ and McKEOWN, Circuit Judges and WEINER, 2 Senior District J.

MEMORANDUM 1

The County of Santa Clara initiated this insurance coverage action against its primary insurer United States Fidelity & Guaranty (USF & G) and its excess insurer Employers Reinsurance Corporation (ERC). Jurisdiction before the district court was premised on 28 U.S .C. § 1332; jurisdiction on appeal is premised on 28 U.S.C. § 1291. We reverse and remand for further consideration.

Under California law, an excess insurer is not obligated to contribute to defense costs until the primary insurance has been exhausted. Signal Companies, Inc. v. Harbor Ins. Co., 27 Cal.3d 359, 365, 612 P.2d 889, 165 Cal.Rptr. 799 (1980); Aetna Cas. & Surety Co. v. Certain Underwriters at Lloyds, 56 Cal.App.3d 791, 804, 129 Cal.Rptr. 47 (1976). More specifically, the primary insurer's duty to defend is only extinguished after exhaustion of the primary coverage, not anticipated exhaustion. Aetna 56 Cal.App.3d at 804 (duty is extinguished "after the payment" of the primary coverage); Signal, 27 Cal.3d at 367 (notification that exposure exceeds primary coverage insufficient to extinguish primary's duty to defend when primary coverage has not yet been exhausted); Chubb/Pacific Indemnity Group v. Insurance Co. of North America, 188 Cal.App.3d 691, 233 Cal.Rptr. 539 (1987) (obligation to defend extinguished only by "actual settlement or payment of judgment"). The record here shows only...

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