This decision follows Diamond Heights Homeowners Assn. v. National American Ins. Co. (1991) 227 Cal.App.3d 563 which it finds was not expressly or impliedly disapproved in Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1. When the primary insurer and the insured wish to settle a claim and timely ask the excess insurer to approve it, the excess insurer has three options: it may accept the settlement and pay its share, it may reject the settlement and assume the insured’s defense, or it may reject both the settlement and defense, but then, it is liable in a suit by the primary or the insured for contribution if the settlement is found to have been reasonable and not the product of collusion. The excess insurer cannot defend against that liability by contending that the settlement was entered into without its consent in breach of the policy’s no action clause.
Ninth Circuit Court of Appeal (Callahan, J.); March 21, 2017; 2017 WL 1055586