Teleflex Medical Inc. v. National Union Fire Insurance Co. of Pittsburgh

OPINION

CALLAHAN, Circuit Judge:

In Diamond Heights Homeowners Association v. National American Insurance Co., 227 Cal.App.3d 563, 277 Cal.Rptr. 906 (1991), a California appellate court ruled that an excess liability insurer has three options when presented with a proposed settlement of a covered claim that has met the approval of the insured and the primary insurer. The excess insurer must (1) approve the proposed settlement, (2) reject it and take over the defense, or (3) reject it, decline to take over the defense, and face a potential lawsuit by the insured seeking contribution toward the…