RSUI Indemnity Company v. American States Insuranc

REAVLEY, Circuit Judge:

This is a dispute between excess and primary insurance carriers with a common insured. The excess insurer seeks to recover from the primary the amount that it paid on the insured’s behalf to settle excess claims in an underlying lawsuit after the primary insurer had settled its own liability with the underlying plaintiff by paying its policy limit. The excess insurer sued under a theory of subrogation based on the primary insurer’s alleged bad faith failure to defend properly the common insured.

The district court held that the excess insurer could not maintain the suit…