NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RUTH ANN WUNDERMAN COOPER, as 

assignees, and on behalf of the members of 

the class of investor/member investors of 

QHL Holdings Fund Ten LLC, a California 

Limited Liability Company, and Golden 

State TD Investments, LLC a California 

Limited Liability Company and MARC 

SOBEL, as assignees, and on behalf of the 

members of the class of investor/member 

investors of QHL Holdings Fund Ten LLC, 

a California Limited Liability Company, and 

Golden State TD Investments, LLC a 

California Limited Liability Company, 

Plaintiffs-Appellants, 

 v. 

CERTAIN UNDERWRITERS AT 

LLOYD'S, LONDON, Subscribing to 

Syndicate Nos. 623 and 2623 Under 

Contract No. W15HUJ07PNDM, 

Defendant-Appellee.

No. 15-56671 

D.C. No. 

2:14-cv-07475-FMO-MAN 

MEMORANDUM*

Appeal from the United States District Court

for the Central District of California

Fernando M. Olguin, District Judge, Presiding

Argued and Submitted February 15, 2018

Pasadena, California

 

* This disposition is not appropriate for publication and is not precedent except as 

provided by Ninth Circuit Rule 36-3.

FILED

MAR 30 2018

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2

Before: McKEOWN and WARDLAW, Circuit Judges, and DONATO,** District 

Judge.

Ruth Ann Wunderman Cooper and Marc Sobel appeal from the district 

court’s dismissal of their first amended complaint with prejudice. We have 

jurisdiction under 28 U.S.C. § 1291 and affirm.

Plaintiffs are assignees to rights in an excess insurance policy issued by 

defendants, Certain Underwriters at Lloyd’s, London (“Underwriters”). Plaintiffs 

sought to recover on the excess policy and sued Underwriters for breach of 

contract and breach of the implied covenant of good faith and fair dealing. 

Plaintiffs also sought a declaratory judgment that California law applied to their 

claims despite a New York choice of law provision in the excess policy. 

Underwriters moved to dismiss the first amended complaint. The district 

court found that the choice of law provision was enforceable, the excess policy 

unambiguously required exhaustion of underlying limits through payment by the 

insurers rather than payment by the insured, and settlement agreements attached to 

plaintiffs’ complaint clearly stated that an underlying insurer had not paid the full 

limits of its policy. The district court concluded that Underwriters could not be 

found liable on any of plaintiffs’ theories because excess coverage had never been 

triggered under the terms of the policy, and dismissed with prejudice. 

 

** The Honorable James Donato, United States District Judge for the Northern 

District of California, sitting by designation.
3

The district court correctly enforced the New York choice of law provision 

in the policy. California choice of law considers an international defendant’s 

geographic proximity to the chosen state. 1-800-Got Junk? LLC v. Superior Court, 

189 Cal. App. 4th 500, 515 (Cal. Ct. App. 2010), as modified (Nov. 19, 2010). 

New York is relatively close to London (headquarters of Underwriters) and is next 

to Connecticut (headquarters of Underwriters’ United States agent). In addition, 

international defendants have an interest in contracting under the laws of a state --

even one not substantially related to the contract -- for reasons of uniformity and 

predictability. Restatement (Second) of Conflict of Laws § 187 (1971). 

Plaintiffs have not shown that New York law is contrary to a fundamental 

California policy. Plaintiffs do not identify any material differences between New 

York and California in interpreting the disputed insurance policy, and the result is 

the same under the laws of both states. The excess policy unambiguously requires 

exhaustion of underlying policy limits “by reason of the payment . . . by the 

insurers of the Underlying Policies.” This forecloses the possibility of exhaustion 

through payment by parties other than the underlying insurers. Qualcomm, Inc. v. 

Certain Underwriters At Lloyd’s, London, 161 Cal. App. 4th 184, 194-95 (Cal. Ct. 

App. 2008); Forest Labs., Inc. v. Arch Ins. Co., 953 N.Y.S.2d 460, 463-65 (N.Y. 

Sup. Ct. 2012), aff’d, 984 N.Y.S.2d 361 (N.Y. App. Div. 2014). A settlement 

agreement attached to the first amended complaint expressly states that an
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underlying insurer paid only $3.47 million out of a $5 million policy limit. 

Plaintiffs’ allegations of exhaustion contradict the settlement agreement and are 

properly disregarded. Johnson v. Fed. Home Loan Mortg. Corp., 793 F.3d 1005, 

1008 (9th Cir. 2015).

Contrary to plaintiffs’ argument, Diamond Heights Homeowners Ass’n. v. 

National American Insurance Co., 227 Cal. App. 3d 563, 580 (Cal. Ct. App. 1991), 

does not override the exhaustion requirements stated in a policy. Rather, it 

addresses the entirely different question of “whether excess insurers have an 

absolute right to veto a settlement under a policy’s ‘no action’ and ‘no voluntary 

payments’ clauses.” Teleflex Med. Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 

PA, 851 F.3d 976, 982 (9th Cir. 2017). 

Under either New York or California law, excess coverage has not been 

triggered and Underwriters are not subject to liability. Because this conclusion is 

based on undisputed facts in the record before the district court, amendment would 

have been futile and dismissal with prejudice was proper. 

AFFIRMED.