N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
TR AVELER S PR O PER TY C ASUALTY C OM PANY OF AM ER IC A, a C onne c t ic ut c orporat i on,

Pla i ntiff-Appe lle e , v. TAISEI C ONSTR

UC TION C ORPOR ATION, a

De la ware c orporation, De fe nda n t-Appe l la

nt. No. 17-55886

DC No. C V 15-05677 R
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia M anue l L. R e a l , Distric t Judge , Pre siding A rgue d a nd Subm itte d Ja

nua ry 10, 2019 Pa sa de n a , C a l ifornia B e fore : TASHIM Aand WATFORD, C i rc uit Judge s, a nd R OB RENO, * * Distric t Judge
. 

# FIL ED FEB 08 2019 M OLLY C. DW Y ER, CLERK U
. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The Honora

ble Edua rdo C . R obre n o, Unite d State s Distric t Judge for the E a s te rn Distric t of Pe nnsy lva nia , sitting by

de s igna tion.This a ppe a l ste m s from

a disputebe twe e n an insura n c e c arrie r, Pla intiff Trave l e rs Prope rty C a sua lty C om pa ny of Am e ric a

(“ Trave le rs” ), an d

its insure d, De fe nda nt Ta ise i C orporation (“ Ta ise i” ). Wh e n Ta ise i wa s sue d in sta

te c ourt by

a third pa rty , it te nde re d the de fe nse of the a c t ion to Tra ve le rs, whic h a c c e pte d

the te nde r and a

p pointe d c ounse l to de fe nd Ta i se i. La te r, Ta ise i re que ste d tha

t Trave l e rs’ a

ppointe d c ounse l withdra w. Tra ve le rs the n brought this ac t ion a ga inst Ta ise i for de c la

ra t ory re l ie f and bre a c h of c ontra c t, a lle g ing tha t Ta ise i’ s dismissa l of a ppointe d c ounse l wa s a

bre a c h of Ta i se i’ s duty

to c oope rate . Ta ise i c ounte rc la im e d, a lso for de c latory re lie f and bre a c h

of c ontra c t. The distric t c ourt dism isse d Ta ise i ’ s c ounte rc l a im and gra n te d sum m ary judgm e nt to Tra

ve le rs; Ta ise i a ppe a le d. W e re vie w de novo a distric t c ourt’ s granting of sum m ary judgm e nt, se e Balle n v . C

ity of Re dmond, 466 F.3d 736, 741 (9th C ir. 2006), a n d of a m otion to dism iss, se e C

e rv ante s v . Unite d State

s , 330 F.3d 1186, 1187 (9th C ir. 2003). W e va c ate and re m and in pa

rt a nd a ffirm in pa rt. 1. The distric t c ourt e rre d in gra nting sum m ary judgm e n t to Tra

ve le rs on its c l a im tha t Ta i se i bre a c he d its duty

to c oope rat e unde r the insura nc e c ontra c t a s a
m atte r of la

w by re je c ting Tra

ve le rs’ a ppointe d c ounse l. Unde r C a lifornia la w, a n insura nc e c arrie r m

ust show substa

ntia l pre judic e in orde r to pre va i l on a c la im tha t
2an insure d bre a c h e d the duty to c oope rat e . C

ampbe ll v . Allstate Ins. C o. , 384 P.2d 155, 156 (C a l. 1963). B e c a use substa

ntia l pre judic e re quire s a

showing tha

t the re is “ a substa ntia l like lihood thetrie r of fa c t would ha v e found in theinsure d’ s favor,” Billington v. Inte rinsuranc e Ex c h. of S. C a l. , 456 P.2d 982, 987 (C a l. 1969), a nd be c a use pre judic e from

bre a c h of the duty

to c oope rate ge ne ra l ly

c annot be pre sum e d, C

ampbe ll , 384 P.2d a

t 157, pre judic e ge ne ra l ly

c annot be shown until theunde rly ing litiga tion ha s c onc lude d. Se e Unite d Se rv s. Auto. Assn. v
. Martin , 174 C a l. R

ptr. 835, 836 (C t. App. 1981) (“ Logic a lly , the re quire d showing of pre judic e c annot be m a de while the m a in tort a c tion is still pe nding, its outc om e unc e rta in.” ). At the tim e the distric t c ourt gra nte d sum m ary judgm e nt to Tra

ve le rs, the unde rly ing litiga

tion ha d not c onc lude d; a c c ordingly , the distric t c ourt e rre d in gran ting sum

m ary judgm e nt to Tra

ve le rs be c a

use pre judic e ha d not be e n a

nd c ould not be shown. Howe ve r, the unde rly ing litiga tion ha s sinc e be e n se ttle d. W e the re fore va c ate the distric t c ourt’ s gra nt of sum m ary judgm e nt to Tra

ve le rs a nd
re m and for the c ourt to c onside r the e ffe c t of the se ttle m e nt of the unde rly ing
a c tion on Tra

ve le rs’ c la im
. 2. The distric t c ourt prope rly dism isse d Ta i se i’ s c ounte rc la im for de c la ra tory re lie f a nd bre a c h of c ontra c t. Ta ise i a lle g e d tha t Trave le rs bre a c he d its duty unde r the c ontra c t by

fa i ling to supervise its a

ppointe d c ounse l. Unde r
3C a lifornia

la w, howe ve r, insure rs do not ha ve an obliga

tion to monitor the
a de qua c y of a ppointe d c o unse l’ s re pre se ntation. Se e Me rritt v . Re se rv e Ins. C

o. , 110 C a l. R

ptr. 511, 526–27 (C t. App. 1973) (holding tha t, be c a use an insura nc e c arrie r is not a

uthoriz e d to pra c tic e la

w a n d the re fore m

ust de le gate the de fe nse to tria l c ounse l, a

ny re m e d y is “ found in a

n a c tion a ga inst c ounse l for m a lpra c t ic e and not in a suit a ga i nst c ounse l’ s e m ploy e r to im

pose vic arious lia

bility ” ). Ta ise i’ s
a lle gation tha

t Tra ve le rs unde rtook this obliga tion through a

n a lle g e d c ontra c t is a le ga l c o nc lusion for whic h Trav e le rs a lle ge d no supporting fac ts. Se e Ashc roft v
. Iqbal , 556 U.S. 662, 679 (2009). Ac c ordingly , be c a use the c ounte rc la i m

fa ile d pla u sibly to a lle ge e ithe r that Tra

ve le rs owe d a

duty to Ta ise i to ove rse e a

ppointe d
c ounse l’ s c onduc t of the unde rly ing litiga tion or tha

t it bre a c he d suc h a

duty , we
a ffirm the distric t c o urt’ s dism issa l of Ta ise i’ s am e nde d c ounte rc la im
. V ACAT E D and RE M ANDE D in par t, and AFFIRM E D in par t. Ea c h side sha ll be a

r its own c osts on a

ppe a l.

4