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Excess Insurer Owes Nothing Until Primary Insurer’s Limits Are Exhausted
Vizio, Inc. appealed the district court’s order granting Arch Insurance’s motion to dismiss. Arch issued an insurance policy to Vizio and provided coverage excess to Navigators Insurance’s primary policy, meaning that Arch only covered losses that exceeded the $5 million limit of the Navigators Policy. The Arch Policy “followed form” to Navigators’ policy, so it has the same terms except for those specifically contradicted by the Arch Policy. Vizio also had a separate line of general liability coverage with Chubb.
In VIZIO, INC. v. ARCH INSURANCE COMPANY, et al., No. 22-55755, United States Court of Appeals, Ninth Circuit (October 30, 2023) Vizio sought coverage from an excess insurer after reaching a settlement with plaintiffs in a class action suit without first getting permission from the excess insurer.
FACTS
After consumers filed class action lawsuits against Vizio in connection with its Smart TV products (the “Smart TV Litigation”), Vizio notified both Navigators and Arch of its potential insurance claims in a February 2016 email. Arch requested more information, while Navigators denied coverage, citing a policy exclusion. Vizio twice forwarded Navigators’ denial letter to Arch, but Vizio never provided Arch with any substantive updates about the Smart TV Litigation. Arch, in turn, failed to convey a coverage decision, though internal records show that Arch decided to deny coverage.
About two years later, without seeking or receiving Arch’s consent, Vizio settled the Smart TV Litigation for $17 million. On Arch’s motion the district court dismissed Vizio’s fourth amended complaint with prejudice, holding (among other things) that Vizio failed to properly notify Arch of its claim after the underlying policy limit was exhausted.
The District Court Erred In Holding That Providing Notice Prior To Exhaustion Was Improper.
Finding that notice was given the district court incorrectly concluded Vizio failed to give proper notice but rightly determined that Arch at that time had no duty to defend or indemnify because the primary policy limit had not yet been exhausted. Vizio’s February 2016 email was adequate notice.
Vizio Failed To Comply With The Consent Provision Before Settling.
First, Vizio admits that it did not obtain Arch’s consent prior to settling the Smart TV Litigation as required under the Arch Policy. Since a following form excess policy has the same terms and conditions as the underlying primary policy and, therefore, the Navigators Policy’s consent provision is incorporated into the Arch Policy.
Second, Vizio argues that Arch’s policy conflicts with Navigators’ policy. Not so.
Lastly, Vizio argues that, if the consent provision applies, Vizio was excused from performing because Arch allegedly breached the policy first by not properly responding to Vizio’s February 2016 email. However, Vizio failed to allege facts that would plausibly show that Arch breached any of its duties under the policy. Moreover, even if Arch breached the policy as alleged, this would not excuse Vizio from seeking Arch’s consent to the settlement.
ANALYSIS
Insurance contracts in the state of California incorporate the terms of California’s insurance regulations. Vizio relies on California Code of Regulations Title 10, Section 2695.7(b) for the proposition that an insurer’s failure to accept or deny a claim within 40 days of tender is a breach of the insurance policy. But Section 2695.7(b) only applies after an insurer receives a “proof of claim,” which is defined as evidence of a claim that “reasonably supports the magnitude or the amount of the claimed loss.” 10 C.C.R. § 2695.2(s).
A “notice of claim” is not a proof of claims. Vizio’s February 2016 email to Arch was a notice of claim, not a proof of claim.
Vizio also alleged Arch breached the contract when it internally denied coverage and never informed Vizio. Arch’s alleged breach would only excuse Vizio’s non-consensual settlement if Vizio had requested and been denied coverage. But Arch never informed Vizio that it would deny coverage, and Vizio never followed up or provided Arch with any substantive updates about the Smart TV Litigation. Thus, Vizio, having never been notified of a denial of coverage, still had an obligation to obtain Arch’s consent to any settlement, notwithstanding Arch’s alleged breach. Without notice, Arch was denied the opportunity to participate in the settlement negotiations, which the insurance contract established as a prerequisite to Arch’s duty to pay.
Vizio’s Claim For The Breach Of The Implied Covenant Of Good Faith And Fair Dealing Fails.
Under California law, without a breach of the insurance contract, there can be no breach of the implied covenant of good faith and fair dealing. Because Vizio breached the policy by not soliciting Arch’s consent prior to settlement, no benefits were due, and Arch therefore did not breach the contract.
Vizio’s Equitable Contribution Claim Fails.
Equitable contribution is the right to recover, not from the party primarily liable for the loss, but from a co-obligor who shares such liability with the party seeking contribution. However, as a general rule, there is no contribution between a primary and an excess carrier.
Arch was indisputably an excess insurer because it only had an obligation to indemnify Vizio once the $5 million limit of the Navigators Policy was exhausted.
ZALMA OPINION
The Ninth Circuit read the two policies: the primary and the following excess policy. Both policies required that the insured advise the insurers of their intent to settle, obtain permission from the insurer, or lose the right to indemnity. The settlement of the class action may have been a wise decision by Vizio but its failure to seek the participation and consent of Arch cost them any possibility of obtaining contribution from Arch and deprived Arch of the ability to reject coverage or pay.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Convicted Criminal Seeks to Compel Receiver to Protect his Assets
Post number 5291
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The Work of a Court Appointed Receiver is Constitutionally Protected
In Simon Semaan et al. v. Robert P. Mosier et al., G064385, California Court of Appeals, Fourth District, Third Division (February 6, 2026) the Court of Appeals applied the California anti-SLAPP statute which protects defendants from meritless lawsuits arising from constitutionally protected activities, including those performed in official capacities. The court also considered the doctrine of quasi-judicial immunity, which shields court-appointed receivers from liability for discretionary acts performed within their official duties.
Facts
In September 2021, the State of California filed felony charges against Simon Semaan, alleging violations of Insurance Code section 11760(a) for making...
When There are Two Different Other Insurance Clauses They Eliminate Each Other and Both Insurers Owe Indemnity Equally
Post number 5289
In Great West Casualty Co. v. Nationwide Agribusiness Insurance Co., and Conserv FS, Inc., and Timothy A. Brennan, as Administrator of the Estate of Pat- rick J. Brennan, deceased, Nos. 24-1258, 24-1259, United States Court of Appeals, Seventh Circuit (February 11, 2026) the USCA was required to resolve a dispute that arose when a tractor-trailer operated by Robert D. Fisher (agent of Deerpass Farms Trucking, LLC-II) was involved in a side-impact collision with an SUV driven by Patrick J. Brennan, resulting in Brennan’s death.
Facts
Deerpass Trucking, an interstate motor carrier, leased the tractor from Deerpass Farms Services, LLC, and hauled cargo for Conserv FS, Inc. under a trailer interchange agreement. The tractor was insured by Great West Casualty Company with a $1 million policy limit, while the trailer was insured by Nationwide Agribusiness Insurance Company with a $2 million ...
Opiod Producer Seeks Indemnity from CGL Insurers
Post number 5288
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Insurers Exclude Damages Due to Insured’s Products
In Matthew Dundon, As The Trustee Of The Endo General Unsecured Creditors’ Trust v. ACE Property And Casualty Insurance Company, et al., Civil Action No. 24-4221, United States District Court, E.D. Pennsylvania (February 10, 2026) Matthew Dundon, trustee of the Endo General Unsecured Creditors’ Trust, sued multiple commercial general liability (CGL) insurers for coverage of opioid-related litigation involving Endo International PLC a pharmaceutical manufacturer.
KEY FACTS
Beginning as early as 2014, thousands of opioid suits were filed by governments, third parties, and individuals alleging harms tied to opioid manufacturing and marketing.
Bankruptcy & Settlements
Endo filed Chapter 11 in August 2022; before bankruptcy it ...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lost the ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah. Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being. Jews believe the force we call G_d created the entire universe and everything in it. Jews feel G_d is all seeing and knowing and although we can’t see Him, He is everywhere and in everyone.We understand...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
Read the full article at https://www.linkedin.com/pulse/passover-americans-barry-zalma-esq-cfe-5vgkc.
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lostthe ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah.
Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and ...
You Get What You Pay For – Less Coverage Means Lower Premium
Post number 5275
Posted on January 30, 2026 by Barry Zalma
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When Experts for Both Sides Agree That Two Causes Concur to Cause a Wall to Collapse Exclusion Applies
In Lido Hospitality, Inc. v. AIX Specialty Insurance Company, No. 1-24-1465, 2026 IL App (1st) 241465-U, Court of Appeals of Illinois (January 27, 2026) resolved the effect of an anti-concurrent cause exclusion to a loss with more than one cause.
Facts and Background
Lido Hospitality, Inc. operates the Lido Motel in Franklin Park, Illinois. In November 2020, a windstorm caused one of the motel’s brick veneer walls to collapse. At the time, Lido was insured under a policy issued by AIX Specialty Insurance Company which provided coverage for windstorm damage. However, the policy contained an exclusion for any loss or damage directly or indirectly resulting from ...
