Durment v. Burlington Insurance Company (9th Cir. 2020) 820 Fed.Appx. 561
Underlying this insurance bad faith dispute was a lawsuit involving alleged breaches of a joint venture agreement and an intellectual property agreement.  The insurers failed to defend the policyholders against an amended complaint tendered to the insurers on the eve of trial.  The policyholders then settled, assigning their claims against the insurers in exchange for a covenant not to execute against the policyholders.
Plaintiff sued the insurance carriers, seeking reimbursement of the settlement costs and alleging bad faith.  The district court granted summary judgment in the carriers’ favor concluding that an insurer that breaches the duty to defend is not liable for settlement costs outside the scope of the insurer’s indemnification duty.
The Court of Appeals for the Ninth Circuit affirmed, concluding that the district court correctly applied California law to reject Plaintiff’s argument that he could recover for settlement amounts from the insurers without establishing coverage.

Court of Appeals Opinion – View Document