Rivera

MEMORANDUM *

In this insurance coverage dispute, Pedro and Aracely Rivera allege that Allstate unreasonably, and in bad faith, denied payment of their claim for water damage to their home. Allstate denied coverage of the claim, citing the Riveras’ failure to comply with the cooperation provision in their homeowner’s insurance policy. The Riveras brought suit for breach of contract, bad faith and punitive damages. The district court granted summary judgment to Allstate on all claims. We have jurisdiction under 28 U.S.C. § 1291 , and we affirm in part, and reverse and remand in part.

We review de novo the district court’s summary judgment ruling. See United States v. City of Tacoma, Wash., 332 F.3d 574, 578 (9th Cir.2003). Our review is governed by the same standard used by the trial court under Federal Rule of Civil Procedure 56(c). See Suzuki Motor Corp. v. Consumers Union, Inc., 330 F.3d 1110, 1131 (9th Cir.2003). Both parties agree California law governs this dispute.

I.

The district court erred in granting summary judgment to Allstate on the Riv-eras’ breach of contract claim. The district court held that the Riveras breached the cooperation clause in two ways: (1) the…