National Railroad Passenger Corp. (AMTRAK) v. TIG Insurance

MEMORANDUM *

This case involves a challenge to the district court’s determination that TIG Insurance Company (TIG) is liable in tort for a judgment in excess of its policy limit because it breached the covenant of good faith and fair dealings by failing to accept a reasonable settlement offer within the policy limit. 1

*696 This court reviews the district court’s grant of summary judgment de novo. Buono v. Norton, 371 F.3d 543, 545 (9th Cir.2004); Universal Health Servs., Inc. v. Thompson, 363 F.3d 1013 , 1019 (9th Cir. 2004). A district court’s interpretation of state substantive law also is reviewed de novo. Reese v. Travelers Ins. Co., 129 F.3d 1056,1059-60 (9th Cir.1997).

TIG argues that traditional insurance law — with its duty to settle and concomitant tort liability for failure to settle a third party claim — should not apply here because of the operation of a reimbursement provision contained in the California Public Utilities Commission’s endorsement (the PUC Endorsement) to the insurance policy. TIG contends that the PUC Endorsement’s reimbursement provision (1) forms a surety obligation to which tort liability does not attach, and (2) frees TIG from the settlement…

I concur in the result.