                            NOT FOR PUBLICATION                          FILED
                    UNITED STATES COURT OF APPEALS                        SEP 20 2018
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                            FOR THE NINTH CIRCUIT

AMCO INSURANCE COMPANY,                         No.    17-55383

      Plaintiff-counter-                        D.C. No.
      defendant-Appellee,                       2:12-CV-02323-DSF-PLA

 v.
                                                MEMORANDUM*
JENNIFER MORFE,

      Defendant-counter-claimant-
      Appellant.

                   Appeal from the United States District Court
                      for the Central District of California
                    Dale S. Fischer, District Judge, Presiding

                       Argued and Submitted August 9, 2018
                               Pasadena, California

Before: CALLAHAN and NGUYEN, Circuit Judges, and EZRA,** District Judge.

      Appellant Jennifer Morfe (“Morfe”) filed a tort action against her former

employer Right Yogurt Inc. (“Right Yogurt”) and then-shareholder of Right

Yogurt, Robert Lee (“Lee”) (collectively, “the Insureds”), for injuries Lee inflicted


      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable David A. Ezra, United States District Judge for the
District of Hawaii, sitting by designation.
on Morfe. After tendering their defense to AMCO Insurance Company

(“AMCO”), but before AMCO rendered a coverage decision, the Insureds entered

into a settlement agreement without AMCO’s knowledge or consent. Following

the settlement, AMCO filed an action for declaratory relief in federal court

seeking, inter alia, a declaration that it did not have a duty to defend or indemnify

the Insureds. Thereafter, AMCO moved for partial summary judgment on its

requests for judicial declarations. The district court granted AMCO’s motion for

partial summary judgment on three grounds: (1) there was no coverage under the

policy because the Insureds breached the policy’s “no-voluntary payments”

provision (the “NVP provision”) by entering into the settlement without AMCO’s

knowledge or consent; (2) several exclusions precluded coverage for “bodily

injuries” (Coverage A); and (3) several exclusions barred coverage for “personal

and advertising injuries” (Coverage B). Upon entry of the final judgment, Morfe

appealed. On appeal, Morfe challenges each ground the district court relied on to

grant AMCO’s motion for partial summary judgment.

      This Court reviews de novo a district court’s grant of summary judgment.

See Uthe Tech. Corp. v. Aetrium, Inc., 808 F.3d 755, 759 (9th Cir. 2015). This

Court also reviews de novo the district court’s interpretation of state contract law,

AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 949 (9th Cir. 2006),

and its interpretation of an insurance policy, Stanford Ranch, Inc. v. Md. Cas. Co.,



                                          2                                    17-55383
89 F.3d 618, 624 (9th Cir. 1996). “Because this action was brought in federal

district court under diversity jurisdiction, the substantive law of California, the

forum state, applies.” St. Paul Fire & Marine Ins. Co. v. Weiner, 606 F.2d 864,

867 (9th Cir. 1979).

      The NVP provision, contained in Section IV.2 of the Policy, provides: “[n]o

insured will, except at their own cost, voluntarily make a payment, assume any

obligation, or incur any expense, other than first aid, without [AMCO’s] consent.”

In California, this type of consent requirement applies to any payments made and

obligations assumed by an insured at any time before coverage is denied, if such

payments or obligations are made without the insurer’s knowledge and consent.

See Low v. Golden Eagle Ins. Co., 110 Cal. App. 4th 1532, 1546, 2 Cal. Rptr. 3d

761, 772 (2003) (noting that such provisions are enforceable in “the rare case

where the insured tenders the defense and then negotiates a settlement on its own,

leaving the insurer in the dark”).

      Morfe does not dispute that the Insureds entered into the settlement without

AMCO’s knowledge or consent after tendering their defense to AMCO but before

receiving a coverage determination. See Jamestown Builders, Inc. v. Gen. Star

Indem. Co., 77 Cal. App. 4th 341, 346, 91 Cal. Rptr. 2d 514 (1999) (noting that

NVP provisions are enforceable when an insured assumed an obligation without

the insurer’s consent “before the establishment of the claim against them and the



                                           3                                     17-55383
insurer’s refusal to defend in a lawsuit to establish liability”). Morfe argues,

however, that the settlement agreement is excepted from the general rule of

enforceability because: (1) AMCO abandoned the Insureds by failing to respond to

their tender of the Morfe Action; (2) the Insureds executed the settlement under

duress and fear of financial ruin; and (3) AMCO breached its duty to provide an

immediate defense by not rendering a coverage determination in the 12-week

period between October 3, 2011 (the date the Insureds tendered their defense) and

December 31, 2011 (the date the Insureds executed the settlement).

      The abandonment exception generally applies in cases where the insurer

expressly denied coverage and refused to provide the insured with a defense. See,

e.g., Pruyn v. Agric. Ins. Co., 36 Cal. App. 4th 500, 515, 42 Cal. Rptr. 2d 295, 303

(1995). In this case, it is undisputed that at the time of the settlement AMCO had

not denied coverage to Lee or Right Yogurt; the investigation was still ongoing.

Because Lee and Right Yogurt executed the settlement before AMCO issued a

coverage decision, the abandonment exception is not applicable in this case. See

Gribaldo, Jacobs, Jones & Assocs. v. Agrippina Versicherunges A.G., 476 P.2d

406, 449 (Cal. 1970) (“[I]t is only when the insured has requested and been denied

a defense by the insurer that the insured may ignore the policy’s provisions

forbidding the incurring of defense costs without the insurer’s prior consent . . . .”).




                                           4                                       17-55383
       Next, Morfe claims that the settlement is also unenforceable because the

Insureds executed the settlement under duress and fear of financial ruin. There is

no evidence in the record to support this claim, and Morfe’s unsubstantiated

assertions are insufficient to create a genuine dispute of material fact. See Norse v.

City of Santa Cruz, 629 F.3d 966, 973 (9th Cir. 2010) (en banc) (“Rule 56 requires

the parties to set out facts they will be able to prove at trial.”).

       As to the final exception, Morfe contends the NVP provision is

unenforceable because AMCO breached its obligation to provide an immediate

defense. On this issue, Morfe advances the same arguments she made in the

previous argument, and as before, fails to present any material facts to support her

claim that the settlement was involuntary based on the length of AMCO’s

investigation. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986)

(noting that the Rule 56 summary judgment “standard provides that the mere

existence of some alleged factual dispute between the parties will not defeat an

otherwise properly supported motion for summary judgment; the requirement is

that there be no genuine issue of material fact”). Moreover, the facts do not

support Morfe’s argument. Because Morfe presented no evidence to rebut the facts

in the record and create a genuine issue of material fact indicating that the

settlement was procured though the insurer’s breach, the district court did not err

by granting partial summary judgment to AMCO on the ground that Lee and Right



                                             5                                  17-55383
Yogurt breached the NVP Provision. See Richard & Sheila J. McKnight

2000 Family Tr. v. Barkett, 675 F. App’x 715, 717 (9th Cir. 2017) (finding

summary judgment proper when no rebuttal evidence is presented to create a

genuine issue of fact on the contested point).

      In sum, no valid exception to the NVP provision applies. The Insureds

executed the settlement without AMCO’s knowledge or consent and therefore

breached the NVP provision. Because Morfe failed to create a genuine issue of

material fact as to the voluntariness of the Insureds’ breach, the district court did

not err in granting partial summary judgment to AMCO. Since the district court’s

grant of partial summary judgment based on the Insureds’ breach of the NVP

provision is dispositive, the panel need not reach the remaining issues on appeal.

      For the reasons stated, we AFFIRM the district court’s grant of partial

summary judgment to AMCO.

      AFFIRMED.




                                           6                                     17-55383
