California, United States of America
The following excerpt is from Pacific Estates, Inc. v. Superior Court, 13 Cal.App.4th 1561, 17 Cal.Rptr.2d 434 (Cal. App. 1993):
In Rose v. Royal Ins. Co., supra, 2 Cal.App.4th 709, 3 Cal.Rptr.2d 483, we gave effect to a "no action" clause in the insurer's policy. In that case the insurer provided a defense for its insured under a full reservation of rights to dispute coverage. Independent counsel was provided to defend the insured in the underlying action. The litigation was settled when the plaintiff and the insured agreed to a stipulated judgment negotiated by the insured's independent counsel. In a later action by the plaintiff against the insurer, we held the insurer was not bound by the stipulated judgment entered into without its approval or consent and while the insured was being defended by the insurer.
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