Fox Paine & Co, LLC v. Twin City Fire Ins Co

Summary

The California Supreme Court held that an insured need not allege exhaustion of all underlying insurance to pursue either a declaratory relief claim or a tortious bad faith claim against an excess insurer. For declaratory relief, the insured must still adequately plead covered losses implicating the excess policy's attachment point; where losses are uncertain, an actual controversy exists if it is reasonably likely the losses will reach the excess coverage. The court rejected each rationale offered for treating declaratory relief as unnecessary or improper, disapproved two Court of Appeal decisions to the extent they suggested no covered-loss allegation is required, and reversed and remanded for application of the proper standards, with leave to amend if deficiencies are curable.