The California Supreme Court concluded that the insureds could state a cause of action for declaratory relief regarding coverage under an excess policy even though all of the underlying policies had not yet been exhausted. Fox Paine & Co., LLC v. Twin City Fire Ins. Co., 2026 Cal. LEXIS 3942 (Cal. July 27, 2026).

The insureds filed a complaint for a declaratory judgment and bad faith against its excess carriers. The insureds alleged the excess carriers acted in bad faith by issuing proceeds to parties who were not insureds and not properly communicating with the insureds.