Agricultural Insurance v. Superior Court

J.This case arises out of an insurance claim for earthquake damage. After the insurer paid the claim in part, controversies arose. The insureds then sued for bad faith and breach of contract. The trial court stayed the action to allow the insurer to complete its investigation. The insurer did, and then cross-complained, contending that the insureds’ claim was in significant part falsified. The insurer pleaded various contract theories, and also the tort theories of “reverse bad faith” (tortious breach of the covenant of good faith and fair dealing by the insureds) and fraud. The insureds demurred to the tort theories, and the trial court sustained without leave to amend. In addition, the trial court stmck the insurer’s prayer for punitive damages and attorney’s fees.

The insurer then filed its initial petition for writ of mandate directly in the Supreme Court. The Supreme Court declined to accept direct review, and instead referred the petition to this court. This court issued an alternative writ and a stay. The insureds then advised that a contractual appraisal proceeding was underway. In view of the pending appraisal proceeding, this court vacated its stay and…