Salimi

An employer filed an action for bad faith and breach of contract against his workers’ compensation insurance carrier. The complaint alleges the carrier wrongfully refused to defend and indemnify in a pending workers’ compensation action.

The carrier demurred for lack of subject matter jurisdiction. (Code Civ. Proc., § 430.10, subd. (a).) Its theory was that the Workers’ Compensation Appeals Board (WCAB) had exclusive jurisdiction and that the employer failed to exhaust administrative remedies afforded by the WCAB and the California Department of Insurance. The trial court sustained the demurrer without leave to amend and ordered the case dismissed. We reverse.

Facts

The first amended complaint alleged as follows:

Faramarz and Brenda Salimi owned an automobile repair business known as German Engineering. They purchased a continuous coverage workers’ compensation insurance policy from the State Compensation Insurance Fund (hereinafter State Fund). The policy was effective October 1, 1992.

On December 7, 1993, State Fund notified the Salimis that the policy was being canceled effective December 21. The reason given for the cancellation was the Salimis’ failure to submit…