Sprinkles

INTRODUCTION

Plaintiffs and appellants Rose, Austin, and Logan Sprinkles are the heirs of a motorcyclist who died in an accident caused by an employee, Juan Bibinz (Bibinz), of Sinco Co., Inc. (Sinco). Sinco had an automobile liability policy issued by General Insurance Company of America (General), an excess and umbrella policy issued by Fireman’s Fund Insurance Company (Fireman’s Fund), and a commercial general liability (CGL) policy issued by Fireman’s Fund. Plaintiffs partially settled with Sinco and Bibinz for the full policy limits under the automobile policy and the excess and umbrella policy. Fireman’s Fund denied coverage under the CGL policy and, under that policy, refused to defend an action by plaintiffs against Sinco. In the partial settlement, plaintiffs, Sinco, and Bibinz agreed to arbitrate plaintiffs’ claims, and plaintiffs took an assignment of Sinco’s claims under the CGL policy against Fireman’s Fund.

After the arbitrator’s award to plaintiffs of more than $27 million, plaintiffs filed this bad faith action against Fireman’s Fund. Before the trial court on a demurrer to the complaint, Fireman’s Fund contended that Bibinz was an insured under the CGL…