Fahmian

Introduction

Sohail Fahmian was sued for injuries suffered by a worker on a residence Fahmian and his company were building. Fahmian tendered the matter to *164 his homeowners insurance company, American Modem Home Insurance Company (American Modem), which accepted the defense of the personal injury lawsuit, subject to a reservation of rights. American Modem later determined a policy limits settlement demand of $300,000 by the injured worker was reasonable, and notified Fahmian in writing, pursuant to Blue Ridge Ins. Co. v. Jacobsen (2001) 25 Cal.4th 489 [ 106 Cal.Rptr.2d 535 , 22 P.3d 313 ] (Blue Ridge), that it intended to accept the settlement demand unless Fahmian would either take over his own defense, or waive any later bad faith claim based on the failure to settle the action.

Fahmian did not respond to American Modem’s offer. American Modem then settled the underlying action with the worker and sued Fahmian for reimbursement. A jury found there was no coverage for the personal injury action under the American Modem insurance policy. The jury also found that Fahmian did not have sufficient time to make a reasoned reply to American Modem. Based on this finding,…