Fox Paine & Company, LLC, et al. v. Twin City Fire Insurance Company, et al.

In its amicus brief, United Policyholders urged the California Supreme Court to reverse the Court of Appeal’s ruling in Fox Paine, which held that a policyholder cannot seek declaratory relief against excess insurers until the immediately underlying insurer has actually paid its policy limits. UP argued that this “actual exhaustion” requirement departs from decades of California precedent, produces unworkable consequences for policyholders and the courts, and could effectively immunize excess insurers from bad faith and breach of contract liability.

On July 27, 2026 the California Supreme Court issued a favorable ruling holding that a policyholder can obtain declaratory relief against excess insurers before the underlying policies have paid their limits. In the discussion, the Court specifically quoted UP’s amicus brief, stating: “Moreover, as noted by amicus curiae United Policyholders, a rule requiring seriatim proceedings when excess insurance is involved might impose an inconvenience on insureds and insurers alike.  Requiring individual actions to be brought against individual insurers at different times and, potentially, in different jurisdictions poses a heightened risk of conflicting rulings that could make the parties’ rights and responsibilities under insurance policies more difficult to ascertain and act upon.” This decision puts a stop to years of argument by insurers that an excess insurer owes no duty to anyone unless the underlying coverage is exhausted and that the excess insurer cannot even be sued until that happens.