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LARRABURU BROS., INC. v. ROYAL INDEM. CO.

No. 77-2229.

604 F.2d 1208 (1979)

LARRABURU BROTHERS, INC., a corporation, Harold E. Paul and Harold E. Paul, Jr., Appellants, v. ROYAL INDEMNITY COMPANY, a corporation, Appellee.

United States Court of Appeals, Ninth Circuit.

September 12, 1979.

Attorney(s) appearing for the Case

John Wynne Herron, San Francisco, Cal., Marshall W. Krause, Larkspur, Cal. (argued), for appellants.

David C. Rust, Sacramento, Cal., for appellee.

Before CHOY and KENNEDY, Circuit Judges, and BEEKS, District Judge.

KENNEDY, Circuit Judge:

Under California law, the covenant of good faith and fair dealing, which is implied in the contract between an insurance company and the insured, requires that the insurer take reasonable action to settle a claim within the policy limits when there is a substantial likelihood of recovery against the insured of an amount in excess of policy limits should the claimant proceed to trial. The question presented by this appeal is whether an insurance...

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