KRANSCO v. AMERICAN EMPIRE SURPLUS LINES

No. S062139.

97 Cal.Rptr.2d 151 (2000)

23 Cal.4th 390

2 P.3d 1

KRANSCO, Plaintiff and Appellant; International Insurance Company et al., Plaintiffs and Respondents, v. AMERICAN EMPIRE SURPLUS LINES INSURANCE COMPANY, Defendant and Appellant.

Supreme Court of California.

As Modified July 26, 2000.


Attorney(s) appearing for the Case

Thacher, Albrecht & Ratcliff, James F. Thacher, Arthur R. Albrecht, San Francisco, Frank E. Solomon; Quarles & Brady, W. Stuart Parsons, Milwaukee, WI, Kevin P. Crooks, Katherine H. Grebe; Irell & Manella and Thomas W. Johnson, Jr., Newport Beach, for Plaintiff and Appellant.

Anderson Kill & Olick, Jordan S. Stanzler, Deborah M. Mongan, San Francisco, and John A. MacDonald, Philadelphia, PA, for United Policyholders as Amicus Curiae on behalf of Plaintiff and Appellant.

James T. Linford, San Francisco, as Amicus Curiae on behalf of Plaintiff and Appellant.

Latham & Watkins, David L. Mulliken, Kristine L. Wilkes, Dorn G. Bishop and Julia E. Parry, San Diego, for Montrose Chemical Corporation of California as Amicus Curiae on behalf of Plaintiff and Appellant.

Carroll, Burdick & McDonough, Bertrand LeBlanc II, Donald T. Ramsey, David M. Rice, Rosemary Springer, San Francisco; Kravit Gass & Weber, J. Ric Gass, Janice A. Rhodes, Milwaukee, WI, Karen B. Goldberg, Santa Monica; Newman & Company and Thomas R. Newman for Defendant and Appellant.

Hancock Rothert & Bunshoft, Richard L. Seabolt, Eve F. Lynch and Robert M. Fineman, San Francisco, for London Market Insurers as Amicus Curiae on behalf of Defendant and Appellant.

Horvitz & Levy, Lisa Perrochet, Encino, and Stephanie Rae Williams for Truck Insurance Exchange and Allstate Insurance Company as Amici Curiae on behalf of Defendant and Appellant.

Engstrom, Lipscomb & Lack, Bolson, Nishimura & Saunders, Hahn Bolson & Mendelson, Jeffrey T. Bolson and Karen-Denise Lee, Los Angeles, for Plaintiffs and Respondents International Insurance Company and Transco Syndicate No. 1, Ltd.

Gibbons, Lees & Conley, Gibbons & Conley and Dolores M. Donohoe, Walnut Creek, for Plaintiff and Respondent Agricultural Excess and Surplus Insurance Company.


BAXTER, J.

Can a liability insurer assert the insured's "comparative bad faith" as an affirmative defense in a bad faith action brought against it for breach of the covenant of good faith and fair dealing? In this case a liability insurer breached its duty of good faith and fair dealing owed its insured manufacturer by unreasonably failing to settle an injured third party's action against the insured within policy limits, thereby exposing the insured to a verdict...

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