Exhaustion Is Not Blanket Rule for Excess-Insurer Lawsuits

The California Supreme Court held that alleged insureds do not have to plead full exhaustion of underlying policies to pursue declaratory relief and bad-faith claims against excess insurers. In Fox Paine & Company LLC v. Twin City Fire Insurance Company, the court said the absence of exhaustion is not fatal if liability is reasonably likely to reach the excess layer. The opinion rejected a blanket exhaustion prerequisite.