Ace American Ins. Co. v. Fireman's Fund Ins. Co.Annotate this Case
After a film industry worker was seriously injured on a film set, he filed suit. His employer had two primary insurance policies with Fireman’s Fund, and an excess insurance policy with Ace American. Ace American subsequently filed suit against Fireman's Fund for equitable subrogation, alleging the injured worker initially offered to settle his case within the limits of the Fireman’s Fund policies, and that Fireman’s Fund unreasonably rejected those settlement offers. Ace American alleged that as a result, it was required to contribute to the eventual settlement, which exceeded the limits of the Fireman’s Fund policies. The court found that because Ace American, the excess insurer, alleged it was required to contribute to the settlement of the underlying case due to the primary insurer’s failure to reasonably settle the case within policy limits, the lack of an excess judgment against the insured in the underlying case does not bar an action for equitable subrogation and breach of the duty of good faith and fair dealing. Accordingly, the court reversed the judgment sustaining Fireman’s Fund’s demurrer and remanded for further proceedings.