Insurers Should Never Sue Other Insurers for Bad Faith

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CSAA Insurance Exchange (“CSAA”) is a homeowner’s insurance company. Premier Restoration and Remodel, Inc. (“Premier”) is a home-repair contractor in CSAA’s network whose misapplication of an anti-mold chemical caused property damage to a residence insured by CSAA. Premier was insured by Rockhill Insurance Companies (“Rockhill”), and CSAA believed that coverage for the damage was available under Rockhill’s policy. 

In Rockhill v. CSAA Insurance Exchange, and Premier Restoration And Remodel, Inc., No. 19-16716, United States Court Of Appeals For The Ninth Circuit (November 20, 2020) Rockhill sought a declaratory judgment that it had satisfied its obligations to Premier.

ZALMA OPINION

Insurance companies, professional litigants, should be able to avoid litigation especially with another insurer. In this case CSAA took a definite position that it was entitled to money from Rockhill even though there was no question Rockhill’s mold exclusion was valuid. They failed because CSAA refused all reasonable settlement offers.