Newsletter

JUDGE PURI Ins Cov Edition

September 2026

IN THE NEWS

Vedica Puri Featured In The Daily Journal PA G E 1

INSURANCE COVERAGE

Key Insurance Coverage Decisions to Watch PA G E 5

M E D I AT I O N S E R V I C E S

What kinds of cases does Judge Puri mediate?

PA G E 8

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Interested in mediating with Judge Puri?

Reach out to the Kathleen Emma Case Management Team at ADR Services, Inc. (415) 772-0900 kathleenteam@adrservices.com 3

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BIOGRAPHY

J u d ge Ve d i c a P u r i h a s s p e n t ove r t h re e decades immersed in litigation and dispute resolution, with insurance law at the heart of her distinguished career.

She began as an insurance defense lawyer, later shifting to represent plaintiffs in bad faith claims—experience that gave her a rare, full-circle view of coverage disputes.

As a judge on the San Francisco Superior Court , she went on to preside over countless insurance matters, further deepening her command of the field.

This 360-degree perspective now defines her approach as a mediator. Judge Puri is known for her fluency in both the language of insurance coverage and the nuances of underlying disputes. Her ability to navigate the legal, financial, and human dynamics of complex cases has made her a trusted problemsolver in high-stakes mediation. Drawing on her courtroom experience and evaluative style, she helps parties reach clear and practical resolutions.

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BREAKING NEWS: New CA Supreme Court Coverage Case Insurance coverage litigation is known to move at a glacial pace.‌ So, when the California Supreme Court issues a unanimous coverage opinion that presents a paradigm shift on when to sue an excess carrier for breach of contract and bad faith -- we all pay attention.

(Ok, well, maybe not all, but certainly my fellow coverage nerds).

The story began with wildly successful investment bank partners, Saul Fox and Dexter Paine. They created Fox Paine Company LLC, based in the Bay Area, which managed funds worth over $1B. The beginning of the end came in 2007 when Paine created a third fund and launched his own company, with Fox as a minority participant.

The partnership fell apart shortly thereafter.‌ ‌Fox sued Paine for breach of contract and breach of fIduciary duty. Ensuing bitter litigation between the two partners and the company’s insurance carriers will soon span two decades and many different states.

The former partners tendered a myriad of lawsuits against one another to their carriers under a $50M tower of Private Equity Professional Liability policies.‌ The policy chart covering FPC LLC is as follows:

Primary Policy Houston Cas. Co.

Policy Amount $10 million

Excess Policies

Policy Amount

Attachment Point

Twin City

First layer $10 million

$10 million

St. Paul

Second layer $10 million

$20 million

Twin City

Third layer $10 million

$30 million

Liberty Mutual

Fourth layer $10 million

$40 million

The San Francisco Litigation.‌ The San Francisco litigation (stayed for many years while the New York litigation proceeded) generated a very recent California Supreme Court decision which changes how and when insureds can plead in excess carriers. The Fox parties sued their primary and excess carriers for declaratory relief, breach of contract and bad faith alleging the carriers had made secret and massive payouts to the

Fox Paine & Company, LLC v.

Twin City Fire Insurance Company 2026 WL 2148053

B y H o n . Ve d i c a P u r i ( Re t . )

Paine parties related to the underlying litigation, while leaving the Fox parties high and dry. The Fox parties pled they had tendered defense costs to the carriers, the carriers failed to reimburse them and that the Fox parties had incurred losses (plus interest) “exceeding $43M, not subject to offset.”

The carriers filed demurrers to all causes of action in San Francisco Superior Court alleging that the Fox parties had improperly sued the excess carriers without alleging exhaustion of the primary and first excess layers of insurance.‌ The trial court granted the demurrers in general, without leave to amend.‌ The Trial Court Ruling.

It is a basic tenet that excess insurance coverage is not triggered until exhaustion of an underlying policy. It is a rule, which California coverage practitioners have come to know and rely on for decades. “An excess insurer's coverage obligation begins once a certain level of loss or liability is reached; that level is generally referred to as the ‘attachment point' of the excess policy. [Citations.]" (Croskey, et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2023) ¶ 8:177.)” The trial court sustained demurrers without leave to amend on the declaratory relief and breach of contract claims holding that because Twin City only paid $6 million out of the $10M limit on its first excess policy, exhaustion has not yet occurred for any of the upper excess layers to be triggered.

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The Court of Appeal (“COA”) Decision Went to Great Lengths to Affirm the Trial Court.

it must be practically or reasonably‌ likely that the insured's potential‌ liability will reach into the excess‌ coverage‌; absolute proof that the‌ The COA decision affirmed the trial policies will be triggered is not‌ required.” ‌Id @ *12 (emphasis court in all respects. First, the COA added). Applying the new rule, the found that there was no actual Court found the demurrer should controversy over whether excess layers had been reached, as required not have been sustained as to the declaratory relief/breach of contract to obtain declaratory relief, because actions because (1) the dispute is the Court would not assume as true sufficiently concrete (defense bills plaintiff’s allegation that it had tendered and not paid) and (2) the incurred $43M in losses (which insureds would suffer hardship if would have naturally pierced all the lack of exhaustion defeated their layers). Second, the COA held there claims and required them to sue was no breach of contract because different carriers in different the relevant excess policies had not jurisdictions at different times yet attached upon the exhaustion of possibly enabling inconsistent the underlying policies. And finally, the COA held the plaintiffs could not opinions.‌ state a bad faith claim because there The Court also offered the was coverage had no attached from following guidance in how to apply the excess layers and coverage was a the new rule, including that an prerequisite to claiming bad faith. insured can plead “the ‘worst case The opinion went so far as to explain or highest estimate of damages.” ‌Id‌.

The Court cautioned trial courts, in that the trial court could have also found that declaratory relief was not performing the reasonable likelihood inquiry at the pleading “necessary or proper.” The general stage “not give undue weight to rule in California is that even if an “actual controversy” has been shown what are at that juncture only potential defenses to coverage that (Code Civ. Proc., § 1060-1), a trial may prove successful in future court has latitude not to entertain a proceedings and ultimately prevent claim for declaratory relief if it was exhaustion.” ‌Id‌. not necessary or proper.

1‌ 08 Cal.Rptr. 480, 510 P.2d‌ 1032 [recognizing a claim for‌ bad faith in circumstances‌ where the insured's failure to‌ satisfy a condition of coverage‌ was allegedly brought about‌ by the insurers’ bad-faith‌ conduct]), it becomes clear‌ that it would ask too much,‌ too soon, from insureds to‌ require them to plead the prior‌ exhaustion of all underlying‌ insurance before they may‌ pursue a bad faith claim.‌ The proper focus at the‌ pleading stage is not on‌ whether coverage under a‌ particular excess policy has‌ already attached and payments‌ under that policy are already‌ due. Rather, at that phase of‌ the proceedings an insured in‌ plaintiffs’ position needs only‌ to allege facts that, taken as‌ true, are sufficient to show that‌ coverage under a defendant‌ insurer's excess policy ‌will‌ attach — or that it would‌ attach, if not for the excess‌ insurer's bad-faith conduct —‌ and that the insurer's‌ misconduct has impaired the‌ insured's recovery of benefits‌ owed to it under the policy. ‌Id‌ @ *21.

As to bad faith: the CA Supreme Court held that a bad faith claim against an excess carrier can survive demurrer even if the excess policies While this case applies specifically are not exhausted. After pointing and only to the pleading stage, it is a As to Decl. Relief Claim: The CA out at that the COA’s reliance on sea change in how an insured may Supreme Court reversed the COA Waller v. Truck Ins. Exchange (1995) plead its case against excess carriers. holding “that an insured may state a 11 Cal.4‌th 1, 36 (which generally viable cause of action for declaratory stated that bad faith cannot occur relief regarding coverage and liability unless policy benefits were due) was Written September ‌2026 under an excess insurance policy even misplaced, the CA Supreme Court if all of the underlying insurance went on to state:‌ coverage has not yet been exhausted.” Id @ *1. “While insureds When it is unders‌tood that a‌ in this position must adequately breach of the implied‌ plead their covered losses, the covenant of good faith and‌ relevant principles governing the fair dealing can occur before‌ availability of declaratory relief do coverage is due and prior to‌ not support a strict rule that would the breach of any obligation to‌ withhold this relief whenever pay benefits under a policy,‌ exhaustion has not also been and that in some instances it‌ alleged.” Id.

The CA Supreme Court Rejects a Strict Rule when Pleading Exhaustion

Instead, the Court adopted a new rule – at the pleading stage – related to exhaustion of policies: “for a declaratory judgment coverage action involving an excess policy to be ripe,

may be the insurer's bad faith‌ itself that prevents an insured‌ from fulfilling all of the‌ conditions of coverage (see Gruenberg v. Aetna Ins. Co.‌ (1973) 9 Cal.3d 566, 574–575,

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“She is the best mediator I have had to date. Her follow up is amazing. Even though we did not settle during the 1st day of mediation, it was her consistent follow up that nudged the parties to agree to a second session.”

“The clients that I represented had been through a lot, so there was an emotional component for them. She was very supportive of hearing their story, and you can tell she has a lot of compassion in life with the way she works.”

“She was wonderful and extremely effective. We would definitely hire her again.”

Have feedback for Judge Puri?

Email your testimonial to kathleen@adrservices.com

Testimonials F E AT U R E D

“ I c o u l d n ot h a ve b e e n m o r e p l e a s e d w i t h J u d ge P u r i . S h e w a s p r o a c t i ve i n a d va n c e o f t h e s e s s i o n a n d s e t t h e st a ge fo r a successful resolution.

During the session, she helped the parties quickly ge t p a st va r i o u s t a n ge n t i a l i s s u e s t h a t w o u l d h a ve b e e n d e a l b r e a ke r s i f t h e p a r t i e s h a d a t t e m pt e d t o n e got i a t e d i r e c t l y. S h e a l s o c l e a r l y c r e a t e d t r u st w i t h t h e ot h e r s i d e t h a t h e l p e d the case settle. Great e m ot i o n a l i n t e l l i ge n c e . T h i s w a s a ve r y st r e s s f u l m a t t e r fo r m y c l i e n t (a n d d e r i va t i ve l y fo r m e o n h i s b e h a l f ) , s o I w a s ve r y grateful to bring a painful s i t u a t i o n fo r m y c l i e n t t o a s fa vo r a b l e a r e s o l u t i o n a s c o u l d r e a s o n a b l y h a ve b e e n a c h i eve d . ” 7

Types of Cases

CASE SUMMARIES

M E D I AT E D B Y J U D G E P U R I

I n s u r a n c e C ove r a ge & B a d Fa i t h Insurance Appraisal (Umpire) Pe r s o n a l I n j u r y T B I ( M i l d t o C a t a st r o p h i c ) Premises Liability E m p l oy m e n t + C l a s s Ac t i o n / PAG A

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California Law firm sued for legal malpractice alleging the firm missed an important deadline. When the firm tendered the claim to i t s i n s u r a n c e c o m p a n y, the insurer not only refused to defend but a l s o re s c i n d e d t h e f i r m ’s E&O policy on the grounds that the managing partner lied on the policy a p p l i c at i o n . Af te r ye a r s of litigation, the insurer re i n st ate d t h e l aw f i r m ’s coverage and contributed to settling the underlying malpractice claim.

Le g a l M a l p r a c t i c e Business/ Breach of Contract P r o b a t e , E st a t e s & Tr u st s Re a l P r o p e r t y P r o d u c t L i a b i l i t y, M a s s To r t s & Pharmaceuticals

Ins cCoverage ase summaries

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A family in the Bay Area made a claim for a massive water leak that damaged their entire home. The fa m i l y ’s h o m e ow n e r ’s i n s u re r d e n i e d coverage. The home fell into disrepair, consumed by mold damage from the water leak and the fa m i l y i nvo ke d t h e p o l i c y ’s appraisal provision. The appraisal p a n e l rev i ewe d t h e i n s u re r ’s b i d to re p a i r t h e h o m e (o f $ 8 0 0 K ) a n d t h e fa m i l y ’s b i d to re b u i l d t h e h o m e a n d determined it would take $2.1M to repair the home. The carrier still r e f u s e d t o p a y. T h e f a m i l y s u e d t h e carrier for bad faith and after deposition of key representatives, the case settled.

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CASE SUMMARIES

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Software company was sued for failing to perform on a contract. The company tendered the claim to its Te c h n o l o g y E r r o r s a n d O m i s s i o n s c a r r i e r . T h e c a r r i e r agreed to defend the claim by appointing and paying for d e fe n s e c o u n s e l . Two ye a r s i n t o t h a t s u i t , t h e s o f t wa re company tried to reach a settlement and invited the carrier to at te n d t h o s e d i s c u s s i o n s . T h e c a r r i e r d e c l i n e d . At t h e settlement meeting, the software company agreed to waive its outstanding invoices and tendered the settlement for reimbursement. The carrier refused, arguing that a waiver of invoices did not equal damages. A bench trial resolved the issue of first impression holding that invoices could be c o n s i d e r e d d a m a g e s u n d e r t h e t e r m s o f t h e Te c h E & O p o l i c y a t issue. Shortly before Phase 2 of trial, the bad faith phase, was to begin, the case settled.

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A public institution bought a complex insurance policy through brokers. The institution provides health i n s u r a n c e fo r t h e i r e m p l oye e s t h ro u g h a s e l f - f u n d e d plan and also subscribes to a kind of insurance, called stop loss insurance, to protect itself against catastrophic claims. Names of patients who could possibly become highcost insureds were sent to the broker so those patients could be properly insured. The broker failed to include a key group of patients, whose insurance claims tallied over $1M in m e d i c a l c a re c o st s . T h e i n st i t u t i o n ’s c l a i m fo r re i m b u r s e m e n t was properly denied as a result. The broker refused to acknowledge the mistake and took the case to trial. The jury announced within an hour of deliberations that the broker committed negligence and awarded a majority of the medical care costs sought.

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CASE SUMMARIES

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A Renaissance reenactment group was sued in civil court for failing to protect minors from molestation. Certain group members were arrested and convicted in criminal court for molestation of six children. The group settled the civil suit for millions and tendered the settlement to its carrier for reimbursement. The insurer refused because its policy contained a molestation exclusion.

The group argued the exclusion did not cover negligence claims as was t h e i n s u re d ’s i n te n t . T h e insurer moved for summary judgment requesting that the court issue an order that there was no coverage as a matter of law because of the molestation exclusion. In an opinion of first impression, the court denied the summary judgment and shortly thereafter, the parties settled.

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A n e m p l oye e o f a c a re giving company fleeced an elderly client of all her savings. The company made a claim for reimbursement under i t s e m p l oye e d i s h o n e st y p o l i c y and the claim was successfully resolved after investigation and mediation.​

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A C a l i fo r n i a fa m i l y ’s severely developmentally disabled son was placed into a Level 4 group home on a part time basis. He lived with his parents on a part time basis as well. After an incident in the group home, tragedy struck and the son strangled and ended up killing his roommate. The contract for Level 4 homes requires 24-hour supervision. The son was found incompetent to stand trial and his parents were sued in civil court for wrongful death. The fa m i l y ’s h o m e ow n e r ’s i n s u r a n c e declined to defend the family against this lawsuit on the grounds that the son acted i n t e n t i o n a l l y. A f t e r l i t i g a t i o n , the insurer reversed course, provided a defense and tendered full policy limits to settle the matter.

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