California case law
California Won't Hear About the Investigation Until You Win Coverage
Linsao sat unpublished and uncitable for four weeks. The carrier that won it then asked the Second District to publish it, as any party may.
Photo: Pasadena, California, February 2005. FEMA / Laura Lee
In short
Linsao v. First American Property & Casualty Ins. Co., No. B340746, was filed unpublished on August 27, 2026 and certified for publication on September 23, 2026 after the insurer requested publication. It holds that bad faith or delay in a California first-party property insurer's investigation of a claim the policy does not cover is not a cognizable basis for an implied-covenant or intentional-infliction claim. Delay in paying benefits that are owed still is.
The opinion came down August 27, 2026, unpublished and uncitable.1 On September 11 the insurer asked the Second District to publish it. The homeowners responded the same day. On September 23 the court granted the request.2 Linsao v. First American is binding California precedent because the carrier that won it asked.1
The sentence now citable, pages 25 and 26: "Bad faith or delay in First American's insurance investigation of a claim the policy does not cover is not a cognizable basis for an IIED or implied covenant claim."1 The panel accepted the homeowners' evidence as true first. A manager who said management had agreed there was coverage. A claims adjuster who called it "a done deal." About $386,000 of estimates in the file, a $20,000 living-expense check on June 29, 2020, a $200,000 loan a week later, a denial letter dated July 24, 2020.1 All inert: every possible efficient proximate cause of this loss triggered an exclusion, and the implied covenant has no existence apart from its contract.46 Benavides said that in 2006 about the implied covenant and negligence. Linsao extends it to intentional infliction and declines the Brizuela and Murray dicta that kept a crack open.3
What survives is narrow. Delay in paying benefits that are owed still supports an implied-covenant claim, so this is a threshold rule, not an immunity.5 The loan bought at best its own costs, never coverage, and only "on a promissory estoppel theory appellants have disclaimed."1 Which leaves the causation record from the first inspection, and dated reliance spending, as the California first-party file's only assets. Another reason to read California's incoming smoke-damage clocks early. Citable as of October 23, 2026: a petition for review arrived October 6 as S298998, docketed premature and not yet acted on, review not granted, no depublication sought.2
Can a California policyholder still sue over a bad-faith investigation?
It depends on coverage. Linsao holds that bad faith or delay in a first-party insurer's investigation of a claim the policy does not cover is not a cognizable basis for an implied-covenant or intentional-infliction-of-emotional-distress claim. Where benefits are owed, delay in paying them remains actionable under Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, so the rule operates as a threshold rather than an immunity.
Is Linsao v. First American citable right now?
Yes, as of October 23, 2026. The opinion was filed unpublished on August 27, 2026 and certified for publication on September 23, 2026, so it is binding California authority. A premature petition for review was received on October 6, 2026 under Supreme Court No. S298998, review has not been granted, and no depublication request appears on either docket. If review is later granted the opinion loses binding effect.
Does an insurer have to identify the efficient proximate cause to win on noncoverage?
No. Following Brodkin, an insurer meets its burden by establishing that every possible efficient proximate cause is excluded, even where a triable question remains over which cause predominated. The Vardanyan and Garvey line still applies where only some of the possible causes are excluded.
What did the homeowners have left after the denial?
The opinion identifies one route and notes it was given up: the $200,000 loan taken in reliance on the coverage representations was at best a basis for seeking the costs of that loan, not full coverage, on a promissory estoppel theory the appellants disclaimed. Reliance spending, documented and dated, is the claim worth preserving when coverage is in doubt.
Sources cited
- Linsao v. First American Property & Casualty Ins. Co., No. B340746 (Cal. Ct. App., 2d Dist., Div. One, filed Aug. 27, 2026; certified for publication Sept. 23, 2026) — slip opinion— Judicial Council of California
- Appellate Courts Case Information System — dockets for B340746 and Supreme Court No. S298998 (read Oct. 23, 2026)— Judicial Council of California
- Benavides v. State Farm General Ins. Co. (2006) 136 Cal.App.4th 1241 — the rule Linsao elects to follow— CourtListener (Free Law Project)
- Waller v. Truck Insurance Exchange, Inc. (1995) 11 Cal.4th 1 — the implied covenant has no existence independent of its contractual underpinnings— CourtListener (Free Law Project)
- Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713 — delay in paying benefits that are owed remains actionable— CourtListener (Free Law Project)
- Brodkin v. State Farm Fire & Casualty Co. (1989) 217 Cal.App.3d 210 — summary judgment proper where all possible causes are excluded— CourtListener (Free Law Project)
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