USA – CALIFORNIA Trends and Developments Contributed by: Louisa Weix, Monique Ferraro and Hope Williams, TittmannWeix
as to the “inherent risk” pleading standard in City of Oroville v Superior Court ., 7 Cal. 5th 1091 (2019). Sim- ple Avo Paradise Ranch , LLC v Southern California Edison Co ., 102 Cal. App. 5th 281 (2024) confirmed the doctrine extends to a privately owned utility oper- ating under an exclusive state granted franchise, a proposition the Eaton Fire litigation now tests. The Eaton Fire cases, consolidated under Gursey v Southern California Edison Co ., No 25STCV00731 (L.A. County Super. Ct.), are generating rulings on threshold liability and allocation. SCE contends inverse condemnation does not apply because the transmission line linked to ignition was disconnected from the grid since 1971. On 11 August 2026, the court tentatively denied the insurers’ summary adju- dication motion on that question, sending it toward a bench trial. In a separate June 30 ruling, the same court allowed SCE’s cross-complaint, alleging Los Angeles County created a dangerous condition near the ignition point to proceed. The Palisades Fire claims against LADWP, consolidat- ed as Grigsby v City of Los Angeles , No 25STCV00731 (L.A. County Super. Ct.), are proceeding similarly. In February 2026, the court overruled a demurrer, allow- ing infrastructure failure claims to proceed to discov- ery, with at least one complaint reportedly seeking USD10 billion in damages. Market conduct claims and the FAIR plan A newer set of theories targets the industry’s collec- tive conduct rather than any single claim decision. Beginning in April 2025, fire-loss homeowners filed Ferrier v State Farm Fire & Casualty Co . (L.A. County Super. Ct. Apr. 18, 2025) and a related case, Canzo- neri v State Farm Group , (L.A. County Super. Ct. Apr. 18, 2025), naming roughly two dozen insurers hold- ing nearly 75% of the California homeowners’ market, alleging an antitrust group boycott and unfair com- petition violations over co-ordinated non-renewals in fire-prone areas beginning in 2023. In May 2026, the court denied the bulk of the insurers’ motion to dismiss, and on 6 May 2026, the US Department of Justice filed a Statement of Interest arguing that nei- ther the Noerr-Pennington doctrine nor the McCarran- Ferguson Act necessarily shields the alleged conduct, undercutting the insurers’ antitrust immunity defence.
That scrutiny expanded again on 31 August 2026, when Los Angeles County sued State Farm Gener- al Insurance Company and related entities, alleging systemic violations of California consumer protection laws in the handling of homeowners’ claims arising from the 2025 Palisades and Eaton fires. The County alleges that State Farm delayed and denied claims, shifted toxic-contamination testing costs to policy- holders, and underpaid smoke-damage benefits. It seeks approximately USD160 million in premiums allegedly owed back to policyholders, in addition to withheld benefits and out-of-pocket costs. The suit is part of a broader trend indicating that wildfire cover- age litigation is moving beyond individual coverage disputes toward public-enforcement and market-con- duct theories focused on claims-handling practices. The FAIR Plan features throughout this litigation. It is a defendant in disputes like Aliff , a subrogation benefi- ciary alongside its member insurers, and the alleged destination in the market conduct suits, all while writ- ing far more of the market than intended. In California FAIR Plan Association v Lara , 116 Cal. App. 5th 869 (2025), the Second District held that Insurance Com- missioner Lara lacked authority to unilaterally expand the FAIR Plan’s “basic coverage” to include liability insurance, since the 1968 Basic Property Insurance Law authorises only first-party property coverage. Following the 2025 fires, the FAIR Plan levied its first assessment on member insurers in more than 30 years, up to USD2 billion combined under Commis- sioner Lara’s Order 2025-1. Member insurers may recoup up to 50% of their assessment (100% above USD1 billion) from policyholders as a temporary sur- charge over as long as 24 months. Consumer Watch- dog sued to block the surcharges on Proposition 103 grounds, and on 2 July 2026, a Los Angeles County Superior Court judge upheld them. The assessment litigation also matters beyond the FAIR Plan itself because it shifts part of wildfire insol- vency risk back into the admitted market and ulti- mately to policyholders. That dynamic may affect rate filings, insurer appetite in high-risk zip codes, and settlement strategy in cases where carriers face both indemnity obligations and assessment-related cost pressure. It also gives policyholder advocates a
310 I NSURANCE L I T IGATI O N 2026
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