Tanya M. Murray | Plunkett Cooney
San Bernardino County v. The Ins. Co. of The State of Pennsylvania
Case No. 5:21-cv-01978-PSG-JEM (D. Cal. May 16, 2023)
The U.S. District Court for the Central District of California granted in part, and denied in part, the parties’ cross motions for summary judgment. At issue between the parties, San Bernardino County (the county) and The Insurance Company of The State of Pennsylvania (ICSOP), was the scope of insurance coverage for the county’s liability with respect to groundwater contamination at The Chino Airport.
In particular, the county sought coverage for the remediation it was ordered to complete under three separate cleanup and abatement orders issued by the California Regional Water Quality Control Board, Santa Ana Region (CAO). There was no dispute that coverage was afforded under the policies issued by ICSOP to the county from 1966 to 1975; rather, the parties disputed: (i) whether the policies afforded a duty to defend, (ii) the number of occurrences, and (iii) whether the policies had aggregate limits of liability.
Regarding the first issue, the district court ruled that, when reading the “Ultimate Net Loss” and the “Assistance and Co-Operation” provisions, the policies “plainly require only a duty to indemnify.” The district court reasoned that while the “‘Ultimate Net Loss’ provision states that ICSOP must pay for ‘fees, charges and law costs, … expenses for … lawyers, … and investigators and other persons, and for litigation, settlement, adjustment and investigation of claims and suits …’ that provision must be read in connection with the ‘Assistance and Co-Operation’ provision.” And that latter provision gave ICSOP the right, not the duty, to participate in any claim or suit against the insured. Accordingly, the district court granted summary judgment in favor of ICSOP, ruling that it only had the duty to indemnify the county.
On the second issue, however, the district court ruled that there was a genuine dispute over the number of occurrences. Initially, the district court found that the county had the burden of showing multiple occurrences within the policy periods. The district court then found that the county had “presented enough evidence to show a triable issue of fact.” In particular, it was noted that one of the county’s experts opined that the plumes originated from two different source areas, and another expert opined that there were 18 separate causes of the contamination. The district court, therefore, denied summary judgment for ICSOP on this issue.
Regarding the third issue, the district court found that the policies “unambiguously include a general aggregate limit, which includes a limit on property damage, and separate aggregate limits.” Thus, the policies could not “reasonably be interpreted under the circumstances to subject ICSOP to the potential of unlimited liability for property damage.” In granting summary judgment in favor of ICSOP on this issue, the district court also found that a withdrawal order, allowing ICSOP to withdraw its previous admission that the policies were not subject to aggregate limits, was not clearly erroneous or contrary to law.
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