Ameron Internat. Corp. v. Insurance Co. of State of Pennsylvania
118 Cal. Rptr. 3d 95
| Cal. | 2010Background
- Ameron, insured by 11 insurers, faced government contract claims related to defective Central Arizona Project siphons.
- Bureau of Reclamation contracted with Kiewit; Ameron subbed to fabricate siphons and indemnify Kiewit.
- In 1990 defects were found; 1992 federal suit against Ameron and Kiewit; actions dismissed on appeal.
- In 1995 Contract Disputes Act process: IBCA proceedings lasted 22 days; Ameron/Kiewit settled for $10 million; insurers largely refused to defend or indemnify.
- Ameron, as assignee of Kiewit’s rights, sued insurers in 2004 for breach of contract, bad faith, declaratory relief, waiver/estoppel, and contribution, arguing IBCA proceedings were a “suit” triggering defense/coverage.
- Court of Appeal held partial coverage for some policies but applied Foster-Gardner to preclude coverage for others; California Supreme Court granted review to decide if an adjudicative IBCA proceeding constitutes a “suit” under policies not defining that term.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does an adjudicative IBCA proceeding count as a 'suit' under nondefinitional CGL policies? | Ameron: IBCA proceedings are a 'suit' | Respondents: IBCA is not a court proceeding; not a 'suit' | Yes; IBCA proceedings are a 'suit' for coverage purposes. |
| Does Foster-Gardner control the interpretation of 'suit' for IBCA proceedings? | Ameron: Foster-Gardner does not apply to IBCA; seeks broader reading | Respondents: Foster-Gardner applies to pollution-remediation orders only | No; Foster-Gardner does not control the IBCA context; adopt different approach. |
| Is there a reasonable expectation of coverage for the IBCA proceeding under ambiguous policy language? | Ameron: insured would expect coverage for IBCA proceedings | Insurers: ambiguity resolves against insured; no coverage unless defined | Yes; ambiguity resolved in insured’s favor to cover IBCA proceeding. |
| Did the complaint requirements under IBCA provide adequate notice to trigger defense/indemnity? | IBCA complaint satisfies notice similar to CCP complaint | Complaint formalities are not equivalent to court suit; insufficient notice | Yes; IBCA complaint meets notice requirements, activating defense/indemnity. |
Key Cases Cited
- Foster-Gardner, Inc. v. National Union Fire Ins. Co., 18 Cal.4th 857 (Cal. 1998) (literal meaning of 'suit' limits coverage to court filings)
- Powerine I, 24 Cal.4th 945 (Cal. 2001) (indemnity for damages tied to court-ordered remedies; language matters)
- Powerine II, 37 Cal.4th 377 (Cal. 2005) (specific policy language governs coverage of cleanup costs)
- Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1 (Cal. 1995) (duty to defend hinges on underlying claim potentially within policy coverage)
- AIU Ins. Co. v. Superior Court, 51 Cal.3d 807 (Cal. 1990) (ambiguities resolved against insurer; favor insured for coverage)
- County of San Diego v. Ace Property & Casualty Ins. Co., 37 Cal.4th 406 (Cal. 2005) (specific insuring language controls coverage; expenses vs damages)