Ameron International Corp. v. Insurance Co. of the State of Pennsylvania
118 Cal. Rptr. 3d 95
| Cal. | 2010Background
- Ameron International Corporation (Ameron) faced primary and excess CGL coverage from 11 insurers for defense/indemnity in IBCA proceedings tied to defective Central Arizona Project siphons.
- Bureau of Reclamation contracted with Kiewit; Ameron manufactured siphons under indemnity, becoming an insured in those policies.
- In 1995, two final decisions found Kiewit responsible; Ameron notified insurers about IBCA challenge to those decisions; Ameron and Kiewit settled the IBCA claim for $10 million.
- IBCA proceeding lasted 22 days, with witnesses, testimony, and a formal adjudicative process; other insurers largely refused to defend or indemnify.
- Ameron filed suit in 2004 seeking defense/coverage, arguing the IBCA proceedings were a “suit” triggering coverage under policies that do not define “suit.”
- Court of Appeal had held Foster-Gardner limited to pollution-remediation orders and did not preclude coverage for IBCA-like adjudicative proceedings; California Supreme Court granted review to decide if such proceedings are “suits” under the applicable policies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IBCA adjudicative proceedings are a “suit” under the policies lacking a definition of suit. | Ameron: IBCA is a civil action; a quasi-judicial proceeding; should trigger defense/coverage. | Respondents: Foster-Gardner’s literal-suit rule applies; IBCA is not a court proceeding, thus not a suit. | IBCA proceedings are a suit for purposes of defense/coverage. |
| Does Foster-Gardner apply to the IBCA proceeding, or does the rule extend to adjudicative administrative hearings? | Foster-Gardner should not apply; IBCA resembles a court-like process. | Foster-Gardner applies to any nondefined “suit” scenario using a literal rule. | Foster-Gardner does not control; the IBCA proceeding triggers defense/coverage. |
| Do IBCA complaint requirements provide insurers with notice to trigger defense obligations, similar to a formal court complaint? | IBCA complaint satisfies notice requirements and parallels court complaints. | Insurers rely on lack of a court-form complaint; Foster-Gardner limits notice. | IBCA pleading meets complaint standards; provides notice to insurers. |
| Should ambiguity resolve in favor of coverage for IBCA proceedings under policies without defined “suit”? | Ambiguity resolved in favor of insured; reasonable expectation of coverage. | Ambiguity should be interpreted against insured to limit coverage. | Ambiguity resolved in favor of coverage; reasonable expectation supports defense/indemnity. |
Key Cases Cited
- Foster-Gardner, Inc. v. National Union Fire Ins. Co., 18 Cal.4th 857 (Cal. 1998) (literal meaning of 'suit' as court proceeding; environment remediation order not a suit)
- Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1 (Cal. 1995) (duty to defend linked to allegations in the complaint; notice)
- E.M.M.I. Inc. v. Zurich American Ins. Co., 32 Cal.4th 465 (Cal. 2004) (ambiguity in policy terms; resolve in insured's favor)
- Powerine I (Certain Underwriters at Lloyd's of London v. Superior Court), 24 Cal.4th 945 (Cal. 2001) (duty to indemnify limited to damages ordered by court; specific language matters)
- Powerine Oil Co., Inc. v. Superior Court (Powerine II), 37 Cal.4th 377 (Cal. 2005) (specific policy language governs coverage for cleanup costs)
- County of San Diego v. Ace Property & Casualty Ins. Co., 37 Cal.4th 406 (Cal. 2005) ('expenses' vs. 'damages' in policy language determines coverage)