Santa Clara Waste Water Co. v. Allied World Nat'l. Assur. Co.
B279679
| Cal. Ct. App. | Dec 20, 2017Background
- SCWW and GCES sought prejudgment attachments for $2.5 million plus costs based on an express Payment Term Sheet and implied-contract theories (unjust enrichment, rescission).
- Allied issued primary and umbrella environmental liability policies; coverage excluded damages from intentional noncompliance with law or regulations.
- A sodium chlorite spill occurred after an explosion at the SCWW facility; Allied denied coverage for cleanup costs.
- Evidence showed SCWW/GCES reportedly stored and concealed hazardous waste, including unreported sodium chlorite, prior to and after policy inception.
- Trial court found probable validity of Allied’s unjust enrichment and rescission theories and issued writs of attachment against SCWW and GCES.
- SCWW/GCES appealed, arguing Allied failed to establish probable validity of its claims and that there were issues with express vs implied contracts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Probable validity of attachment claim | Allied showed likely recovery on implied/express contracts. | SCWW/GCES contest sufficiency of probable validity. | Attachment affirmed; probable validity established. |
| Unjust enrichment against insureds | Payment of $2.5 million was improper under intentional noncompliance exclusion. | No basis for reimbursement under policy terms. | Probable validity shown; reimbursement claim supported. |
| Rescission based on misrepresentation/ concealment | Misrepresentation of hazardous-waste handling and concealment justify rescission. | Rescission not properly pled or noticed. | Probable validity shown; rescission supported. |
| Express vs. implied contract for attachment | Implied-contract theories independently support attachment even if an express term exists. | Express term would govern; attachment relies on express contract. | Implied-contract theories sustain attachment; invited-error rationale barred; express vs implied not fatal. |
| Prejudgment interest accrual date | Interest starts when Allied paid the $2.5 million. | Interest from judgment date. | Interest accrues from payment date. |
Key Cases Cited
- Buss v. Superior Court, 16 Cal.4th 35 (Cal. 1997) (unjust enrichment supports reimbursement when policy excludes coverage)
- Lorber Indus. v. Turbulence, Inc., 175 Cal.App.3d 532 (Cal. App. 3d 1985) (standard of review for attachment must be substantial evidence)
- Village Northridge Homeowners Assn. v. State Farm Fire & Casualty Co., 50 Cal.4th 913 (Cal. 2010) (rescission principles; notice/offer considerations)
- Joshua Tree Townsite Co. v. Joshua Tree Land Co., 100 Cal.App.2d 590 (Cal. App. 2d 1950) (timing of issues in connections to contractual relations)
- Tudor Ranches, Inc. v. State Comp. Ins. Fund, 65 Cal.App.4th 1422 (Cal. App. 4th 1998) (failure to raise issues on appeal forfeiture doctrine)
- Robinson v. Varela, 67 Cal.App.3d 611 (Cal. App. 3d 1977) (conditions precedent; writ attachments dissolution guidance)
- Ohio Cas. Ins. Co. v. Garamendi, 137 Cal.App.4th 64 (Cal. App. 4th 2006) (prejudgment interest accrues from payment date)
- Eaton v. Queen, 78 Cal.App.2d 571 (Cal. App. 2d 1947) (contract requirement basics for attachment)
- Hartford Cas. Ins. Co. v. J.R. Marketing, L.L.C., 61 Cal.4th 988 (Cal. 2015) (twin-contract analysis; implied vs express terms alignment)