AMERON INTERNATIONAL CORPORATION, Plaintiff and Appellant, v. INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA et al., Defendants and Respondents. AMERON INTERNATIONAL CORPORATION, Plaintiff and Appellant, v. HARBOR INSURANCE COMPANY, Defendant and Respondent.
No. S153852
Supreme Court of California
Nov. 18, 2010
1370
Stanzler Funderburk & Castellon, Stanzler Law Group and Jordan S. Stanzler for Plaintiff and Appellant.
Weston, Benshoof, Rochefort, Rubalcava & MacCuish and Richard Giller for California Cast Metals Association as Amicus Curiae on behalf of Plaintiff and Appellant.
McCurdy & Fuller, Kevin G. McCurdy and Rosemary J. Springer for Defendant and Respondent Insurance Company of the State of Pennsylvania.
Hinshaw & Culbertson, Robert J. Romero, Paul E. Vallone and Joseph J. De Hope, Jr., for Defendants and Respondents Century Indemnity Company, Insurance Company of North America, Pacific Employers Insurance Company, St. Paul Surplus Lines Insurance Company, Insurance Company of the State of Pennsylvania, Harbor Insurance Company and Transcontinental Insurance Company.
Charlston, Revich & Chamberlin, Charlston, Revich & Wollitz, Ira Revich and Nicholas R. Andrea for Defendants and Respondents International Insurance Company and Puritan Insurance Company.
Ericksen, Arbuthnot, Kilduff, Day & Lindstrom and Andrew P. Sclar for Defendant and Respondent Old Republic Insurance Company.
Hogan & Hartson, David R. Singer, Jonathan S. Franklin, William J. Bowman and Catherine E. Stetson for Defendant and Respondent Twin City Fire Insurance Company.
Sonnenschein Nath & Rosenthal, Michael A. Barnes, Sonia Martin and Lee L. Kaster for Defendant and Respondent Great American Surplus Lines Insurance Company.
O‘Melveny & Myers, Richard B. Goetz and A. Patricia Klemic for Defendants and Respondents Insurance Company of North America and Pacific Employers Insurance Company.
Foley & Lardner, Eileen R. Ridley and Patrick T. Wong for Lloyd‘s and The Reinsurance Association of America as Amici Curiae on behalf of Defendants and Respondents.
Wiley Rein, Laura A. Foggan; Sinnott, Dito, Moura & Puebla, Randolph P. Sinnott and John J. Moura for Complex Insurance Claims Litigation Association as Amicus Curiae on behalf of Defendants and Respondents.
Sinnott, Dito, Moura & Puebla, Blaise S. Curet and Stephen R. Wong for Zurich American Insurance Company as Amicus Curiae on behalf of Defendants and Respondents.
OPINION
CHIN, J.—This court has defined the term “suit” in a comprehensive general liability (CGL) insurance policy as “a court proceeding initiated by the filing of a complaint.” (Foster-Gardner, Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857, 887 [77 Cal.Rptr.2d 107, 959 P.2d 265] (Foster-Gardner).) Foster-Gardner declined to include an environmental agency‘s pollution remediation order in that definition, and so we found the insured business was not entitled to coverage under its CGL policy for its cleanup liability. (Id. at pp. 860-861, 864.) Here, in a case involving numerous primary, excess, and umbrella insurance policies, we must decide the narrow question: Is a federal administrative adjudicative proceeding before an administrative law judge of
FACTUAL AND PROCEDURAL BACKGROUND
Appellant Ameron International Corporation (Ameron) is based in Pasadena, California, and incorporated under the laws of the State of Delaware. Respondent insurers (respondents) are 11 insurance companies that provided Ameron with primary CGL coverage as well as excess/umbrella policies between 1978 and 1995.2 Beginning in 1975, the United States Department of the Interior, Bureau of Reclamation (Bureau) contracted with Peter Kiewit Sons’ Company (Kiewit) for the fabrication and installation of concrete siphons used in the Bureau‘s Central Arizona Project aqueduct. Kiewit then subcontracted manufacture of the siphons to Ameron, requiring it to defend and indemnify Kiewit in the event the siphons proved defective. Kiewit is an insured under Ameron‘s insurance policies.
In 1990, the Bureau discovered defects in the siphons that required their replacement at a cost of approximately $116 million. In 1992, the Central Arizona Water Conservation District filed an action against Ameron in federal district court in Arizona for its responsibility in providing the defective siphons. Ameron provided respondents with timely notice of that action,
In 1995, the Bureau‘s contracting officer issued two final decisions finding Kiewit responsible for the siphons’ defects and seeking almost $40 million in damages from Kiewit and Ameron.3 Under the terms of their indemnity agreement providing for a private contractual remedy, Kiewit and Ameron challenged the contracting officer‘s decision before the IBCA. In light of the Bureau‘s action against them, Ameron provided timely notice to respondent insurers.
The IBCA administrative law proceeding lasted 22 days and concluded when Ameron and Kiewit settled the Bureau‘s claims against them for $10 million. Following the settlement, Truck Insurance Exchange, “one of Ameron‘s primary insurers, paid Ameron certain sums with respect to the [Central Arizona Project] litigation.”4 In addition, INA offered to pay $750,000 towards the settlement, but Ameron rejected this amount as insufficient. The remaining respondents generally failed or refused to pay for the cost of defending or indemnifying Ameron in the litigation before the IBCA.
Ameron, in its own right and as the assignee of Kiewit‘s rights, filed its operative complaint against respondent insurers on July 21, 2004, alleging causes of action for breach of contract, breach of the covenant of good faith and fair dealing, declaratory relief, waiver and estoppel, and contribution.5 Ameron‘s complaint alleged that the IBCA proceedings are “civil proceedings” in which the IBCA acts in a “judicial capacity” when conducting hearings and deciding contested factual issues. Ameron pointed out that under the Contract Disputes Act of 1978 (Contract Disputes Act) (
The Court of Appeal partially reversed the trial court‘s judgment with respect to those policies that defined a “suit” as a “civil proceeding.”6 However, after commenting that it was reluctantly applying Foster-Gardner‘s reasoning to those policies that did not define the term “suit,” the Court of Appeal concluded that similar pre-1986 insurance policies containing language virtually identical to the policies at issue in Foster-Gardner7 gave Ameron no defense or liability coverage, because the IBCA adjudicative administrative hearing was before a federal administrative agency and not a court of law. We granted review to decide whether, under the applicable Ameron policies at issue here, the rule announced in Foster-Gardner applies to preclude the obligation to provide a defense and potential indemnity coverage in an administrative law proceeding before the IBCA.8
DISCUSSION
A. Background
1. Standard of Review and Insurance Law Principles
In general, interpretation of an insurance policy is a question of law and is reviewed de novo under settled rules of contract interpretation. (E.M.M.I. Inc. v. Zurich American Ins. Co. (2004) 32 Cal.4th 465, 470 [
An insurance policy provision is ambiguous when it is susceptible of two or more reasonable constructions. (E.M.M.I., supra, 32 Cal.4th at p. 470.) If ambiguity exists, however, the courts must construe the provisions in the way the insurer believed the insured understood them at the time the policy was purchased. (
In addition, to prevail on a duty to defend claim, an insured need ” ‘only show that the underlying claim may fall within policy coverage....’ ” (Ortega Rock Quarry v. Golden Eagle Ins. Corp. (2006) 141 Cal.App.4th 969, 977 [46 Cal.Rptr.3d 517].) Insurers have the more difficult burden of proving that the underlying claim cannot fall within policy coverage. (Ibid.)
2. Foster-Gardner and Subsequent Cases
Respondents assert that the hearing before the IBCA was not the trial of a “suit” as defined in the insurance policies. They generally rely on language in Foster-Gardner to argue that because the IBCA is not a court of law, any hearing before it is not the trial of a “suit” unless specifically indicated as such in the pertinent policy. (Foster-Gardner, supra, 18 Cal.4th at pp. 887-888.) Ameron, in turn, contends that Foster-Gardner either does not apply to the IBCA‘s “civil proceedings,” or, if it does, we should overrule it to provide that the IBCA proceedings are considered the trial of a “suit.”
DTSC issued the Order under the Carpenter-Presley-Tanner Hazardous Substance Account Act (HSAA;
Foster-Gardner tendered its proposed defense to the Order to four of its insurers, who either refused to defend or agreed to defend subject to a reservation of rights. (Foster-Gardner, supra, 18 Cal.4th at pp. 863–864.) All had issued CGL policies containing essentially similar language; none of the policies defined the term “suit” or “claims.” (Ibid.) Foster-Gardner brought suit against its insurers, asserting they were obligated to defend, and seeking summary adjudication as to their obligation. (Id. at p. 864.) However, the trial court disagreed and granted the insurers’ cross-motions for summary judgment based on its determination that the Order was not a “suit.” (Ibid.) The Court of Appeal reversed the judgment, interpreting the policies using a ” ‘nontechnical... analysis’ ” (id. at p. 865) to find the Order was the ” ‘functional equivalent’ ” of a “suit” that triggered the insurers’ duty to defend (id. at p. 879).
Rejecting a “functional” or “hybrid” methodology that other states had adopted in interpreting the meaning of the term “suit” (Foster-Gardner, supra, 18 Cal.4th at pp. 871-874), this court reversed the Court of Appeal judgment, holding that the term in the insurance policies at issue referred, unequivocally, to a lawsuit or, more accurately, “a civil action commenced by filing a complaint” (id. at p. 878). We cited two authorities: Black‘s Law Dictionary and Webster‘s Ninth New Collegiate Dictionary. Black‘s defines “suit” as ” ‘[a] generic term, of comprehensive signification, referring to any proceeding by one person or persons against another or others in a court of law in
In considering the coverage issue, we observed that other jurisdictions take different approaches to interpreting CGL policies. Some take a “functional” view, holding that the receipt of any EPA-type cleanup letter or order constitutes a “suit.” (See Aetna Casualty & Surety Co., Inc. v. Pintlar Corp. (9th Cir. 1991) 948 F.2d 1507, 1517; Michigan Millers Mutual Ins. v. Bronson Plating (1994) 445 Mich. 558 [519 N.W.2d 864, 872].) Other states take a “hybrid” approach, holding that an agency‘s letter, order, or precomplaint action is a “suit” if it is sufficiently coercive and threatening. (See Michigan Millers, supra, 519 N.W.2d at p. 874, fn. 8 (dis. opn. of Griffin, J.) [mere notice of alleged contamination does not trigger coverage under the hybrid test].) Foster-Gardner sided with the jurisdictions taking the third, “literal meaning,” approach and held that a “suit” refers to an actual court complaint only. (Foster-Gardner, supra, 18 Cal.4th at pp. 869, 879.) This view emphasized that the insurer has undertaken to defend suits, not mere threats ” ‘to initiate legal action’ ” (id. at p. 882) or a ” ‘functional equivalent’ ” (id. at p. 879). Foster-Gardner reasoned that the literal meaning approach preserves and underscores the distinction between a “suit” and a “claim,” as the insurer is required to defend the former but has the discretion to investigate the latter. (Id. at pp. 878, 880.) Under this literal interpretation, and in the absence of a corresponding definition within a CGL policy, Foster-Gardner determined that a “suit” is a proceeding brought in a court of law by the filing of a complaint. (Id. at p. 878.)
As the Court of Appeal observed, we extended our ” ‘bright-line rule’ ” (Foster-Gardner, supra, 18 Cal.4th at p. 887) in Certain Underwriters at Lloyd‘s of London v. Superior Court (2001) 24 Cal.4th 945, 960–961 [103 Cal.Rptr.2d 672, 16 P.3d 94] (Powerine I), to the insurer‘s duty to indemnify the insured under the same standard CGL insurance policies. Powerine I limited the insurer‘s duty to indemnify for all sums the insured was “legally obligated to pay as damages” to sums ordered by a court, as opposed to expenses required by an agency‘s cleanup order. (Id. at p. 951Foster-Gardner, the policies in Powerine I used the terms “suit” and “damages” but did not define either. Next, in Powerine Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377 [33 Cal.Rptr.3d 562, 118 P.3d 589] (Powerine II) we emphasized that the specific language used in the policies is determinative; thus, where the coverage provisions included the word “expenses,” as well as “damages,” the policy required the insurers to indemnify the insured for cleanup of contaminated sites. (Id. at pp. 383, 398-405.)
In addition, the Court of Appeal considered two appellate decisions applying our authority. (Lockheed Martin Corp. v. Continental Ins. Co. (2005) 134 Cal.App.4th 187, 200 [35 Cal.Rptr.3d 799] [concluding that insuring phrase ” ‘any suit or action’ ” referred to a court proceeding, and thus there was no coverage for agency cleanup orders]; CDM Investors v. Travelers Casualty & Surety Co. (2006) 139 Cal.App.4th 1251, 1263 [43 Cal.Rptr.3d 669] [insurance clause for ” ‘ultimate net loss’ ” which the insured was obligated to pay ” ‘as damages’ ” (italics omitted) did not provide coverage for environmental response costs incurred pursuant to an administrative order because the ” ‘as damages’ ” phrase limited the duty to court proceedings].)
Applying these cases, the Court of Appeal discussed the coverage issues for the multiple types of policies the 11 insurers provided to Ameron over the years. In parts I. through IX. of the opinion, the Court of Appeal found coverage under some insurance policies it likened to that in Powerine II, but found no coverage as to other policies more akin to the Foster-Gardner and Powerine I policies. Of importance here is part I.A. There, the Court of Appeal considered a primary CGL policy issued by INA for the years 1988 to 1989. That policy indemnified Ameron for ” ‘all sums which [Ameron] shall become legally obligated to pay as damages’ ” and provided a defense duty for ” ‘any suit against the Insured seeking damages....’ ” The insuring provision also stated the insurer ” ‘may make such investigation and settlement of any claim or suit as it deems expedient, but the Company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the Company‘s liability has been exhausted by payment of judgments or settlements.’ ‘Suit’ and ‘claim’ are not defined in the policy.” The Court of Appeal observed that the INA policy language was substantially the same as the Foster-Gardner and Powerine I policy language. Although the court held that Foster-Gardner precluded coverage under that INA policy‘s definition of “suit,” it did so with obvious dissatisfaction. The Court of Appeal observed that Ameron‘s IBCA action—a quasi-judicial administrative agency board hearing conducted by an administrative law judge—was significantly different from the environmental cleanup orders of Foster-Gardner and Powerine I. Indeed, the court found “much to commend” in Ameron‘s contention that the IBCA hearing is a “suit.” It also found “compelling” a similar distinction embraced in Justice Spencer‘s concurring opinion in Fireman‘s Fund Ins. Co. v. Superior Court (1997) 65 Cal.App.4th 1205 [78 Cal.Rptr.2d 418], opining that “merely an investigative administrative proceeding seeking a negotiated settlement and a consent decree” “did
In eventually denying Ameron all coverage under those insurance policies that did not define the term “suit,” the Court of Appeal observed that the IBCA proceeding is trial-like in nature, and that Foster-Gardner‘s concerns of uncertainty are not present where the administrative action is adjudicatory. The court noted that “[t]he IBCA proceeding at issue here was, by any measure, an adjudicative administrative hearing. It was commenced by the filing of a notice and complaint and was presided over by a judge governed by federal evidence rules and charged with setting damages for an alleged contract breach.” The court concluded that because the administrative proceedings in Foster-Gardner involved a pollution remediation order, it could “fairly regard its broad rule as dicta when applied to the very different administrative proceedings in this case.” But the court observed that ” ’ “[e]ven if properly characterized as dictum, statements of the Supreme Court should be considered persuasive.” ’ ” In sum, the Court of Appeal concluded that although a contractor like Ameron would reasonably expect the IBCA litigation to be considered a “suit” seeking “damages,” Foster-Gardner‘s bright-line rule compelled the court to interpret the word “suit” as used in that policy as limited to a court proceeding.
The Court of Appeal addressed a wide range of insurance policy language and discussed at length the coverage provisions in each of those policies that were applicable to the appeal. Ameron‘s petition for review, however, focused on the narrow but fundamental question whether an adjudicative administrative action like the IBCA action is a “suit” for purposes of coverage under a liability policy. Ameron asserts that the rule in Foster-Gardner and its progeny does not apply to the IBCA action. That action, Ameron claims, is a “suit” even under Foster-Gardner‘s bright-line rule approach. The specific post-Foster-Gardner question—whether a liability policy covers adjudicative administrative hearings like the hearing before the IBCA under policies that do not specifically define “suit” or limit the application of coverage to preclude administrative adjudicative hearings—is one of first impression.
B. Analysis
1. The Obligation to Defend a Suit
Ameron contends that Foster-Gardner is not applicable here because the IBCA proceeding was a “suit” as a reasonable insured would understand the term, in contrast to the pollution remediation order for which the insured sought coverage in Foster-Gardner. Ameron points out that the IBCA is a
Therefore, in order to determine whether proceedings before the IBCA are a “suit” we must decide if the concerns that led us to conclude that issuance of a pollution remediation order was not a “suit” also apply to hearings before a federal administrative adjudicative body. In conducting this analysis, we compare the IBCA‘s complaint requirements to those of the Code of Civil Procedure. We also look briefly both to Congress‘s intent in setting up the IBCA, and to the structure of IBCA proceedings themselves.
2. The IBCA‘s Complaint Requirements
It is a “settled rule that the insurer must look to the facts of the complaint and extrinsic evidence, if available, to determine whether there is a potential for coverage under the policy and a corresponding duty to defend.” (Waller, supra, 11 Cal.4th at p. 25.) In Foster-Gardner, the court pointed out that “[i]t is because the insurer‘s duty to defend depends on the allegations in the complaint that the insurer may or may not owe a duty to defend those allegations.” (Foster-Gardner, supra, 18 Cal.4th at p. 880, original italics, citing Waller, supra, 11 Cal.4th at p. 26.) This link between the complaint and an insurer‘s duty to provide coverage was crucial to Foster-Gardner‘s holding that the pollution remediation order, which did not amount to a complaint, provided insurance companies insufficient notice of the parameters of the action against the insured. (Foster-Gardner, supra, at p. 880.)
The IBCA complaint requirements distinguish the case from Foster-Gardner. As noted, the Contract Disputes Act established the IBCA and authorized it to conduct trials, determine liability, and award money damages. (
The IBCA procedure at issue here requires the contractor appealing from an adverse decision by the Bureau‘s contracting officer to file a complaint, “setting forth simple, concise, and direct statements of each claim, alleging the basis with appropriate reference to contract provisions for each claim, and the dollar amount claimed.” (
In addition, not only does the Code of Federal Regulations call the required pleading before the IBCA a “complaint,” but the requirements for that “complaint” serve the same notice purpose as California‘s civil litigation complaint requirement. (
It is clear that the IBCA pleading requirements meet the standards for a complaint under our Code of Civil Procedure. The IBCA pleading must “set[] forth simple, concise, and direct statements of each claim, alleging the basis with appropriate reference to contract provisions for each claim....” This level of specificity gives as much, if not more, notice to insurers making coverage decisions regarding claims as does the specificity required by our Code of Civil Procedure. If there were any doubt whether the “complaint” before the IBCA was meant to serve the same purpose as a complaint in a
Respondents rely on the fact that a contractor can choose to access article III courts (U.S. Const., art. III) directly, by filing an action with the Federal Claims Court rather than with the IBCA. (Sen.Rep. No. 95-1118, supra, p. 3.) Respondents claim that this alternative procedure means that Congress intended to distinguish an action filed with the IBCA from one filed with the Federal Claims Court. They assert that the “degree of due process desired” is weighed against “the time and expense considered appropriate for the case.” In other words, respondents claim that the contractor that chooses the IBCA as a forum must give up some of the due process rights that it would have received in a court, such that the IBCA proceedings stop short of being a “suit.” Not so. Congress allowed for these two avenues of review in order to “cut down the present traffic between the boards and the courts... [to] reduc[e] the points of friction and eliminat[e] delays.” (Sen.Rep. No. 95-1118, supra, p. 12.) In addition, Congress expected that agency boards would handle “better than 90 percent of contract claims,” “since they should be the least expensive, most expeditious forum available to the contractor.” (Ibid.) Due process rights are adequately protected in the IBCA quasi-judicial proceedings. (Id. at p. 13.) With regard to appeals to the IBCA, Congress states: “The contractor should feel that he is able to obtain his ‘day in court‘... and at the same time [save] time and money through the agency board process. If this is not so, then contractors would elect to go directly to court and bypass the boards since there would be no advantage in choosing the agency board route for appeals.” (Id. at p. 25.)
Respondents next assert that language referring to the transfer of “suits” between boards like the IBCA and the Federal Claims Court is an anomaly. Insurers cite language from previous drafts of the Contract Disputes Act where the word “suits” in title 41 United States Code section 609(d) referred to transfers between the federal district court and the Federal Claims Court instead of between the Federal Claims Court and agency boards, and argue that the word “suits” is, essentially, a drafting error.9 The insurers are correct
3. Reasonable Expectation of Coverage
Under the statutory rules of contract interpretation, any ambiguity in the policy terms will be construed against the insurer to protect the insured‘s reasonable expectation of coverage. Based on the reference to “suits” in
As the legislative purpose indicates, the IBCA proceeding provides contractors with their “day in court.” As noted, this case proceeded in a 22-day IBCA hearing, in which witnesses testified and were cross-examined. The parties then decided to mediate, and reached a settlement in which Ameron agreed to pay the government $10 million. A reasonable policyholder would recognize such proceedings as a suit and would expect to be defended and, if necessary, indemnified by its insurer. It is safe to assume that Ameron would not have proceeded under the IBCA appeals process if it had known that coverage would not be extended to its $10 million settlement with the government.
Given insurers’ reliance on a “complaint” for coverage determinations,10 and our policy of emphasizing substance over form in characterizing pleadings,11 it is reasonable for all parties to a liability insurance policy that does not define the term “suit” to expect a federal adjudicative administrative agency board proceeding to trigger the defense and indemnity provisions in the policy. Foster-Gardner notes that “[a]lthough insureds certainly deserve no less than the benefit of their bargain, insurers should be held liable for no more,” and its rule will continue to apply to actions involving pollution remediation orders, or any matters that involve threats to take legal action only, rather than to “suits.” (Foster-Gardner, supra, 18 Cal.4th at p. 882.)
In this case, the agency board proceeding was not a “threat” to take legal action; it was an administrative adjudicative action that dictates our
CONCLUSION
For the foregoing reasons, we reverse the Court of Appeal judgment, and remand the matter for proceedings consistent with this decision.
George, C. J., Baxter, J., Werdegar, J., Moreno, J., and Siggins, J.,* concurred.
KENNARD, J., Concurring.—I concur in the judgment. In Foster-Gardner, Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857 [77 Cal.Rptr.2d 107, 959 P.2d 265] (Foster-Gardner), a decision signed by four justices, this court used a ” ‘literal meaning’ approach” in construing the term “suit” in a standard comprehensive general liability (CGL) insurance policy that did not define that term. (Id. at pp. 869-870, 878-880.) Adopting what it termed a ” ‘bright-line rule’ ” (id. at p. 887), the Foster-Gardner majority held that as used in a CGL policy to define the insurer‘s duty of defense, “suit” unambiguously refers only to court proceedings, and CGL insurers are therefore not obligated to undertake the defense of their policyholders in responding to an administrative agency‘s pollution remediation order. (Id. at pp. 881-882.) I was among the three dissenting justices. (Id. at p. 888 (dis. opn. of Kennard, J.).)
When it was decided in 1998, Foster-Gardner represented a distinctly minority view. (See Government Interinsurance Exchange v. City of Angola (N.D.Ind. 1998) 8 F.Supp.2d 1120, 1130 [” ‘The vast majority of courts around the United States... have found that all kinds of coercive administrative actions... are “suits” covered by general liability insurance policies....’ “].) Since Foster-Gardner was decided, no sister state court has adopted its “literal meaning approach,” or its resulting “bright-line rule,” in construing the term “suit” in a CGL insurance policy, while courts in nine sister states and federal courts applying the law of two other sister states have rejected that approach, instead adopting either the “functional equivalent” approach or the “hybrid” approach that the Foster-Gardner majority rejected. (Compass Ins. Co. v. City of Littleton (Colo. 1999) 984 P.2d 606, 622; R.T. Vanderbilt Co., Inc. v. Continental Casualty Co. (2005) 273 Conn. 448 [870 A.2d 1048, 1058]; Travelers Indemnity Co. v. Summit Corp. of America (Ind.Ct.App. 1999) 715 N.E.2d 926, 934; Aetna Casualty & Surety Co. v. Commonwealth (Ky. 2005) 179 S.W.3d 830, 837–838; Dutton-Lainson Co. v. Continental Ins. Co. (2010) 279 Neb. 365 [778 N.W.2d 433, 446–449]; Carpentier v. Hanover Ins. Co. (N.Y.App.Div. 1998) 248 A.D.2d 579 [670 N.Y.S.2d 540, 542]; Schnitzer Investment Corp. v. Certain Underwriters at Lloyd‘s of London (2005) 197 Ore.App. 147 [104 P.3d 1162, 1168–1169]; State v. CNA Ins. Cos. (2001) 172 Vt. 318 [779 A.2d 662, 667]; Johnson Controls v. Employers Ins. of Wausau (2003) 264 Wis.2d 60 [665 N.W.2d 257]; Briggs & Stratton Corp. v. Royal Globe Ins. Co. (M.D.Ga. 1999) 64 F.Supp.2d 1340, 1345 [applying Ga. law]; Pacific Employers Ins. Co. v. Servco Pacific Inc. (D. Hawaii 2003) 273 F.Supp.2d 1149, 1156 [applying Hawaii law].) Thus, over the past 12 years, it has become increasingly apparent that Foster-Gardner lies far outside the mainstream of American insurance law.
Here, the court limits Foster-Gardner‘s “bright-line rule” by holding that it does not apply to administrative agency adjudicative proceedings. The court reaches this result by concluding that the word “suit,” when used in a CGL policy that does not define that word, is sufficiently ambiguous that it should be construed to protect the insured‘s reasonable expectation of coverage. (See maj. opn., ante, at p. 1386.) In so doing, the court implicitly rejects Foster-Gardner‘s reasoning that “suit” unambiguously refers only to court proceedings. (Foster-Gardner, supra, 18 Cal.4th at pp. 878-879.) Although I would prefer that Foster-Gardner be overruled, the decision here is at least a step in the right direction.
On January 19, 2011, the opinion was modified to read as printed above.
*Associate Justice of the Court of Appeal, First Appellate District, Division Three, assigned by the Chief Justice pursuant to