*1 Aug. S061699. 1998.] [Nо. CORPORATION, and Plaintiff Respondent,
AYDIN COMPANY, Defendant Appellant. FIRST STATE INSURANCE *3 Counsel Martin, Mascovich, P. Roach & James C.
Crosby, Heafey, May, Joseph Sleeth, Adolfsen, and Louis G. Adolfsen for C. Melito & Siff Rosen Boyd Defendant and Appellant. Lemer, Rein & Laura A. Daniel E. S.
Wiley, Fielding, Foggan, Troy, Craig Summers, Bien, Hancock, and William Bien & Elliot L. Rothert & Bunshoft J. Baron as Amici Curiae on behalf of Defendant and Appellant. Brobeck, Harrison, Brown, E. and Edith & Donald W. David Weiss Phleger M. Hofmeister for Plaintiff and Respondent. Konishi, Pasich, Katz, Lauri Steuber & Martin D. S. Meisinger,
Troop, Watkins, Mulliken, Parry, Latham & L. Dorn G. Julia E. David Bishop, Heller, Ehrman, as Amici Curiae White & McAuliffe and David B. Goodwin on behalf of Plaintiff and Respondent.
Opinion case, whether, in an BROWN, seeking must decide action In this we J. under a standard commercial indemnity general called a (formerly comprehensive general liability insurance policy), insured or the insurer bears the burden of that a claim comes within proving the “sudden and accidental” to the exclusion. general The Court of concluded that once the insurer Appeal carries its burden of that the exclusion the insured bears applies, and, We with the Court of exception. agree conclusion there- Appeal’s fore, affirm its judgment. Background
I. Factual and Procedural A. The Contamination and the Remedial Action Order facts underlying are well summarized in-the Court of Appeal’s From until opinion. May plaintiff Corporation (Aydin) a research and operated in Palo Alto at it manufacturing complex which *4 fabricated, assembled, and electrical transformers. repaired These operations chemicals, oils, solvents, the use of a required of noxious variety and waste materials. Some of these fluids were stored in metal tanks buried under- ground; other were liquids metal kept aboveground 55-gallon drums. drums and material out of the tanks were pumped turned over to a disposal company.
In Aydin (PCB) discovered polychlorinated soil biphenyl ground contamination and to correct it. In attempted July discovered Aydin recurred, the PCB contamination had and on a much larger scale. PCB contamination was found in the area of the tanks. There underground tanks, also solvent contamination of the groundwater beneath the site. The removed in contained numerous holes. Aydin notified California Services, of Health Department which a remedial action order promulgated studies, to undertake an requiring Aydin extensive of program monitoring, and efforts. cleanup
B. The General Comprehensive Liability Insurance Policies From the beginning (i.e., 1980 to the end of during period when the second discovered), PCB contamination was $5 had million Aydin of excess issued defendant First coverage by (First State Insurance Company State). In each of the two annual comprehensive general liability issue, policies First State to for “all agreed indemnify Aydin sums which the Insured shall be obligated reason of the pay by liability imposed the Insured upon law or assumed the Insured under contract by of; or agreement because A. Personal damages expenses, HQ Injury defined; Property as hereinafter B. as hereinafter HD Damage, HQ defined . . . this caused as which policy applies, Occurrence, defined, The term “Occur- anywhere hereinafter world.” happening is defined as “an accident or event continuous including repeated rence” results, conditions, in Personal during which exposure policy period, Injury Property Damage or neither nor intended from the expected of the Insured. standpoint . . .” Under the that it not each stated “shall heading “Exclusions,” HQ HQ ... ... ... out
apply any liability any arising Insured, smoke, soot, fumes, or discharge, release dispersal, escape vapors, acids, alkalis, chemicals, solids, toxic or or waste materials liquids gases, irritants, land, other contaminants or into or upon atmosphere or watercourse or water unless such release body discharge, dispersal, (Italics added.) is sudden and accidental.” escape
C. The Action Declaratory Relief relief, commenced this action for declaratory seeking as to the judgment coverage and excess insurers. provided by primary because, First State asserted there nowas under its policies among other things, discharge, release or of the contami dispersal, escape “[t]he accidental,’ nants was not ‘sudden and to the exclusion.” pursuant trial, At the trial court gave instruction advisory jury following *5 regarding “The issued First State contain proof: policies pollution exclusions. To establish its defense based on the exclu pollution sions, First State has the burden of proving by preponderance (1) evidence that Aydin arises out of the Corporation’s liability ‘discharge, smoke, soot, fumes, acids, alkalis, release or dispersal, of escape’ vapors, chemicals, solids, irritants, toxic or gases, waste materials or other liquids land, contaminants or into or or water upon atmosphere any water; course or (2) body release or discharge, dispersal, smoke, soot, fumes, acids, alkalis, chemicals, solids, escape vapors, toxic irritants, or gases, waste materials or other liquids contaminants or pollutants accidental.’,,1 was not ‘sudden and First State to the second half of objected instruction, this contending Aydin should bear the burden of proving “sudden and accidental” exception. deliberations,
At the conclusion of its answered “No” to the jury two following (1) “Has First State met its burden of special interrogatories: that Aydin arises out of proving Corporation’s legal liability discharge(s), 1The court went on to jury. trial define term “sudden and accidental” for the Since the court, parties challenged have not the trial court’s definition in this we have no occasion to proper meaning address the of the term in this case.
1188 contaminants, release(s) or into or a water dispersal(s), escape(s) upon water, (2) course or which were not ‘sudden and accidental’?” “Has body First State met its burden of that Aydin legal liability Corporation’s release(s) arises out of of contami- discharge(s), dispersal(s), escape(s) nants, land, into or which were not ‘sudden and accidental’?” The trial upon and, court other these after number of adopted findings resolving points here, not at issue entered a declaratory Aydin. favor judgment On the Court of concluded that the trial court should have appeal, Appeal the burden of that its claim came within the “sudden assigned Aydin and accidental” to the exclusion. The Court of general exception in this Aydin’s regard concession error Appeal accepted and, reversed the We prejudicial accordingly, judgment. granted Aydin’s for review. petition
II. Discussion
our review of this matter are well
general principles governing
established. The burden is on an insured to establish that the occurrence
the basis of its claim is within the basic
of insurance
forming
scope
125,
(1994)
v. Federal
Assurance Co.
7 Cal.4th
coverage.
Kemper
{Weil
Life
316,
774,
789];
P.2d
A.L.R.5th
Searle v. Allstate
Cal.Rptr.2d
[27
466,
Ins. Co.
38 Cal.3d
Cal.Rptr.
[212
Life
And,
1308].)
once an insured has made this
the burden is on the
showing,
claim
insurer to
excluded.
v. State Farm
{Garvey
specifically
Fire &
704];
Co.
48 Cal.3d
770 P.2d
Casualty
Cal.Rptr.
Co.,
437-438;
v. Allstate
Ins.
38 Cal.3d at
Searle
Life
Clemmerv.
Insurance Co.
22 Cal.3d
Cal.Rptr.
Hartford
1098].)
587 P.2d
on these
dis
Although
parties agree
general
they
principles,
as to whether the “sudden and accidental”
should be con
agree
strued as a
or an
exclusionary
allocating
when
*6
provision
provision
the burden оf
asserts First State should bear the burden of
Aydin
proof.
to
the
because it “does not
it serves
negating
grant coverage;
only
exception
establish the reach of the exclusion by describing
coverage already
what
not
worded basic
is
by
policy’s broadly
coverage provision
provided
State,
hand,
italics.)
taken
First
on the other
asserts
being
away.” (Original
should bear the burden of
because “its
establishing
Aydin
effect
otherwise
exclusionary language
is
reinstate
below,
First
bars.” For the reasons discussed
we
with
State.
agree
outset,
At the
note that neither
v. Cal. Western etc. Ins. Co.
Bebbingtón
we
(hereafter
A.L.R.2d
(1947)
Bebbington)
Bebbington is not in the illuminating context. there is no present indication the allocation of the burden of was even a contested proper proof issue in that case. To the we devoted the bulk of our contrary, opinion evidence the explaining why insurer had offered was either specific inadmissible or insufficient. 159-162.) 30 Cal.2d at {Bebbington, supra, pp. Second, the at issue specific policy language was not set out in Bebbington (see 159), our id. at opinion it making draw impossible any meaningful comparison between at issue there and the at language issue language that, here. Finally, our decisions establish past to the extent the burden of discussion in proof has Bebbington any continued it should be vitality, strictly limited to the (See factual of that case. Zuckerman setting v. Under- writers at Lloyd’s 42 Cal.2d [declining 777] the rationale of to an accident insurance apply Bebbington see also policy]; Hellеr v. Bankers & Cas. Co. 187-188 Cal.App.2d Life Indeed, [same].) to the Cal.Rptr'. according of Beb- authoring justice 586] it has been bington, overruled “so far as the burden of is concerned.” (dis. Underwriters 42 Cal.2d at Lloyd’s, supra, pp. {Zuckerman Carter, J.).) opn. Strubble, the Court of addressed an “all-risks” insurance Appeal
which, endorsement, virtue of a included of an earth- special peril {Strubble, also quake. Cal.App.3d {Ibid.) contained a for earth exclusion movement. The court held specific *7 insurer, that “defendant in order to establish its defense of of its noncoverage had the burden of that policy, loss was plaintiffs’ proximately (an caused the excluded of earth other than by movement peril earthquake 1190 that the
included To this defendant insurer had to prove peril). accomplish included did not cause the loss that plain- peril earthquake proximately tiffs, insured, words, suffered. In other it had to its negative exception (earth movement) since the burden of to its exclusion (earthquake) (Id. its defense of of the sued on rested on it. noncoverage policy [Citation.]” 504-505, omitted.) fn. court Like Strubble is not instructive here. The Strubble Bebbington, to all-risks insurance only emphasized holding applied policies, an action an all-risks such as the one before “in explaining upon policy (unlike us the insured does not have to specific peril policy), his loss was covered This is because by peril proximately causing policy. all risks excluded covers risks save for those specifically 504, italics.) Under a (Strubble, 35 Cal.App.3d original policy.” the one at issue such as comprehensive general liability here, contrast, establishing the insured bears the burden of cover- clearly 1, (See, Truck Inc. 11 Cal.4th 16 Exchange, Waller v. Ins. age. e.g., 370, 619].) P.2d 900 Cal.Rptr.2d [44 absence of California cases on we look to how other point, there little relatively have dealt with the
jurisdictions
problem. Although
on the issue at the time the trial court instructed
authority
jury,
now
the burden of
overwhelming weight
authority
places
“sudden and accidental”
on the insured.
to our re-
According
five,
search,
issue, and all
five state
courts have considered the
high
(See
unanimous
the burden on the insured.
E.I. du
have
opinions,
placed
1059, 1061;
(Del. 1997)
A.2d
Highlands
Pont de Nemours v. Allstate Ins.
693
801, 804-805];
Inc.
1191 66, 75-76, law]; (2d F.2d Blank 933 fn. 14 but see State v. [Maine of N.Y. 783, 1994) 27 Cir. F.3d 788-789 how New York [wrongly predicting high rule]; (3d court County would New Castle v. Acc. and Indem. Co. Hartford 1162, 1991) Cir. 933 F.2d how Delaware [wrongly predicting rule].)2 court would high
We find the reflected in reasoning this extensive of case law body we that the “sudden and accidental” persuasive. Specifically, agree excep tion a is construed as when properly coverage provision allocating determination, In this are proof. making we guided by familiar that the of an insurance like the principle provisions policy, provi contract, sions of other any must be construed in the as context policy a (Buss whole. Court Cal.4th 45 Superior 16 Cal.Rptr.2d [65 Inc., 766]; 939 P.2d Waller v. Truck Ins. 11 Cal.4th at Exchange, supra, 18; Bank West v. Court Cal.4th Superior 545].) 833 P.2d As Cal.Rptr.2d acknowl Aydin forthrightly аt oral edged it is the function argument, served not the by policy language, location of an language in insurance that is determinative. While policy, correct in certainly the basic describing coverage as provision worded,” broad, “broadly general exclusion is equally stating HQ “shall not . . . . . . . . . to apply any liability [f] smoke, out of the arising release or discharge, dispersal, escape Insured soot, fumes, acids, alkalis, chemicals, solids, toxic vapors, or gases, liquids irritants, waste materials or other contaminants or into or upon land, the or any watercourse or of water . atmosphere body . . .’’As the exclusion, Court of Appeal explained construing identical virtually language broad exclusion from any liability “[t]his create[s] (Shell from resulting Oil Co. v. pollution.” Winterthur Swiss Ins. Co. 815].) Cal.App.4th Cal.Rptr.2d brief, Aydin 2In opening leading cites a treatise for the proposition exclusion, narrowing exception an insurer uses a “[w]hen to construct an the insurer ‘does not [exclusion], proof negatives sustain its burden of exception unless it in the omit [Fn. ” 79:385, (Quoting (2d 1983) 338.) Couch on Insurance ed. reality, ted.]’ In § Thus, very merely authority treatise notes a split next on the burden of issue. continues, is, however, authority sentence of the trеatise “There that when a contains rather, exception within an exception, negative the insurer need not exception; internal {Ibid., plaintiff must show that the exemption liability applies.” from the from fact, omitted.) fn. supplement very to the treatise rely cites some of the cases we on Co., (See (1998 27-28, citing LaFarge Corp. id. pocket supp.) pp. here. v. Travelers Indem. 1511; supra, Paul 1195; Dyeing, supra, St. Fire Marine Ins. v. Warwick 118 F.3d 26 F.3d Co., Corp. SCSC v. Allied Mut. Ins. 536 N.W.2d *9 the “sudden and exclusionary language, Read in the context of this broad it other coverage” accidental” serves to “reinstate where would exception (Shell Co., Swiss Ins. 12 supra, wise not exist.3 Oil Co. v. Winterthur omitted; Ins. at italics see also SCSC v. Allied Mut. Corp. Cal.App.4th p. Co., at to the exclusion ‘restores’ 536 N.W.2d 314 supra, p. exception [“the insurer ex the has established that the pollution “Once coverage”].) clusion on coverage depends applicability exception. applies, under an Because the insured bears the burden of establishing coverage that the insured must also insurance it makes sense policy, (St. affords after an exclusion is coverage triggered. exception [Citations.]” at Paul Fire and Marine Ins. v. Warwick 26 F.3d Dyeing, supra, p. italics; Inc., see also Ins. Co. v. Aerovox 676 Highlands supra, original Co., 805; at N.E.2d at SCSC v. Allied Mut. Ins. 536 N.W.2d Corp. supra, p. Ins., 314; at Northville Industries v. Nat. Union 679 N.E.2d supra, p. Co., 1048-1049; Inc., v. Aetna Cas. and Sur. 26 F.3d supra, Aeroquip Corp. be construed 895.) broadly As a will coverage provision, exception p. (Montrose Chemical v. Admiral Ins. Co. in favor of insured. Corp. 878]; National Union Fire 10 Cal.4th 913 Cal.Rptr.2d [42 Ins. v. C. Lynette Cal.App.3d Cal.Rptr. Co. burden of 394].) This broad construction will aid the insured in meeting con that the end result or thereby ensuring (coverage noncoverage) proof, (See forms to the insured’s reasonable Montrose objectively expectations. Co., 667.) Admiral Ins. 10 Cal.4th at supra, Chemical Corp. have their amici curiae who Throughout briefing, Aydin and accidental” filed briefs on its behalf “sudden argue construing industry as a will “invite coverage provision exception . . . linguistic the allocation proof simple manipulate can be reframed since exclusion adjustments” any straightforward “[a]lmost to a One as a broader exclusion subject narrowing exception.” group curiae, that an insurer would bear the burden amici for example, complains exclusion that bars for nonsudden coverage proving “qualified pollution too much. nonaccidеntal This discharges argument proves pollutants.” rather, as here do not contain such an exclusion but at issue policies above, from coverage any liability resulting noted “a broad exclusion Co., (Shell Swiss Ins. from Oil Co. v. Winterthur pollution.” 753.) The fact that different result language might at p. Cal.App.4th come as a shock. hardly allocation of the burden of should a different Casualty 3Hurley Fire Co. Construction Co. v. State Farm & Cal.App.4th 533 case, 629], contrary. Appeal the Court of by Aydin, cited is not to the In that Cal.Rptr.2d “[o]rdinarily, exception to a exclusion does made the unremarkable observation that (Id. coverage clause. coverage not create not otherwise available under [Citation.]” Hurley, coverage of the “sudden and accidental” seeks virtue Unlike coverage exclusion is available general under the clause. exception to the Rather, it arises from the freedom to contract as deem parties’ general they fit. our is to effect to the Simply put, obligation give language parties chose, not the have chosen. language they might concluded that the “sudden and accidental” be
Having should construed as a as to which the insured would provisiоn ordinarily *10 Code, (Evid. bear the 500),4 burden of we next consider proof whether § there is reason to alter the normal allocation of the burden of “ rule the burden of proof. general allocating proof applies ‘[T]he as otherwise by law.” is included in “except provided recog nition of the fact that the burden of is sometimes allocated in a manner proof that is at variance the with rule. In whether the normal general determining altered, allocation of the burden of should be the courts consider a proof number of factors: of the knowledge parties concerning particular fact, the of the evidence to availability the most desirable parties, result in terms fact, in the public absence of and policy proof particular ” of the existence or probability (Lakin nonexistence of the fact.’ v. Watkins Associated Industries 6 Cal.4th Cal.Rptr.2d 179], com., 863 P.2d Cal. Law quoting Revision Com. 29B West’s (1966 ed.) Ann. Evid. Code 431.) p. §
The Court of correctly concluded there is no Appeal compelling reason to alter the normal allocation of the burden of with proof respect noted, “sudden and accidental” As the Court of exception.5 Appeal “[i]t is the eliminate, strong public of this state to and reduce prevent, Code, pollution. Pub. (E.g., 21000-21002.) Resources That would §§ be if the impaired insured has a disincentive to positive discover pollution. Shifting burden of the insurer proof such a [to would] constitute^] disincentive because it would . . . reward ignorance by increasing likelihood of insurance coverage. an insured’s ‘see no Rewarding evil’ would also position undercut the insured’s to the insurer of obligations notice, and cooperation, (See faith.” also good Ins. Co. v. Aerovox Highlands Inc., 805; Ins., 616 N.E.2d at supra, Northville p. Industries Nat. Union 1049; Co., N.E.2d supra, 679 v. Aetna Cas. and p. Aeroquip Corp. Sur. Inc., 895.) 26 F.3d at supra, p.
Moreover, as the Court of is common Appeal only sense explained, “[i]t that the insured will have information and greater about the knowledge law, 4Evidence Code provides section 500 as follows: “Except provided by as otherwise party has the proof burden of as to each fact the existence or nonexistence of which is essential to the claim for asserting.” relief or defense that he is briefing, Aydin agrees 5In its there is no reason to alter the normal allocation burden however, backwards, proof. argument, Its is based as it is on the assumption mistaken in the first instance lies on First State. the insured which by may and/or conducted insured’s property operations in this case furnish perfect The circumstances liability. result in damage State, contrast, California; is a First illustration. The site was in that state. It is with its office imprac- Massachusetts corporation, principal situation is an excess insurer. The monitoring by tical to transcoastal require been, duties the insured to contractual agreeing best handled as it has long made, and with the losses suffered or claims cooperating of: reporting The insured’s knowledge insurer’s investigation. superior subsequent Inc., (See also Ins. Co. v. Aerovox Highlands for these duties.” predicate Co., 805; v. Allied Mut. Ins. supra, 676 N.E.2d at SCSC supra, p. Corp. Ins., 314; v. Nat. Union 679 N.E.2d supra, N.W.2d at Northville Industries p. Products, Co., 1049; F.3d at Mut. Ins. Liberty supra, Harrow Inc. v. p. Co., Inc., 1020; F.3d at v. Aetna Cas. Sur. Aeroquip Corp. *11 short, on the insured “conforms with the burden of proof placing not to establish where it would otherwise duty insured’s general exist, that detection early the insured with an incentive strive provides and it is into the environment releasing appropriately places pollutants the actual the better and earlier access to having burden of on the party proof (Northville surrounding dischargе facts and circumstances [citations].” Ins., 1049:) For these N.E.2d at p. Industries v. Nat. Union supra, reasons, under a standard that in an action seeking indemnity we conclude carries its once the insurer commercial insurance general liability policy, the insured exclusion applies, burden of general pollution a claim comes within the “sudden the burden of that bears accidental” exception.6
III. Disposition the Court of is affirmed. judgment Appeal Chin, J., J., Baxter, J., and concurred. C. George, regardless party of which bears Appeal that some Courts of have held 6We note issue, duty implicated, is is at when the defense proof when indemnification potential any underlying action if there is obligated to defend its insured in an insurer is (See, e.g., “sudden and accidental.” escape release or of at least some of 617], citing Companies Cal.Rptr.2d Vann v. Travelers Cal.App.4th 1616 [46 Superior Cal.Rptr.2d Corp. Court 6 Cal.4th Montrose Chemical Co., Corp. v. Admiral Ins. 1153]; Cal.4th at Chemical Montrose 861 P.2d case, 661-662, opinion express in this we no duty to defend is not at issue fn. Since proof the burden of in that context. party as to which should bear MOSK, I dissent. J. reversed of the Court of which Appeal, affirm the judgment
The majority court, former that with thе agree because they judgment superior State Insurance to First allocating error the latter committed reversible a as to whether the burden of proof and not Aydin Corporation Company exclusionary a certain to First State came within claim that Aydin presented policies. clause of each of two umbrella I believe that the because reverse the Court of Appeal’s judgment I would revers- in the premises, court did not commit error whatsoever superior ible or otherwise. at the of our beginning analysis. of the Evidence Code stands
Section 500 And, the end. determine our result at as will it will appear, that, as otherwise Code section 500 declares “[ejxcept
Evidence expressly law, the existence as to each fact has burden party proof provided or defense that he essential to the claim for relief or nonexistence which is law, that, as otherwise provided by It declares asserting.” except impliedly claim for relief or defense.1 has the burden of as to his party threshold, rule of that it is the general At the I with the agree majority thereto. that is and not any exception *12 Evidence Code section 500 applicable 500, that, is the insurеd that Code section it I also under Evidence agree to the insurer comes that a claim that it bears the proving presents and hence it is an clause of a insurance liability policy, within insuring thereto fact essential every insured that bears the burden of proving exist, (Travelers & Casualty not as case be. may either exists or does 1440, 1453 (1998) v. Court 63 Surety Cal.App.4th [75 Co. Superior 26, 54], (S071423), June review for review filed 1998 Cal.Rptr.2d petition Aviation, accord, 16, 1998; Executive Inc. v. National denied e.g., September 799, (1971) Cal.Rptr. 16 806 Cal.App.3d 347] [ex Ins. Underwriters [94 see, Code, 500]; e.g., citation to Evid. to this effect without holding § pressly 395, Cal.3d 406 Fire & Co. 48 Garvey Casualty v. State Farm [257 292, without to this effect holding 770 P.2d [impliedly Cal.Rptr. 704] Code, Assurance Co. 500]; Federal Kemper to Evid. cf. Weilv. citation § Life 774, 316, 125, P.2d 32 A.L.R.5th 866 (1994) 7 Cal.4th 148 Cal.Rptr.2d [27 contract, policy, and an insured under an insurance such as an insurer parties 1Whether against litigation the one the other subsequent the event of may the burden of in allocate do Aydin purport even and did not that need not be addressed here. First State question is a liability policies at issue. insurance so in either of the two umbrella 1196 Code, 500, to this effect [expressly holding without citation to Evid.
789] § in the context of a life insurance Searle v. Allstate Ins. Co. poliсy]; Life 38 Cal.3d 437-438 [same].) 696 P.2d Cal.Rptr. 1308] that,
I further under Evidence agree Code section it is the insurer that bears the burden of that the insured’s claim comes an within clause of a exclusionary liability insurance and hence it is the insurer policy, that bears the burden of fact every essential thereto either exists exist, or does (Travelers not as the case be. may & Co. v. Casualty Surety Court, 1453; accord, Superior 63 supra, Cal.App.4th p. e.g., Garvey Co., State Farm Fire & Casualty 48 Cal.3d at supra, [expressly Code, to this effect holding 500]; without citation to Evid. Clemmer v. § Insurance Co. 22 Cal.3d Cal.Rptr. Hartford [same]; Aviation, Underwriters, Executive Inc. v. National 1098] Ins. supra, [same]; Co., Cal.App.3d cf. Searle v. Allstate Ins. Life Cal.3d at [expressly holding this effect without Code, 500, citation to Evid. in the context of a life insurance § policy].) however, these Beyond ends. points, my agreement clause of each of the two umbrella insuring liability policies that, issued First State to Aydin provides, pertinent part, beyond limit, certain retained First State will “for ... all sums “indemnify” Aydin which” “shall be reason of the obligated pay by liability imposed it law or assumed it upon” “by “under contract or by” agreement for damages because of’ expenses, in forms “personal injury” including “[l]ibel, slander, character, defamation of humiliation or invasion of the activities,” rights unless out of privacy, arising or “because advertising forms, of’ “property damage” various “to which this policy applies, caused occurrence . . . (Full in the happening anywhere world.” deleted.) capitalization
Among clauses of each of the exclusionary two umbrella liability insurance at issue is policies what is called the commonly “qualified pollu- al., tion exclusion” et (e.g., Croskey Cal. Practice Guide: Insurance Litiga- 7:2060, (The tion 2 Rutter 1997) 7H-23): Group “This shall not ^ “to . . . out of the apply” any liability arising release or discharge, dispersal, smoke, soot, fumes, acids, alkalis, chemicals, solids, escape toxic vapors, irritants, or gases, waste materials or other liquids contaminants or pollutants land, into or or watercourse or upon atmosphere any of water body is sudden and acciden- release or escape discharge, unless such dispersal, tal.”2 of either or clause insuring claim came within
In order to that its prove issue, had to at prove, insurance liability policies both of the umbrella “existence” of section Evidence Code by as expressly required to that any For it had рrove “each fact” “essential” thereto. example, (Full damage.” capi- injury” “property arose out “liability” “personal the insuring claim came within deleted.) talization In order to prove as it also had prove, expressly clause of either or both of the policies, “essential” the “nonexistence” of “each fact” the same by required provision, had to that for any “liability” “personal thereto. For it example, prove character, slander, humiliation “[ljibel, defamation of in the form of injury” out of advertising of the did not or invasion rights privacy” “aris[e] (Full deleted.) . .” activities . capitalization Let us then do not any disagreement.
On this point, majority express on. pass in order to that claim came within
Similarly, Aydin’s qualified prove umbrella insurance liability exclusion of either or both of the pollution issue, as Evidence First State had to prove, expressly required policies For of “each fact” “essential” thereto. Code section “existence” it had that on arose from Aydin’s example, prove “liability” part release or In order “discharge, prove dispersal, escape” pollutants. of either or both claim came within the exclusion Aydin’s qualified рollution it the same also had as policies, prove, expressly required “each thereto. For example the “nonexistence” of fact” “essential” provision, —and this is the crux of the matter—it had to that “such discharge, prove not “sudden” and “accidental.” release or dispersal, escape” do indeed state disagreement. They On this point, majority express of “each fact” First State had to the “existence” or “nonexistence” exclusion—“[tjhis to the main clause of the “essential” qualified pollution discharge, shall not “to . . out of the any liability. arising apply” policies at issue “do not majority 2The state that the two umbrella ” cover “but rather ... ‘a broad exclusion from ‘qualified pollution contain” “a exclusion’ ” ante, resulting (Maj. Whether or not age any liability pollution.’ opn., from point. Let us question may properly be described as “broad” is beside the exclusion in Therefore, broad, very ««qualified. is not assume that it is indeed broad. The fact remains: It “ certainly commonly called the ‘absolute qualified. it is It is different from what is ” 7:2085, al., Litigation (e.g., Croskey et Cal. Practice Guide: Insurance exclusion’ *14 “ damage arising out bodily injury property . . or apply 7H-28: ‘This shall not to . actual, еscape discharge, seepage, migration, release or alleged, dispersal, or threatened of ”). of . . . .’ had release or to dispersal, escape” pollutants—but Aydin “existence” or “nonexistence” of “each fact” “essential” to the subordinate release or is sudden and clause—“unless such discharge, dispersal, escape reason, substance, accidental.” in as follows: The subordinate clause They and, exclusion; such, clause; an to the as it is an insuring “exception” it is that must bear the burden of thereon. consequently, proof exclusion, of the which is but majority’s sundering qualified pollution sentence, clauses, a into its main and subordinate and their single separate the burden as to allocation of First State Aydin, respectively, each one does not work. That is because the for their action ground simply is unsound.
First, an the subordinate clause of the exclusion is not qualified pollution to the exclusion because the main clause is not itself the “exception” Rather, exclusion. the main and subordinate clauses constitute what together is, fact, is, law, a sentence and in a exclusion. The what single unitary clause, exclusion, main which defines the and thе general scope clause, dimensions, subordinate which identifies its are necessarily precise interrelated—not unlike the definition of a as a with four square rectangle sides and the identification of the of the sides. The length following equal however, bears The main clause is point, emphasis. syntactically “indepen- dent,” and hence can stand the subordinate clause: “This shall without . re- not “to . . out of the apply” any liability arising discharge, dispersal, contrast, lease or is syn- subordinate clause escape” pollutants. By “un- and hence cannot stand without the main clause: tactically “dependent,” less such release or is sudden and accidental.” discharge, escape dispersal,
Second, even the exclusion if subordinate clause of the qualified pollution exclusion, be deemed an insuring were an it could not “exception” clause. For it could not be read to on First State to reasonably duty impose all be reason obligated for sums indemnify Aydin Aydin might pay . . . out of the” “sudden and accidental” “any liability arising “discharge, For, the face of “liability” release or even in dispersal, escape” pollutants. on out of . . . such release or discharge, Aydin’s part “arising dispersal, be free from any duty indemnify Aydin First State escape,” might reasons, was not host of as for question example No, clause on the subordinate injury damage. predicated personal property Rather, with the main together could not be deemed an clause. insuring clause. exclusionary clause it constitutes simply and found it all we reasoning wanting, scrutinized the Having majority’s on the that what is determinative are left with is their unstated assumption *15 of the burden of is the word with which of the allocation proof question — con- exclusion begins subordinate clause of the qualified pollution so, form over substance. “unless.” If that were would junction prevail two versions of the following qualified pollution in Although phrasing different, are not. they exclusion are in meaning its actual “This language: Here is the exclusion in qualified pollution “to . . . out of the arising discharge, shall not any liability apply” discharge, “unless such dispersal, release or escape” dispersal, release or is sudden and accidental.” escape (Italics added.)
Here is the exclusion in alternative “This language: qualified pollution out of the nonaccidental shall not “to . . . any liability apply” arising or nonsudden discharge, relеase or dispersal, escape” pollutants. do not that the burden of as to the second version majority deny exclusion would be allocated to First State. solely qualified pollution
Indeed, could not do so. they
But the claim the as to the first version of the majority opposite qualified however, so, exclusion. pollution doing over Evidence Code they trip section 500. In order to that Aydin’s claim came within the qualified pollution exclusion of either or both of the umbrella insurance issue, at First State had to policies as that prove, expressly required by be, “nonexistence,” the “existence” or as the of “each provision, may case clause, fact” “essential” thereto. That means that it had to in the main prove, that on any “liability” arose from the Aydin’s part “discharge, dispersal, release or It also means that it had to in the escape” pollutants. prove, clause, subordinate that “such release or discharge, dispersal, escape” not “sudden” and “accidental.” What “facts” are “essential” for the qualified worded, exclusion not on how the exclusion is but rather depends on what it means.3 Bebbington v. Cal. etc. Ins. Western 3In accord with the conclusion that I have arrived at is 361], held, Co. 30 Cal.2d P.2d 1 A.L.R.2d in which we in the policy, context of life insurance that it is the insurer that bears the burden of clause, exclusionary including negating applicability insured’s claim comes within an Bebbington any “exception” majority illuminating “not thereto. The assert ante, 1189.) wrong. present (Maj. opn., They They imply context.” are first that,
Bebbington
speaks
They
did not mean what it said. The decision
for itself.
then state
event,
that,
Bebbington. They
in view of Zuckerman
we
should not adhere to
maintain
Lloyd’s
777],
Underwriters at
and Heller v. Bankers
&
Werdegar, (hereafter KENNARD, J., Dissenting. general liability A comprehensive structured as a CGL) sometimes referred to as a insurance is policy typically section limitations broad of followed grant coverage by separate imposing of rule is that the has the burden on that The coverage. general policyholder that the loss is within the while insurance coverage, proving scope has the burden of that the loss falls within any express company proving case, CGL limitation on In this coverage. corporation bought policies two on the other broad things, coverage liability imposed providing, among ex in the event of Each damage. policy expressly policyholder property exclusion) “unless” the (the cluded from arising liability pollution accidental.” The issue here is this: release of the was “sudden and pollutants the burden of whether the Does the or the insurer have policyholder and accidental”? release of the was “sudden pollutants I It is a disagree. The the burden on the policyholder. majority places that an insurance on a relying of insurance law general company principle merely distinguished policy, Bebbington policy. whereas involved a life insurance Zuckerman insuring insurance Bebbington substantially ground on the clause of an accident than, from, and, insuring clause of a life specifically, is different narrower (See Lloyd’s, supra, pp. Underwriters at 42 Cal.2d at policy. insurance Zuckerman v. facts, 471-474.) “strictly Bebbington support not to its nor does it such Zuckerman did limit[]” ante, fortiori, 1189.) Bebbington, (Maj. opn., p.at A Zuckerman did not “overrule!]” an action. (Ibid.) justice clаim to that effect who had authored expressly implication. A (Zuckerman Lloyd’s, supra, Bebbington v. Underwriters at but who dissented in Zuckerman Carter, J.)) (dis. hyperbole. as mere To the opn. Cal.2d at must be dismissed otherwise, incorrectly. Zuckerman it read it extent that the Heller court read Cal.App.3d Auto. Assn. 498 [110 Also in accord is Strubble v. United Services held, 828], insurance Appeal the Court of in the context of an all-risks Cal.Rptr. in which the insured’s claim comes policy, that it is the insurer that bears the burden of that clause, any thereto. exclusionary including negating applicability “exception” an within ante, 1190.) Again, majority (Maj. opn., p. is “not instructive here.” The assert that Strubble sure, they wrong. insuring in its clause an all-risks insurance is different from are To be policies, with which we policies, such as umbrella insurance other kinds of clauses, But, exclusionary it is not. are concerned in this case. in its Insurance, treatise, broadly Finally, implies which in accord is Couch on an authoritative proving that the insured’s claim comes within that it is the insurer that bears the burden of (19 clause, any “exception” thereto. exclusionary including negating applicability 79:385, 338.) Insurance.(2d 1983) majority that this not so. assert is Couch on ed. § True, ante, 2.) again, they wrong. Couch notes the existence (Maj. atp. fn. Yet are opn., Insurance, 79:385, 338; (1998 (19 pocket id. contrary. of cases to the Couch on § enough. not supp.) p. But that is all. And is must that the loss within stated limitation of prove separately I would hold that insurer limitation Applying principle, provision. contained in the limitation must demonstrate inapplicability Thus, clause, be here that limitation may phrased. exclusion however was not sudden would have to that the release of insurer and accidental.
I made and electrical transformers at Aydin Corporation (Aydin) repaired Alto. chemicals used in the and waste materials in Palo Toxic plant process tanks and in metal drums. In ground were stored above underground that the land and at the site were discovered Aydin groundwater (PCB), contaminated toxic highly with polychlorinated biphenyl pollutant. from holes in the tanks contained PCB. When Sludge leaking underground contamination, the California of Health Services learned of the Department order, it issued a remedial action to clean the site. directing Aydin up State). (First was insured with First State Insurance Each Aydin Company of the two CGL that had from First State Aydin policies purchased promised for “all sums which the Insured shall be indemnify Aydin obligated reason of the the Insured . . . by law pay liability imposed upon Property ft¡] because of: . . defined . . . . B. as hereinafter Damage, [^[] this as hereinafter which caused an policy applies, Occurrence, flO defined . . . .” The define an “Occurrence” as “an accident or policies conditions, results, event continuous which including repeated exposure Property Damage in . . . neither nor during expected period, intended from the of the Insured. standpoint . . .” (cid:127)
Under the each heading, coverage policy precluded “Exclusions,” of out of the release “any liability arising discharge, dispersal, Insured chemicals, smoke, soot, fumes, acids, alkalis, or toxic escape vapors, solids, irritants, or waste materials or other contaminants liquids gases, into or land . . . unless release or discharge, dispersal, such pollutants upon (Italics added.) is sudden and accidental.” escape an action for relief to determine the extent Aydin brought declaratory no coverage under the First State contended coverage policies. there tanks because the release of from Aydin’s underground storage accidental,” was not “sudden and as required by policy. tried Thе trial court instructed advisory jury.
The case was before from the that First State had to arose Aydin’s liability jury and that the discharge pollutants, was not sudden and acciden- discharge favor, tal. The found in and the trial advisory jury Aydin’s court adopted reversed, The Court of findings. had the Appeal holding burden that the of PCB discharge was “sudden and accidental” within the of the meaning language.
II
To establish
under an insurance
insured must show
policy,
that the occurrence on which the claim is based falls within the
scope
(Weil
basic coverage.
v. Federal
Assurance
Kemper
Co.
Cal.4th
Life
789];
32 A.L.R.Sth
Searle
Cal.Rptr.2d
Allstate
Ins. Co.
38 Cal.3d
696 P.2d
Cal.Rptr.
Life
1308].) The insurance
then has the burden of
company
claim is excluded
particular
by some other
provision
(Garvey
policy.
*18
395,
v. State Farm
(1989)
Fire &
Co.
48
Casualty
Cal.3d
406
Cal.Rptr.
[257
292,
704];
Co.,
437-438;
770 P.2d
Searle v. Allstate
Ins.
Life
865,
Clemmer v.
Insurance Co.
22 Cal.3d
Cal.Rptr.
[151
Hartford
1098].)
587 P.2d
The latter rule has existed for some
(See
100 years.
Dennis
e.g.,
120];
v. Union Mut.
Ins. Co.
84 Cal.
P.
Life
Western Assur. Co. Toronto
H.
(2d
1897)
v. J. Mohlman Co.
Cir.
Fed.
of
811, 818; Meadows v.
Mut.
Ins. Co:
Mo.
Pacific
Life
of California
578, 582-583];
C.J., Insurance,
S.W.
see cases cited in 33
p.
§
95.)
rule,
fn.
decisions
Although many
have relied on this
only rarely
have courts discussed the reasons
it.
the most
underlying
Perhaps
helpful
can be found in
explanation
Jewelers Mutual Insurance
Company Balogh
There,
(5th
1959)
Cir.
Often, here, itself contains restrictions limiting as an exclusion clause situation, that an In rule general of the exclusion. that does scope also of an exclusion must establish the applicability insurance company A contained in the exclusion clause? it limitations negate any require instances, a this to “In say: many insurance treatise has leading case, When this is or limitations. is itself exception subject exceptions must also the insurer that the loss comes within exception in does or limitation to exception further to show the exception proceed if an exception not of preclude application exception. Consequently, extend to injuries inflicted does not all intentionally for injuries inflicted it . not sustain unless so . . the does [insurer] (19 (2d on Insurance ed. Couch negatives exception exemption.” Thus, 79:385, 1983) rule is that the insurance the general company § to an excluded risk has the burden of limitations exceptions view, sense, makes as I discuss below. are this rule my inapplicable. a it as coverage Whether to describe limitation scope phrаsing substance, semantics, case not as this generally question excluded illustrates. The two CGL at issue here policies from the “unless liability resulting discharge property damage accidental.“ concludes that such ... is sudden and discharge majority this makes the “sudden and accidental” language specific excep- phrasing tion to the exclusion. Yet if the had instead general pollution policies excluded from or intentional coverage “any discharge pollutants,” gradual *19 exclusion—thus, this serve to the under limitation would well-estab- define law, lished insurance the burden of on the insurance com- proof placing an to it. could not be characterized as there exception Although pany—and substance, be no in the would in no would change meaning, change majority had allow semantic variation to determine the burden strictly party which of proof. a health
Aydin’s brief in this court furnishes another illustration. If disease,” heart insurance excludes from coverage policy “pre-existing so, defines and under term the exclusion well-established “pre-existing” law, coverage insurance an insurer to on exclusion to seeking rely deny heart ailment have the burden of for incurred treat a would expenses had contracted the disease when the already insured proving policy if, must Yet as the holds majority today, policyholder was purchased. risk, to an a health insurer any existence of excluded of the insured a subtle merely by could shift this burden proof rephrasing disease, unless for “all heart it develops to exclude coverage after of insurance policy.” inception sure, coverage
To be insurer has a to decide what generally right offer, it of and the obligation and an insurer control the may scope coverage, incurs,
thereby and provisions coverage exclusions from coverage it states in the To policy. protect reasonable of those who expectations however, purchase policies, courts have rightly insisted that exclusions to worded broadly be coverage provisions and clearly expressed, courts have resolved as to the ambiguities of meaning exclusionary provi- addition, sions favor of coverage. because allocation of the burden of determines the proof effectively when scope coverage evidence of fact balanced, at issue is nonexistent or courts closely have also insisted that the insurer, and not the policyholder, bear the burden of the existence of proving facts to establish necessary exclusions to worded broadly coverage provi- sions. an insurer to Permitting use subtle changes wording exclusions to allocations of the burden manipulate of proof significantly weakens the afforded protections policyholders by these established prin- of insurance ciples law. rule to the insurer the allocating both exclusions and the nonexistence of any qualifications excep- tions to those exclusions is more fundamentally consistent with the spirit established insurance law.
Also, not to these apply established of insurance could principles law considerably increase the unnecessarily cost of litigation simply determine whether subtly worded limitations to contained in an exclusion clause have shifted to the the burden of policyholder such limitations.1 can Theoretically, policy language be subdivided endlessly, piling forth, exception upon the burden of exception, shifting back and forth, back and with each successive Such exception. shifting increases the cost and сomplexity litigation, outweighing any conceivable benefit to be from gained the burden of shifting proof. above,
For the reasons set forth I would hold that once a has policyholder shown that a claim falls within the basic policy’s grant coverage, insurer must limitation on prove any separate no matter coverage, how Therefore, that limitation bemay phrased. here First State would have the *20 burden of the that chemical establishing contamination of Aydin’s property did not result from a “sudden and accidental” from discharge pollutants Aydin’s underground tanks. storage
Ill of its the support on holding, majority relies five decisions from other that jurisdictions have on the the placed burden of policyholder 1Thus, although syntactic parsing the careful policy language of the in Justice Mosk’s sound, dissenting opinion may analytically be proof allocation of the burden of should not grammatical turn on such subtle distinctions.
1205
(E.I. du Pont de
“sudden and accidental.”
discharge
the
1059, 1061;
Ins.
1997)
(Del.
Highlands
A.2d
Nemours v. Allstate Ins.
693
801, 804-805]; SCSC
N.E.2d
Inc.
First, on reasoned that the policyholder court Aeroquip imposing and accidental” limitation on the “sudden high majority predicted also federal courts have that other state courts 2The notes that some ante, Other federal place (Maj. opn., as on the well would burden insured. decisions, however, high place courts the burden on predicted have certain state would (D.Conn. (EDO 1995) Corp. F.Supp. [predicting Ins. Co. the insurer. v. Newark insurer]; (N.D. v. INA Iowa place would burden on A.Y. McDonald Industries Connecticut carrier]; 1993) [predicting place would burden on U.S. F.Supp. 1171 & fn. Iowa (D.Kan. 1990) F.Supp. [predicting Fidelity Co. & Guar. Morrison Grain *21 insurer]; (2d 1994) 27 F.3d place see v. Blank Cir. Kansas would burden on also State of N.Y. insurer]; [wrongly place York burden on New Castle predicting New would 788-789 (3d 1991) [wrongly F.2d County v. Acc. and Indent. Co. Cir. Hartford insurer].) predicting burden on place Delaware would be exclusion would with the consistent rule that the insured has the initial that an occurrence within is the of the basic scope true, said, coverage. This court because ‘sudden and accidental’ “[t]he creates it coverage where would otherwise not exist . . .” {Aero- view, 895.) 26 F.3d at in quip, supra, this case echoes that p. majority that stating the “sudden and accidental” limitation in the clause exclusion ante, coverage 1192) “reinstates” at (maj. and therefore should be opn., p. “construed as a 1193). coverage provision” p. {id. and the are both
Aeroquip majority wrong concluding that the “sudden and accidental” limitation It creates reinstates does neither. All coverage. it does is to a limit on the exclusion. place scope pollution To construe this limitation as a clause runs counter to “the basic coverage principle exclusion clauses subtract from rather than it.” coverage grant {Weedo Stone-E-Brick, 233]; Sturla, Inc. 405 A.2d N.J. see also 795 [81 965]; Inc. v. Fireman’s Fund Ins. Co. 67 Hawaii 203 [684 Continental Cas. Co. v. Pittsburgh (7th 1990) Cir. F.2d Coming Corp. Here, 300.) the events for which seeks are coverage within Therefore, broad of of grant coverage the comprehensive Aydin is policies. entitled to that unless insurer within shows that loss falls exclusion. pollution
Second, to the according federal court in to the insurer Aeroquip, require to of not and prove discharge pollutants was “sudden accidental” give would “an incentive to avoid out policyholders whether finding pollut- ants are being discharged, because of gradually preservation ignorance would increase the likelihood insurance coverage.” {Aeroquip, supra, 895.) F.3d at But it is farfetched to assume that decide policyholders upon course conduct based of the burden of upon apportionment did, the exclusion clauses their Even they if policies. the onerous consequences to continue far allowing would pollution outweigh any benefit from the potential policyholders speculative possi- that their insurers would be unable to defeat bility coverage. ultimately discovered, Almost be inevitably, will pollution leading governmental unabated, orders. The cleanup longer continues more difficult it will be with these orders. costly comply Third, asserts that the limi- Aeroquip requiring policyholder tation issue is because it on the burden who appropriate “places party will have access to facts that generally discharge show sudden and F.3d at I find this unexpected.” {Aeroquip, supra, True, better to the reasoning policyholders may have access unpersuasive. facts to the loss to their leading they because have better access own insured
1207 sole basis for apportion- But if such access were the than insurers. property of have the burden would always of then policyholders burdens ing proof, law, As the majority not the however. exclusions. That is negating policy insurer, the the not policyholder, established”' that acknowledges, it is “well grant broad falls within must that a loss within the prove ante, excluded risk. (Maj. opn., 26 F.3d of reasoning Aeroquip, supra, in this case the majority adopts for addition, holding, reason the fourth majority points
893. “The fact of intent. It states: the implementation namely, parties’ burden in a allocation of the result different might different policy language Rather, from the come a shock. it arises parties’ should as hardly of proof ante, at deem (Maj. opn., freedom to contract as fit.” they general 1192-1193.) I the that parties have no with quarrel majority’s proposition But, I like. as out way they pointed have the freedom to contract in any the under of law burden of proof the preceding paragraph, general principles that a claim excluded. on the insurance establish is is company particular Here, of did not to a different allocation the burden parties agree Therefore, than have the burden First State rather should proof. (See not and accidental.” “sudden discharge 807, Ins. Co. Court 51 Cal.3d 822 Cal.Rptr. AIU v. Superior [274 it is hеld P.2d the insurer writes policy, 799 1253] [“Because therefore construed which is ambiguous policy language, ‘responsible’ Cal.3d favor of Reserve Insurance Co. v. Pisciotta coverage.”]; are clauses [exclusionary Cal.Rptr. 764] insurer].)3 construed narrowly against
Conclusion broad, is A comprehensive general liability expected provide policy “ name of the all-encompassing coverage. ‘Obviously very [comprehen- coverage. of maximum general liability] expectation sive policy suggests has of the most been one Consequently comprehensive preferred entities over because that years businesses and governmental That majority’s holding may in some cases conflict with Evidence Code section 520. 3The claiming person guilty wrongdoing of crime or has provides, party statute “The intentional, discharge dangerous chemi on that issue.” The unauthorized burden extent that State here wrongful the land and sometimes criminal act. First cals onto is a To inapplicable on the exclusion is asserts that the “sudden and accidental” limitation accidentally discharged onto its First Aydin intentionally property, rather than PCB because establishing of this may, have the the truth under Evidence Code section burden State Corp. Companies (But Cal.App.4th see FMC v. Plaisted & allegation. “essentially regulatory” statutes to violation of Cal.Rptr.2d inapplicable 467] [section contamination, occurred before the statutes toxic when much of contamination prohibiting issue, enacted].) it further. addressed I do not consider parties Because the have not this were *23 has provided broadest available. All risks not ex- expressly ” covered, cluded are those not including by either contemplated party.’ Minit-Lube, {Quaker State Inc. v. Fireman’s (¿.Utah Fund Ins. Co. 1994) 868 1278, 1295.) F.Supp. decision,
Before today’s business entity purchasing comprehensive general could liability policy reasonably that to obtain expect the policy’s of broad promise from protection it had liability, only show that it had incurred such and that the liability, could company defeat the coverage only by that the showing claim fell within one of the policy’s limitations or exclusions. The majority’s holding frustrates this expectation, and it gives insurers an and unwarranted unanticipated windfall.
I would reverse the judgment Court of Appeal. J.,
Werdegar, concurred. Respondent’s for a petition rehearing was denied October the opinion was modified Mosk, J., to read as Kennard, J., above. printed J., and Werdegar, were of the opinion petition should be granted.