*1 July 1995.] S026013. [No. CALIFORNIA, Plaintiff OF CORPORATION CHEMICAL
MONTROSE and Appellant, COMPANY, Respondent. Defendant and INSURANCE
ADMIRAL *8 Counsel Conn, Newell, A. Mulliken, Richard Watkins, E. L. Mark David &
Latham for Plaintff Wilkes, Bishop G. and Dorn Jr., Susan Odell L. L. Kristine Appellant. Pasich, Steuber, Martin A. Kirk
Hill, David W. Meisinger, & Troop Wynne, Levin, McAuliffe, N. S. Ehrman, Stephen Katz, Heller, Barry White & D. Goodwin, C. Russell, Sharon Pram, David B. D. Wondie Robert Goldberg, Porrazzo, Porrazzo, H. Ander- Churchill, Michael Corda, Thomas & Martha Anderson, Jerold Jordan son, Kill, Oshinsky, R. Eugene Olick & Oshinsky, Sorensen, Burke, DeVries, Priman, Stanzler, Williams & Paul L. P. S. Scott Jr., Pesóla, P. Timothy V. Young, R. Rufus C. Virginia Harold A. Bridges, Moroski, Sinsheimer, Steven J. Martin P. Baggett, & Schiebelhut Gallagher, Roberts, Walker, A. Adamski, Keith Paul, David M. & Hastings, Janofsky Lerman, Olson, & Covington Burling, B. Cary Tolies & Munger, Meyer, P. William Greaney, S. William F. N. Marc Mayerson, Robert Sayler, Cochrane, B. Skinner, Jones, Timothy Dyk, & W. Reavis John Pogue, Day, Harrison, Jones, Fountain, Brobeck, & William Phleger C. Edwin L. Stephen McDonald, Freeman, Brown, Irwin, M. David R. W. Tom R. Donald Guthner, Nossaman, Carleson, Peterson, Eric M. B. R. Thomas Carol Sharp, Duke, Gerstel, Melchior, Elliott, & Alan Bregante, Shearer Knox & Kurt W. on behalf of Plaintiff as Amici Curiae R. Johnston and Roger Simpson Appellant. Burt,
Wilson, Horvitz & Levy, Borys, Borys, Jeffrey Kenna & Lawrence C. for Defendant and Respondent. Peter Abrahams and Mitchell Tilner Aiwasian, Gibson, Crutcher, Peterson Dunn Fred F. Deborah A. Gregory, & Ross, Blatt, M. W. Bruce Hammersphar, Engel, Richard L. Robert & Davis, W. D. Peter James Kennedy, Roach & Raoul May, Crosby, Heafey, Ribner, Martin, Brothers, Edwatd T. A. Pamela G. Seth Ostrager, C. Coudert Olson, Mack, Schorr, Hufstedler, P. & John Margot Julie N. Kaus Ettinger, Brunner, Metzner, Rein Thomas W. A. Thomas J. & Ready, Wiley, Fielding, Mindlin, Johnstone, Anasiewiez, A. James M. James P. Foggan, Laura Reath, Holtzman, Holtzman, Drinker, John & Michael Biddle & Tigerman Saint-Antoine, Dorn, Nathanson, S. Lawrence A. H. Elizabeth Paul Chesney, Goode, Kincaid, Gianunzio, Hubert, & A. Caudle Patrick J. Andrew Hagan, Jones, Dau, Checov, & W. A. Martin S. O’Melveny Myers, Ralph Abigail Pownell, York, Mavridis, W. J. Duffy, Katherine Rattet & John Gray, Duffy, Sanborn, Bonesteel, B. Brown & Rita Weatherup, James G. Haight, Roy Gunasekaran, Selman, & Kaufman, Logan, Kaufman & Breitman Jeffrey *9 Selman, Buchalter, Nemer, Neil H. Fields & Burgess, Richard de Younger, Phalle, Curet, Orrick, Sutcliffe, Saint Blaise S. & Robert Herrington E. Freitas, Streeter, Chamberlin, Jon B. Carl W. William W. Gloria P. Oxley, Flores, Carroll, Burdick & and Donald T. McDonough as Amici Ramsey Curiae on behalf of Defendant and Respondent.
Opinion
LUCAS, C.
In Prudential-LMI
(1990)
Com. Insurance v.
Court
Superior
J.
As explained we conclude that the standard policy language, case, such as was into Admiral’s issue this incorporated provides bodily that occurs property damage during the case of successive bodily injury In period. policies,1 the policy deteriorating throughout that is continuous progressively covered all effect periods potentially several policy *10 the we conclude industry’s in the insurance parlance, those Stated periods. of should be for third coverage adopted party “continuous injury” trigger continuous or deteriorating insurance cases involving progressively liability case, arose under Admiral’s of coverage In this because the potential losses.2 lawsuits. Montrose in the underlying so too did its defend duty policies, conclude, the with also respect will further be we explained, As 250, that 22 and sections rule codified in Insurance Code3 “loss-in-progress” or bodily deteriorating property of or in the context continuous progressively there as as long CGL policy, losses under a third party insurable injury the occur during that may about uncertainty remains insured, obliga- and no legal liability the of the period upon imposition established, risk is an insurable there third claims has been tion to pay party be may and 250 which coverage within the of sections 22 for meaning under such a sought policy. of reversing of the Court
We shall therefore affirm the judgment Appeal in favor of Admiral. summary judgment granted I Background
Facts and Procedural 1982, dichloro- From 1947 until Montrose manufactured pesticide Torrance, In (DDT) its in California. diphenyl-trichlorethane plant any is include 1Throughout opinion, policies this reference to “successive” intended to also lapses policies policy periods separated by gaps one another temporally which are from coverage periods. in the coverage.” 2Throughout “trigger this we will term of In the third opinion, refer to the context, “trigger by insureds insurers alike coverage” of has been used obligations indemnity insurer’s to denote circumstances activate the defense policy. “trigger a doctrine to coverage” under the The term of should not be misunderstood as automatically coverage categories in of by conclusively be a court to establish certain invoked cases, policies policies. “trigger” or under of not found the CGL types certain The word is Instead, themselves, coverage.” “trigger nor of does the Insurance Code enumerate or define which, specific “trigger coverage” of term of used under the is a convenience to describe that potential of policy, happen policy period terms of an insurance must in the order policy’s largely timing—what place to arise. The issue is take within one must ultimately potential “triggered”? dates to be Whether effective established factors, any may many given depend case on the additional consideration contract of including express particular existence conditions or in the exclusions coverage, and scrutiny, might defeat availability insurance under of certain defenses that coverage. finding the facts a determination whether of the case will support a indicated. statutory 3All references are otherwise further to the Insurance Code unless the federal all domestic government use of DDT. Montrose prohibited continued to manufacture the chemical for at the Torrance export facility until the closed 1982. plant carriers,
Between and March seven different January ending Admiral, Admiral with furnished CGL to Montrose. issued four Montrose, 13, 1982, from October to March covering period six CGL insurers involved in this not remaining 1986. are litigation to this it to on behalf of the parties appeal.4 policies obligate “pay insured all sums which the shall insured become legally obligated pay because of . . . .or . . to which damages bodily injury, property damage this insurance caused an occurrence. . applies, . “Occurrence” is *11 accident, as defined “an continuous or to including con- repeated exposure ditions, which results in neither bodily injury property damage expected nor intended from the of the insured.” standpoint
The broad issue before the trial court was whether of the seven any carriers, Admiral, in five were to defend Montrose including obligated actions it in connection with of toxic or pending against Montrose’s disposal hazardous wastes at several locations in in an California. Admiral joined interim defense to agreement (to fund Montrose’s defense this provisionally date the still as to whether such was parties apparently disagree agreement entered into to a subject reservation of a matter of no direct complete rights, action, concern this When Montrose filed appeal). its relief declaratory Admiral moved for on issue defend of its to summary judgment duty the effective dates and given terms of of its The trial court policies. found there was no for under Admiral’s and thus potential policies, that Admiral had no to defend the actions. We next duty liability briefly summarize the facts of the actions as established the evidence underlying by of, to, submitted in and in support opposition summary judgment motion.
1. The cases. Stringfellow In an (U.S. action initiated in 1983—United States v. J.B. Stringfellow (C.D.Cal.)) Dist. Ct. No. C-83-2501 HLH—the United States and the State of California sued Montrose and numerous other businesses under the Environmental and Act Comprehensive Response, Compensation, Liability (42 CERCLA), U.S.C. et hereafter as well as various state seq.; § 4The other CGL Company carriers and dates of are: Insurance of North America 1, 1960, (Jan. 1, 1969, 15, 15, 1981, 1986); to Jan. and Jan. to American Motorists Jan. 1, 1969, (Jan. 1, 1971); (Mar. Company Indemnity Company Insurance to Mar. the Travelers 1, 1971, 1, 1977); 1, 1977, 15, July to National Union Fire to Company (July Insurance Jan. 1981); 20, 1980, 20, (Mar. 1982); Company, Canadian Universal Insurance Ltd. to Mar. (Mar. 20, 1982, 13, 1982). Company Centaur Insurance to October for costs reimbursement seeking law response environmental provisions, removal, remediation of toxic investigation, incurred pursuant I the state-licensed class hazardous waste at and near waste contamination acid in Riverside The County. site as the pits known Stringfellow disposal resources, abatement of seeks natural damages also government conditions, site. The basis for the Stringfellow at and near the and cleanup law Montrose is strict under CERCLA federal claim against the site. toxic waste shipped generating waste site in 1956 and closed 1972. Stringfellow disposal opened Montrose were there between 1968 by
Chemical wastes generated deposited Montrose paid hauling transport byproducts when a company disposal DDT and licensed manufacturing its process state-approved site, As from toxic wastes were detected facility. early seeping Ana Board declared and in 1975 the Santa Water Control Quality Regional was It site Stringfellow the site nuisance. that the public noteworthy State by selected and as a hazardous waste facility designed disposal California, defense and that the site used for that many purpose In the State and severally contractors. of California was found jointly liable for both on strict various fault-based com- liability and cleanup, *12 mon law due to its in and grounds, actions designing, licensing supervising facility. the
According to the of the CERCLA the allegations complaint, property commenced in the when 1956 and continued throughout periods Admiral’s CGL effect. No issued to Montrose were in bodily injury in the CERCLA action. alleged lawsuit,
In a second consolidated toxic tort action— private party 165994MF)5 v. Newman J.B. Ct. No. Riverside Stringfellow (Super. County, —numerous seek from other defendants for plaintiffs Montrose and damages and to from release bodily injury have resulted the property damage alleged bodily of contaminants at the site. Plaintiffs Stringfellow allege basis, and in commencing occurred on a continuous property damage and that 27 present. extending Specifically, plaintiffs allege (the deaths occurred between and wrongful period effect), were through- and that was continuous property damage out that same period. involving Stringfellow necessary distinguish it is two 5When between these actions site, Stringfellow Stringfellow. we will refer to them as U.S. v. and v. References Newman “Stringfellow apply intended to both cases” are actions. cases involve Stringfellow allegations both Although progressively e6 into, released by being caused contaminants damag
deteriorating property v. water, soil, and Newman only surface groundwater, through, migrating According seeks for injuries. Stringfellow additionally damages bodily cases, February February between Stringfellow in both plaintiffs carcinogen) human (a of trichloroethylene suspected concentration site and Stringfellow between the located groundwater tripled 31, 1982, to commencement six weeks prior of Glen Avon. On August town Montrose, issued to Admiral’s policies term under the first of Protection Agency notified the federal Environmental by Montrose was (PRP) (EPA) that considered Montrose a potentially responsible party it At about the Stringfellow activities at the site. money expended response time, (EIL) Montrose notified its environmental impairment liability same carrier, Stringfellow allegations, International Insurance about Company, did not Admiral.7 but notify
2. Levin Metals Cases. Met- Terminal Co. v. Levin The three actions—Parr-Richmond remaining SC, (U.S. (N.D.Cal.)) Ct. No. Levin Metals Corp. als Dist. C-85-4776 Corp. (N.D.Cal.)) C-84-6273 (U.S. Terminal Co. Dist. Nos. v. Parr-Richmond Ct. SC, Parr-Richmond Terminal SC and 84-6324 and Levin Metals Corp. 255836)—are No. interrelated. Contra all County, Co. Ct. Costa (Super. Levin Metals against out of a state court action by Each arises brought Parr-Richmond, Levin Parr-Richmond to that real sold alleging by Costa contaminated hazardous Metals Contra 1981 was County soil, contamination waste.8 The suits both on-site off-site allege water, on seek for fraud based and surface damages groundwater, failure to contamination. All chemical alleged Parr-Richmond’s disclose *13 1965; in or the Parr-Richmond Terminal site ceased 1964 at processing to that it chemicals shipped basis of Montrose’s CERCLA is alleged liability damage, refer 6Progressive damage, deteriorating are terms that property progressively or time, during periods the effective period occurs over an extended often to context, policies. property damage “progressive” In the several successive by, might continuing damage deteriorating” damage typically caused “progressively involve rot, from, causes such resulting dry natural causes such as soil subsidence or or man-made through property disposal pollutants or onto of industrial or toxic wastes that leach land, underlying adjoining the insured’s into the water table. 1982, record, 13, Stauffer prior 7For reasons not clear from the sometime to October Montrose, all percent notified Company, Chemical which at time owned 50 of the stock except Admiral carriers Admiral of the PRP first advised of Montrose’s CGL letter. Montrose allegations for a Stringfellow application at the time its about submitted Montrose 15, Admiral policy February renewed of insurance dated is also true that 1985. Of course it CGL for thereafter renewed the 1985-1986. collectively 8We shall refer to these cases as the Levin Metals cases.
659 into time, then formulated which chemicals were to that site prior the formulator’s and that an independent company, chemical products by or contributed caused in turn chemical waste byproducts disposal cases, Metals the Levin in to plaintiffs contamination. According by discovered site was the Parr-Richmond contamination at environmental filed, Parr-Rich- were lawsuits After the later than 1982. August them no contribution and for and others Montrose cross-complained against mond indemnity. Parr-Rich- further complicated Metals cases were Levin
Although actions, related federal and other to avoid CERCLA mond’s efforts on the lawsuits filed we need focus only against of this for appeal purposes contaminating and contribution allegedly Montrose for indemnity a Contra Costa period beginning question County 1947, dates of Admiral’s the effective continuing through periods.
3. on Proceedings Summary Judgment. insurers, to Montrose tendered defense of these actions its seven 1986, the carriers in a declaratory Admiral. In Montrose sued including action, the insurers had a to both defend duty relief declaration that seeking All the carriers Montrose in all five actions.9 indemnify underlying 1989, In Admiral to defend to a reservation agreed subject rights. except issues, Admiral moved for summary summary adjudication judgment (i) the trial court to find that it had no to defend or indemnify urging duty duty directly 9It must be borne in mind that Admiral’s Montrose is all that is at defend proceeding. obligation indemnify distinguished duty issue this must be from the (See duty potential indemnity. post, pp. defend. The to defend arises when there is a 662-663; 1076, (1993) Cal.Rptr.2d Horace Mann Ins. Co. v. Barbara B. 4 Cal.4th 1081 [17 210, 263, 792]; (1966) Gray Cal.Rptr. v. Zurich Insurance Co. 65 Cal.2d 276 P.2d [54 168].) may ultimately P.2d It exist even when in doubt and is not is B., 1081; (Horace Saylin established. Mann Ins. Co. v. Barbara 4 Cal.4th at (1986) 493].) The Cal.App.3d Cal.Rptr. Ins. Guarantee Assn. California hand, obligation indemnify, underlying liability on the other arises when the insured’s Code, (Civ. 1; established. subd. Clark v. Ins. Co. § Bellefonte *14 defend, 326, 832].) Cal.Rptr. Although duty 336-337 it may an insurer have a [169 ultimately may obligation indemnify, in damages have no either no were awarded because insured, underlying against damages the action the or because not judgment the actual was for (See (1990) City Laguna policy. Corp. covered under the Beach v. Mead Reinsurance of 822, 438].) Moreover, Cal.App.3d Cal.Rptr. held before declaratory in a relief action party established, the insured’s to third claimants be has been court will the trial (Aitchison unable to determine the amount of the indemnity insurer’s v. Founders obligation. 432, 178].) Ins. Co. 439 [333 P.2d Montrose in the Levin Metals cases because the circumstances which trigger the of clauses within the and definitions in its coverage, meaning coverage (ii) occur that it had did not the no policies, periods, policy duty in to defend or Montrose the cases because indemnify Stringfellow in contamination those actions an uninsurable alleged loss-in-progress 13, date (Oct. to the effective of the first issued Admiral prior policy 1982).
The trial court in favor Admiral on each granted summary judgment First, cases, with to the Levin Metals the court held that ground. respect for third claims of under a CGL coverage party damage progressive property discovered; essence, when the is first an “triggered” of the “manifestation” or “manifestation of loss” rule we later application Prudential-LMI, 51 Cal.3d for losses in adopted progressive first insurance cases. trial court reasoned there was no party property under possibility coverage Admiral’s because third policies party Montrose, insured) Levins Metal claimants not dis- (although allegedly covered contamination at the site than Parr-Richmond no later August before the start of Admiral’s first term.
Second, cases, with the trial court found that respect Stringfellow was further barred under rule codified “loss-in-progress” sections 22 and 250. Those will be examined in provisions statutory greater below; detail for it will suffice to note the rule present purposes provides that insurance is a contract that losses indemnifies loss or from against arising 22), or unknown events such contingent (§ any contingent unknown be event insured limitations may against subject 250). Insurance Code (§ on PRP letter that Montrose received Relying from the EPA in Montrose be August informing it might responsible site, for and other at the costs the trial response court cleanup Stringfellow because, concluded was barred all to the site claims relating Montrose, commencement Admiral’s prior to the issued Mon- trose knew its liability property damage bodily injury and/or stemming from at the contamination site was “likely.”
Montrose and the Court reversed appealed, summary judg- Appeal ment order. The court of loss” or appellate a “manifestation “dis- rejected covery” (as in the first trigger analysis employed context), it finding incompatible Admiral’s third party with language that, held It Metals policies. because the actions Levin underlying that continuous or allege “oc- progressively deteriorating property effect, curred” throughout period potential were *15 of the was at least for purposes duty those triggered, under policies rule did not bar held that the loss-in-progress The court further to defend. that Montrose’s potential cases. It reasoned in the Stringfellow to have alleged the damage to third for progressive property parties “contin- was still of Admiral’s policies “occurred” throughout period 250, damage insurable, as defined even if under section and thus gent,” inevitable, Montrose’s earlier notwithstanding Admiral affirma- Admiral’s remanded PRP letter. The Court of Appeal receipt facts purchasing had concealed material prior defense—that Montrose tive address the insur- further declined from Admiral—and court, for progressive that coverage not raised in the trial er’s argument, exclu- also barred under specific at the site is Stringfellow that Montrose or intended” the progressive sions because “expected 22.) (§ Admiral’s during policy periods. occurred for review to consider complex We granted petition under a CGL policy issue of when potential coverage triggered important involve continuous or progressively where the third claims underlying and how the rule applies deteriorating damage injury, loss-in-progress such policies.10 Corp. Superior opinion 10This court’s recent in Montrose Chemical v. Court 1153], Cal.Rptr.2d pendency appeal, Cal.4th 287 861 P.2d decided of this distinguished separate a CERCLA appeal
is to be from the instant case. That involved action brought against by alleging Montrose in the United States and the State of California operation facility Montrose’s its Torrance caused environmental contamination land, water, damaged Angeles neighboring and wildlife in the Los harbor basin and waters (United (U.S. C.D.Cal.), Corporation States v. Montrose Chemical of California Dist. Ct. (Jrx)), against cross-complaint No. CV 90-3122-AAH and a related filed Montrose Court, Angeles County (Montrose Corp. Superior the Los Sanitation Chemical v. District. 292.) supra, 6 Cal.4th at Court, Corp. Superior In Montrose Chemical 6 Cal.4th Montrose’s tender of v. rejected brought declaratory against defense was and it action its various CGL a relief insurers, seeking duty a declaration that each owed a to defend the federal action and cross-complaint proceedings. duty they The owed a to defend and asserted a insurers denied defenses, including, proceeding, number affirmative as in this several based on exclusion- of-coverage language summary moved for policies. contained in the various Montrose defend, adjudication on duty arguing the issue of the it was entitled as a matter of insurers’ allegations law to have its insurers underlying defend it in the CERCLA action because complaint, along potential coverage, policies, with the terms of created the CGL thereby triggering duty. the defense that Montrose had failed to countered insurers it was summary adjudication, establish entitled to extrinsic evidence revealed a and that existed, regarding undercutting triable issue of fact the basis whether a potential for Court, (Montrose for Montrose’s Superior motion. Cal.4th at Corp. Chemical motion, prima The trial court denied make a facie had failed to concluding Montrose’s it showing allegations that the CERCLA action coverage because potential created a party’s regarding third complaint, upon “neutral” relying, were which Montrose was *16 II
Trigger Coverage Party Progressive Cases of in Third Loss noted, in the trial court on As Admiral moved for summary judgment Levin in the that it had no to defend or Montrose grounds duty indemnify Metals cases because the which within the trigger coverage, circumstances of did not clauses its occur the meaning policies, and that it had no to defend or Montrose policy periods,11 duty indemnify Stringfellow cases because the contamination those actions was alleged an uninsurable to the effective date of the first loss-in-progress prior policy court, it issued to Montrose. convinced the trial but not the Court of Having Admiral seeks to renew these claims. Admiral asserts in Appeal, its brief on the merits that “the fact that CERCLA action Stringfellow alleges contamination does not establish there was an continuing progressive occurrence while Admiral’s were in effect.” Admiral submits that (i.e., “all was caused a damage occurrence outside by single prior of) commencement determina- policy period,” urges any tion that continuous or progressive its injury occurring during alleged by whether the meaning contamination was caused an “occurrence” within the (which policies, by regular practices evidently or Montrose’s business the trial court viewed “occurrence”). (Ibid.) concept as outside the The trial court also found that the insurers had adduced sufficient extrinsic evidence to create a triable issue of fact to whether as (Id. complaint alleged 293-294.) CERCLA policies’ coverage. pp. acts within the terms at mandate, petition On Montrose’s for a Appeal writ of the Court of directed tire trial court motion, grant finding showing to reconsider and prima Montrose had made a facie potential coverage under the granted ultimately there in issue. We review and judgment Appeal, affirmed the concluding prima of the Court of had Montrose made facie showing potential coverage (Montrose trigger duty sufficient to the insurers’ to defend. Court, Superior 294.) Corp. Chemical pp. explained 6 Cal.4th at We that “the discharges fact that lengthy period during operated toxic occurred over a which Montrose its not, more, facility Torrance does without expected establish that Montrose or intended the (Id. property damage allegedly resulted. And we found the [Citations.]” allegations possibility insured’s sufficient to raise the that it would be liable for “[ejxtrinsic by policies, concluding covered further that evidence adduced possibility, merely placed insurers did not eliminate that dispute but whether Montrose’s eventually actions would be determined not to constitute an occurrence or to fall within one not, however, (Ibid.) policies.” more of the exclusions contained in the We did have herein, timing trigger-of-coverage presented occasion to address the issues because the giving policy periods circumstances rise to in relation to the relevant CGL was not directly appeal. at issue in that theory applicable 11Itshould be noted that loss-in-progress Admiral did not advance the cases; (as to the Levin Metals Admiral to the third opposed has not Montrose contended that party claimants in the litigation) knowledge Levin Metals the contamination at the had prior Parr-Richmond site periods. commencement of Admiral’s itself coverage, “ignore[s] can trigger ensuing policy periods *17 of the occurrence with the occur- and the consequences language confuse[s] itself, i.e., that ‘resulted’ in damage.” the event rence third distinguishing party liability 1. considerations: Preliminary insurance. property insurance party first from case, in of issues this coverage To properly analyze trigger presented it is to first between third insur- necessary clearly distinguish liability party ance, issue, here at and under a first coverage type coverage party insurance as the in such standardized homeowners property policy, Prudential-LMI, issue in Cal.3d 674. 2,
As we observed in both Garvey, supra, Cal.3d footnote page Prudential-LMI, 698-699, and 51 Cal.3d at a first insur- pages party ance for loss or sustained policy provides coverage directly by life, health, fire, insurance). insured A (e.g., theft disability, casualty contrast, third for party liability policy, provides liability insured to a “third a CGL a directors and officers party” (e.g., policy, or an errors and omissions In the usual first policy, policy). party the insurer to to the insured policy, promises pay money upon happening event, of an the risk of which has been insured In the third against. typical party liability the carrier assumes a contractual to policy, duty pay judgments the insured becomes because of legally obligated pay damages bodily caused property damage by the insured. 48 Cal.3d (Garvey, supra, 407.) at p.
The difference in the nature of the risks first insured under against property policies and third is also reflected in the party liability policies differing causation analyses must be undertaken to determine coverage under each type 48 Cal.3d at policy. (Garvey, supra, “ contract, ‘Property insurance ... is an a in which the agreement, insurer agrees the insured in the event indemnify insured property turn, suffers a covered loss. reference Coverage, commonly by provided causation, “loss e.g., caused . . .” certain enumerated perils. [¶] fortuitous, term in traditional “perils” insurance refers to property parlance active, wind, forces such as physical which lightning, explosion, bring ” (Ibid., about the loss.’ Concurrent Causation and the Art quoting Bragg, Policy New Perils Drafting: Insurers 20 Forum Property “ contrast, 386-387.) In 'the “cause” loss in the context a prop insurance contract is
erty that in a totally liability policy.'" different from 48 Cal.3d at italics in (Garvey, supra, original.) right “[T]he in the third insurance context draws on party liability traditional fault, tort cause and This concepts proximate duty. liability analysis differs from the substantially analysis context, which draws on the between relationship that are perils either insurance, covered or excluded the contract. In liability by insuring for to cover personal liability, agreeing the insured his own negligence, the insurer agrees to cover the insured (Id. broader spectrum risks.'' *18 for added.) at italics The also differ parties’ expectations may depending upon type First is coverage sought. party in an property coverage typically purchased amount sufficient to cover the insured’s maximum loss fire potential (e.g., Hence, insurance covers the insured). value of the there is typically no reason for a first insured to look to more than one in the party policy (the event of loss in fire). (See effect at the time of the policy Garvey, supra, 48 Cal.3d at Third differs As party liability coverage substantially. observed, best, the Court of below Appeal the insured makes an “[a]t worst, educated about its guess potential to third At exposure parties. insured’s best falls far short guess of the mark.”
Yet another distinction between the two of insurance types that third CGL do party policies not as a condition of a impose, coverage, that the requirement be discovered at any particular point Instead, in time. they caused an provide coverage injuries “occurrence,” and (or define “occurrence” as an typically accident some- “loss”), times a conditions,” a “continuous or including repeated exposure that results in bodily injury property damage during period. standardized CGL (like the in policy language language policies) seen, will be reviewed in detail below. As will be greater about this nothing a manifestation or language suggests as a discovery requirement prerequisite (See, triggering coverage. v. Biltmore Const. Co. e.g., Properties Trizec (11th 1985) Cir. 767 F.2d in standard CGL requirement [no “manifest” themselves damages policy period].)
Another difference between first and third is that important party policies first insurance party the insured to action policies require bring against any the insurer (Prudential-LMI, within months after of the loss.” “inception a filed under such 682-687.) an action is Before Cal.3d at pp. there insurer. Before the insured and between must be dispute there policy, it has should) know (or must reasonably the insured be a dispute, can contrast, 686-687.) party third (Id. By a “loss.” pp. suffered insured which the 12-month limitations period not include a do contain may the the insurer (although an action against must bring third party or injured It is the damaged notification requirements). express estab is ultimately the insured. If the action against initiates who lished, “all sums insured for must indemnify insurer that turn it is the Hence, there is no to pay.” insured shall become legally obligated which the and, will a standard policy, of the loss” language “inception need to the definition “inception no corollary apply become apparent, Prudential-LMI, 51 Cal.3d at pp. that this court articulated the loss” 682, form fire insurance (Cf. policy].) 699. [standard § these critical distinctions some courts have failed to draw Unfortunately, under first and third insurance poli- when issues discussing coverage context, some cases have In the third reported cies. party liability *19 to between muddied the waters by seemingly failing distinguish disputes insurer, between an insured and and actions several among arising out to seek a declaration a loss already paid carriers that judicial allocating In between an insured and the insured under one or more such suits policies. and, an insurer to determine of the coverage, interpretation policy language in the case of of the language, expectations parties, ambiguous policy or insur- will take The existence of excess “secondary typically precedence. clauses, decree- ance” “other insurance” or similar language policies, policy the manner of under ing multiple policies may apportionment also factor into the coverage analysis. contrast, allocate
In where two or more CGL carriers turn to the courts to loss, contractual and the cost for a different indemnity paid policy considerations come in such costs into the effort may apportion play the insurers. The task of contribution amongst allocation among may require all insurers on the risk in to their respective policies’ liability proportion (such limits or the time covered under deductibles ceilings) periods each such cases fail to take these distinc- analyses whose policy. Reported account, tions into or settle an although purporting clarify underlying issue, shed more darkness than on the “trigger coverage” may light matter. a issue also may resolution of proper analysis trigger coverage on to third whether the CGL in issue insures
depend against liability shown, or both. As will be parties bodily injury, property damage, clauses in Admiral’s do not policies between the distinguish nature of the harm or underlying (bodily injury damage) triggers the insured’s liability coverage. Montrose Accordingly, and Admiral appear that under a agree plain reading that unambiguous of the aspect (or whatever be the circumstances language, timing circumstances) that will potentially trigger under liability coverage the policies, will under such apply uniformly circumstances whether the claims be for or bodily in injury, property damage, alleged third underlying lawsuits. resolution of a
Finally, issue proper trigger in any given case turn on may whether the court is addressing underlying facts involving a event single immediate resulting an injury (e.g., explosion causing instantaneous bodily injuries destruction of a property), single event or resulting delayed progressively a chemical deteriorating injury (e.g., (referred event spill), continuing to CGL as “continuous or conditions”) repeated exposure resulting single multiple injuries to toxic wastes or (e.g., exposure time). asbestos over in the Significantly, case we are both with present claims of continuous or dealing progressively (the deteriorating Newman v. bodily injury lawsuit), and Stringfellow pro- gressively (the deteriorating property and Levin Metals Stringfellow cases), all from continuous arising to hazardous waste repeated exposure time, contamination over when allegedly including periods were in effect. *20 mind, With these considerations we turn next to the of express language issue, the contracts of insurance here in looking first to the relevant princi- of ples insurance policy that must our interpretation govern construction of the contested provisions.
2. Admiral’s policy language the rules applicable interpretation. of and, therefore,
Insurance are contracts are in the governed first instance the rules by of construction to contracts. Under applicable rules of statutory contract the mutual intention of the interpretation, parties at Code, the time the contract is formed (Civ. its governs interpretation. 1636.) inferred, Such intent is to be if from the written possible, solely § provisions (Id., 1639.) of the contract. The “clear and of explicit” meaning § sense,” these in their provisions, interpreted “ordinary popular controls sense, unless “used technical judicial interpretation the in a parties 1638, unless a (Id., is to them special meaning given 1644.) If by usage.” §§
667 of ascribe to the of a contract the would layperson language meaning (See that meaning. is clear and a court will unambiguous, apply insurance 807, (1990) v. 51 822 Cal.Rptr. AIU Ins. Co. Court Cal.3d Superior [274 820, (1982) (AIU); Co. v. Pisciotta 30 Reserve Insurance 799 P.2d 1253] 628, 764]; 800, Crane State Farm Fire Cal.3d 807 640 P.2d v. Cal.Rptr. [180 112, 1129, 513, (1971) 5 Cal.3d 115 485 P.2d 48 & Cas. Co. Cal.Rptr. [95 1089].) A.L.R.3d contrast,
In is there . . . it is resolved ambiguity by interpreting “[i]f (i.e., insurer) the sense in the be ambiguous provisions promisor Code, of (Civ. lieved the understood them at the time formation. promisee 1649.) If does this rule not eliminate application ambiguity, ambig § uous construed who caused the language against uncertainty to rule, (Id., 1654.)” (AIU, 822.) exist. 51 Cal.3d at “This supra, p. applied § to a an insurance not the promise policy, protects subjective but, rather, beliefs of the insurer ‘the reasonable objectively expectations (AIU, 822.) the insured.’ rule supra, at if this does not resolve the Only p. AIU, we (See do then it resolve the insurer. at ambiguity against supra, 822.)” 1254, (Bank the West 2 (1992) v. Court Cal.4th 1265 Superior [10 538, 545]; 833 Cal.Rptr.2d P.2d see also Transconti Companies v. Cooper 1094, (1995) nental Ins. Co. 1101-1102 Cal.App.4th Cal.Rptr.2d [37 508].) AIU, 822,
We further in explained Cal.3d page “[i]n context, we resolve in favor generally coverage. ambiguities (See, 193, e.g., (1973) State Farm Mut. Ins. Auto. Co. v. Jacober 10 Cal.3d 1, 953]; 514 P.2d v. Cal.Rptr. [110 Bareno Ins. Co. Employers Life 875, (1972) 889]; 7 Cal.3d 500 P.2d Cal.Rptr. Continental [103 Casualty Co. Phoenix Co. Constr. 46 Cal.2d P.2d 437 914].) 57 A.L.R.2d we Similarly, generally interpret clauses of insurance order broadly, protect] objectively [in (See, reasonable expectations the insured. Garvey v. State Farm Fire e.g., Co.[, 395, 406; & Casualty Cal.3d supra,) 48 Reserve Co. v. Insurance Pisciotta, Cal.3d at These stem from rules the fact insurer drafts typically little or no policy language, leaving insured meaningful (See, opportunity ability for modifications. bargain e.g., *21 426, 435, Garcia v. Truck Ins. (1984) 36 Cal.3d 438 Exchange Cal.Rptr. [204 1100]; Bareno, 682 P.2d 878.) supra, Cal.3d at Because insurer the p. writes the it is held policy, ‘responsible’ for ambiguous language, policy omitted; which is (Fn. therefore construed in favor of see also coverage.” al., Mehr (8th 1985) et 137.) of Insurance Principles ed. p.
Is the of Admiral’s contracts insurance here in issue language Code, “clear 1644)—or and (Civ. thus is explicit,” controlling §§ it us to the ambiguous, requiring clauses in order interpret broadly Montrose, to the reasonable the insured? protect objectively expectations courts, below, Some the Court of have concluded that the including Appeal constructions on the varying judicial definition of occurrence in the placed standard form CGL themselves policy to the inherent in attest that ambiguity (See definition. (1983) Union Ins. Co. v. Landmark Ins. Co. California 461].) commentator One Cal.Rptr. has so far gone as to suggest word ‘occurrence’ itself is because ambiguous “[t]he definite, injury (Note, is not a discrete process event.” Developments in the Law—ToxicWaste Litigation 99 Harv. L.Rev. Although such would any ambiguity have to be ultimately resolved favor of the reasonable (Bank Court, of the insured the West v. expectations Superior 1265; AIU, 822; 2 Cal.4th at Cal.3d at p. Garvey, supra, 406), 48 Cal.3d at we find that the of Admiral’s express language insurance, whole, when read as a unambiguously provides potential for the continuous and progressively deteriorating bodily injury to property damage have occurred alleged Admiral’s during policy periods.
Turning express Admiral contracted with policy language, Montrose to on behalf of the insured all “pay sums which the insured shall become as legally obligated because of pay damages . . . or .. bodily injury, . property to which this damage insurance caused an occur applies, by (Italics added.) rence. . . .” to which this “[Pjroperty damage insurance is applies” defined “(1) to or physical injury destruction of tangible which property occurs during policy period, the loss of including use thereof at time thereform . . . any resulting .” (Italics added.)12 to which the “Bodily injury” is defined as applies “bodily sickness or injury, disease sustained by any which occurs person during the policy period, including death at time any resulting therefrom.” (Italics added.) We find no in this it ambiguity language; clearly explicitly the occurrence of provides or bodily injury property damage during policy is the period event that operative triggers coverage. policy 12The definition of “property applies” which this insurance also includes tangible “loss of use of property which has not physically injured been or destroyed provided such loss of use is caused during policy period.” an occurrence Since the “loss of use” pertains clause only property “which physically injured has not been destroyed,” sustaining property during policy period by such definition cannot be what triggers coverage for such losses. Because parties any have not directed us to case, “loss of use” issue this we coverage, have no occasion to decide whether under such policy, tangible loss of use of property which has not physically injured been destroyed dependent during the loss use upon whether occurs period, or whether the occurrence which the loss of use occurs results period. *22 Furthermore, “occurrence” is defined in Admiral’s as “an acci- policies dent, conditions, continuous or which results including repeated exposure to or neither nor intended from bodily injury property damage expected (Italics added.) of the insured.” When read with the standpoint together aforementioned clauses covered defining bodily injury property damage, this between the causative policy language unambiguously distinguishes event—an accident or “continuous and to conditions”— repeated exposure and the resulting “bodily or It is the injury property damage.” latter or injury that must “occur” damage and “which results” during policy period, from the accident or “continuous and to conditions.” In repeated exposure this case, it is the third party litigants’ bodily injuries property damage, which are alleged have been continuous or progressively deteriorating and which throughout resulted policy periods, from the allegedly continuous and insured, to toxic chemicals for repeated exposure which the Montrose, is an allegedly responsible that party, triggers potential coverage under the policies question. 3. Settled case law and the drafting history CGL standardized
policy language that coverage is triggered by or damage injury confirm occurring during the policy period.
Admiral contends that to read its CGL providing that is coverage triggered when damage injury occurs within the policy as a periods result of an “occurrence” is to “ignore[] policy language itself, consequences i.e., confuse[] occurrence with the occurrence the event that ‘resulted’ (Ante, damage.” Admiral in essence urges that under a CGL is established at the time the (i.e., “occurrence” event) act or precipitating first rise gives to apprecia ble and that injury, that commence after an “occurrence” and some consequent appreciable damage or cannot be injury on the risk for progressive occurs such subsequent policy The periods. relevant cases and interpretative authorities which have con strued the industry-standardized CGL policy lend no language support Admiral’s position.
California courts have long recognized in the context of a liability insurance time established at the the complaining party In actually Remmer damaged. v. Glens Falls Indem. Co. P.2d 57 A.L.R.2d (Remmer), the court was 1379] asked to interpret the definition of “occurrence” as that term was used in policy. issue in precise Remmer was whether the act of defectively grading and a lot filling constituted the sole occurrence rise to giving under “one policy’s occurrence” or whether provision, subse (an quent injury alleged maintenance of a nuisance on the lot graded *23 670 the third claimants’ also
adjoining party cover property) triggered liability under the on cases from age policy. Relying California and other jurisdic tions, the Remmer court formulated the rule: “The following rule is general that the time of the occurrence of an accident within the of an meaning is not the committed, time the act indemnity policy was wrongful but the time when the was complaining (Id. party actually damaged.” 88.) p. formulation,
The Remmer which between a distinguishes act and wrongful act, result of that injurious and holds that the triggering under a CGL is established at policy the time the third complaining was has been embraced actually damaged, such noted by experts (7A (1979 4501.03, Insurance Law & Appleman Appleman, rev.) Practice § Couch, 256) (11 44:8, and Couch p. (2d 1982) Insurance ed. It can § be found in American (43 rev.) Second Jurisprudence (1982 Am.Jur.2d Insurance, 324), has been the courts of accepted by other many § states, and has been cited federal courts by the law of still other interpreting Annot., (See states. Event Insurance as Oc Triggering Liability Coverage Within Period of Time curring Covered by Insurance Where Liability Policy is Injury (1993) Cases 14 Damage Delayed—Modem A.L.R.5th 6§ Indeed, therein.) Court, cases cited as stated the Idaho by Supreme “This rule is followed in every jurisdiction that has considered the issue except Ins., (Millers Louisiana.” Mut. (1982) Fire etc. v. Ed Inc. Bailey, Idaho 1249, 1251].) P.2d [647 Although Court of concluded that Appeal potential coverage under Admiral’s triggered policies by injury occurring during policy the court did not periods, trace this long-standing interpretation how liability under triggered a CGL rule formulated Instead, in Remmer. the court looked to the independently drafting history the standard CGL its conclusion that no language support construction, above, reasonable other than that described could be on placed the insurance use of such industry’s policy language.
Admiral contends that evidence of the of the stan drafting history definitions, dardized CGL policy provisions available interpretative materials, are irrelevant and should not have been considered the Court of Appeal construing of its CGL issued language to Montrose. however, Most courts and commentators have recognized, that the presence of standardized and the industry provisions availability interpretative literature are of considerable (See, assistance in issues. determining coverage Maryland Co. v. e.g., Casualty Reeder 719].) Such
Cal.Rptr. interpretative materials have been cited and widely *24 on in the case law and authorities relied relevant standardized construing insurance As one court has “where two insurers policy language. suggested, of identical standard form mean dispute meaning policy language—the is, minimum, attached to the the insurance at ing provisions by industry (Fireman’s (1990) relevant.” Fund Ins. Co. Surety v. Aetna & Co. Casualty 1621, hand, 431].) 1629 On the other Cal.Rptr. [273 observed, another court has insurance are industry publications “[w]hile helpful understanding scope coverage insurers are to delin trying eate in any given (American are no means policy, they by Star dispositive.” 1320, 1330 (1991) Ins. Co. v. Insurance Co. the West 232 Cal.App.3d 45], case, italics in In this we find Cal.Rptr. original.) the drafting history that, relevant in evaluating Admiral’s from argument stand public policy the insurance will be point, harmed industry a continuous by adoption that the injury trigger never industry would be assertedly anticipated applied to these policies.
Standard CGL was revised policy language industry drafters in several important respects in 1966. starting Prior to that year, third party general liability covered and bodily injuries damages caused (American by “accidents.” Home Prod. v. Mut. Ins. Co. Liberty (S.D.N.Y. 1983) 1485, 1501, 565 F.Supp. (2d 1984) affd. as mod. Cir. 1966, F.2d In the National Bureau of Underwriters Casualty and the Board, Mutual Insurance Rating predecessor organizations Insur ance Services (ISO),13 Office the standard form changed from an “accident-based” to an (Ibid., “occurrence-based” format. see also New Castle County v. Co., Acc. and 1181; Indem. supra, 933 F.2d at p. Hartford Pasich, Insurance Coverage (Jan. L.A.Law., Environmental 1989) Claims for 12; fn. p. Practice, 3 Cal. Insurance Law & Property Liability Insurance, 49.04, 49-10.) at It § reasonable to infer that the insurance knew industry precisely what the entailed. change In comments addressing question under the new CGL progressive personal over an property damage resulting time, extended period one of the drafters some explained “[i]n exposure cases type involving cumulative it is injuries possible that more than one will afford (Elliott, The coverage.” New Comprehensive General Liability Policy, Insurance Liability (PLI, Disputes Schreiber edit. 13ISO nonprofit is a statistical, trade association that provides rating, and actuarial policy forms and drafting 3,000 related services approximately nationwide casualty Policy insurers. forms developed by ISO approved by are its constituent insurance carriers and then agencies submitted to forms, state for review. Most carriers use the basic ISO at least (New as the starting point general for their County Castle Acc. policies. Hartford and Indem. (3d Co. 1991) 1162, 1181; Cir. 933 F.2d see also 3 Cal. Insurance Law & Practice (1986) Property Insurance, Liability 49.04, 49-10.) pp. 49-9 to § 12-5; Obrist, General
1968), 12-3 to see also The New Comprehensive pp. Inst. (Defense Insurance Research Liability Policy—A Coverage Analysis Nachman, [same]; 1966) Provisions Policy The New Monograph [same].) General Insurance 18 CPU Annals Liability its awareness of the insurance was also demonstrating By industry deteriorating issues continuous involving progressively potential Elliott, then Richard H. secretary bodily injury property damage. Underwriters, National Bureau of wrote the Casualty following regarding *25 occurrence-based CGL which standard form adoption policy, policy the term “accident” within its retained definition of occurrence: “The new will afford on an ‘occurrence’ basis. ‘Occurrence’ is defined policy coverage accident, conditions, results, as including injurious ‘an which exposure the in and neither during policy period, bodily injury property damage this nor intended from the of the insured.’ Note that expected standpoint definition includes the word ‘accident.’ This has been done in order to the intent with of time and of clarify respect application policy limits, of situations a related series events attribut- particularly involving the able to same factor. Under such circumstances one accident or only occurrence is intended as as the limits is concerned. application policy far of For the of a out of the ten contractor derailment of example, arising or twelve cars as a result of a collision with a of his freight piece equipment is intended to be to one of the occurrence limit of the subject application Retention the word ‘accident’ is in this sense and no other.” policy. limiting of (Elliott, The New General Insur- Comprehensive Liability Policy, Liability 12-5, added.) ance italics Disputes, supra, Elliot’s comments the leave little doubt that definition of “oc- Secretary currence” in the drafted standard form CGL was intended to newly policy when or from an or provide coverage damage accident injury resulting to conditions” occurs the The term “injurious exposure during policy period. “accident” was left the definition of occurrence for the of purpose limits to each occurrence. The drafters circumscribing policy applicable sense, did not intend to that an “accident” the literal a sudden require e.g., event, occur in order to trigger precipitating during policy period poten- tial for “The reference to or ensuing damage injury. ‘injurious to conditions . . dam- exposure bodily injury property . [resulting [or in] eliminates result from a sudden event. age]’ any that the requirement injury it is most common takes with Although simultaneously that an injury place there are over an taking of exposure, many injuries place instances extended of time the slow before evident period example, become they [for In noxious these substances or ingestion foreign the inhalation fumes]. cases, the time of loss for similar the definition identifies of ‘occurrence’ take must place during policy coverage—the injury applying purposes Practice, (3 Law & Property Liability Cal. Insurance period.” 49-20-49-21, Insurance, 49.12, omitted.) fns. at pp. § demonstrate, the drafters of the standard occurrence- As these materials its advising industry regarding experts based policy, that the would when formulated in contemplated policy interpretation for all damage injury occurring during afford liability coverage accident, or from from an resulting injurious exposure period policy to exclude in the language purports conditions. Nothing nature, a continuous or as it deteriorating progressively long injury Nor is there basis an during policy period. any inferring occurs and reasonable understanding expectations regarding scope insured’s occasioned the effective of an period occurrence-based CGL would have been otherwise.14
We have shown how the clear and explicit language *26 the that is the conclusion occur- supports coverage triggered by potential rence of or as a bodily injury property damage during policy periods, result of an accident or the “continuous or to conditions.” repeated exposure decisions, California, We next review the relevant from the federal reported courts, courts, and other state that have to construe the sought industry- standardized CGL to determine how continuous or policy language injury seen, under damage triggers potential coverage such As will be policies. of weight consistent with our own of authority, interpretation express policy is that and language, bodily injury is property damage continuous or progressively deteriorating successive CGL throughout is covered periods, all in effect those potentially by policies periods. 4. Survey case law and authorities discussing triggering coverage of of under CGL policies where or is continuous over injury damage successive policy periods.
The issue of of in continuous trigger or injury damage cases has been (See (1993) courts. Annot. explored by many A.L.R. 5th 695.) Courts have several recognized as a means of “triggers” identifying nature and or that will rise to timing damage injury give liability coverage under an occurrence-based CGL The courts have viewed policy. generally timing or under damage occurrence-based CGL in four injury at the date of ways: or event or exposure injurious damage-causing conditions; fact”; at the date of the first occurrence of at the date “injury 14The standard policy language, form CGL incorporated which was in Admiral’s ISO, policies, was respects by insuring agreement revised in a number of but and coverage-related substantially definitions were unaltered. or manifestation of the or over the discovery damage contin injury;
uous from manifestation and period exposure through beyond, where the continuous, or injury ongoing, progressively deteriorating or successive this throughout period At it policy periods. point will be outline the various briefly theories formulated helpful trigger courts. (or
The exposure
continuous
This
exposure) trigger.
trigger
first
in cases
theory,
asbestos-related
applied
involving
bodily injuries,
focuses
on
on the date
which the
first
injury-producing agent
contacts the
The
the cost
body.
theory
exposure
apportions
indemnity
those
among
insurers
whose
were
effect from that
time onward. In
point
effect, under this theory,
is deemed to commence
injury
from the
first contact of the
with
agent
injury-producing
injured party.
leading
case
this
espousing
trigger
is the Sixth Circuit’s
analysis
deci
sion in
(6th
Ins. Co. North America Forty-Eight
1980)
Insulations
Cir.
F.2d
clarified 657 F.2d
cert. den.
age, was this in the already explained, court first adopted by party Prudential-LMI, insurance context in Cal.3d property holds supra, the insurer the the insuring at time property appreciable property damage first becomes manifest for solely responsible indemnification the insured. rule, For of the purposes applying the time at which the property damage (also becomes loss”) manifest the of of is point the “that “inception point time when occurs and is or be known appreciable damage should insured, such that a reasonable insured would be aware his that notification 699.) under duty (Id. the had been at policy triggered.” Prudential-LMI, In we three Cal.3d identified reasons the of the in the supporting manifestation first application theory party First, property insurance context. of that of trigger application who, meets the reasonable the of insureds to insure expectations seeking against perils their would look property, normally present to their carrier Second, of the “the 699.) (Id. underwriting practices at for coverage. is liable a loss the insurer not because be made predictable insurer can loss the manifestation of unless the insured ends its contract with once Third, is the insured (Ibid.) since required its term.” contract during occurred to file suit the against insurance policy first party property under standard loss,” of and since inception of the after “inception within months insurer is or should be occurs and date which appreciable damage the loss is the on of insured, loss and inception definition of manifestation the the known to same, in time when is “that one the to say, point loss must be insured, known to the such and is or should be damage occurs appreciable that a reasonable insured his notification under duty would be aware that (Prudential-LMI, at 686- Cal.3d pp. been had triggered.” policy conclude, “in reasons us to with conformity These led policy rule, terms first insurers whose property] loss-in-progress [that are not responsible any manifestation of loss commence after initial 699.)15 (Id. . . . at p. claim .” potential this (or
The Under injury multiple) trigger. continuous trigger or that are continuous theory, injuries damage progres- bodily property covered all successive are deteriorating policy periods sively throughout accident, event, The or periods. in effect those during timing an damage, or insured’s causing bodily property e.g., conditions injury act, it can occur is immaterial to establishing coverage; negligent largely date Neither is the discovery before or during period. it with or not be controlling: might contemporaneous injury might It the causal event. is occurrence bodily only injury effect—the from a sudden accidental resulting policy period, event or the to conditions”—that repeated exposure triggers “continuous this The cases which liability coverage. appellate trigger potential are detail below. greater discussed developed first trigger, coverage Under an injury-in-fact trigger. injury-in-fact shown, in time can be at which an actual triggered point *28 15We has the manifestation only appellate adopted are aware one court decision that trigger coverage injuries party liability for insurance. In bodily in the context of third Industries, 12, Eagle-Picher Liberty (1st 1982) Ins. Inc. Mut. v. Cir. F.2d the United States injury Appeals Court of for Circuit on evidence before it that the the First concluded the resulting until the of the disease symptoms from inhalation of asbestos fibers did not “occur” prior had manifested had no insurance to asbestosis themselves. The asbestos manufacturer exposure the CGL period place. when most of the took The manufacturer’s Forty- coverage accelerating. As case began began when number of was the in the claims Insulations, Eight supra, Eagle-Picher, adopting in the manifes 633 F.2d court the a that afford trigger, tation made clear in manner would interpret its intention to the (682 23.) p. at The coverage and maximize case. F.2d particular on the facts of that Eagle-Picher case therefore stands as of an aberration. somewhat to have been first suffered. This rationale the
retrospectively,
places
injury-
between
in-fact somewhere
the
which is considered the
exposure,
initiating
or
and the
cause of the disease
manifestation of
bodily injury,
symptoms,
which,
(See
is
when an
exists.
Abex
only possible
logically,
injury already
Cas. Co.
(D.C.
1986)
Corp. Maryland
v.
Cir.
F.2d 119
App.D.C.
[asbestos]; American Home
Products
Mut. Ins.
Corp. Liberty
(2d
v.
Cir.
297]
1984)
policy period.
distinguish
expressly
exposure
equate
The CGL
from
injury;
two
ignore
Any argument
. . . is to
distinction.
exposure—without injury—triggers
this
that mere
(Abex
Co.,
simply
linguistically.”
Corp.
supra,
is
Maryland
unsound
v.
Cas.
790 F.2d
Ins.,
p.
original;
Liberty
at
Corp.
italics in
see
Home
v.
also American
Products
Mut.
764.)
p.
748 F.2d at
however,
trigger,
injury-in-fact trigger acknowledges
Unlike the
manifestation
that
injury may
actual
“occur” before it
manifest
has become
or been discovered. Under the
“
injury-in-fact approach, coverage
triggered by
injury, proved
‘a real but
undiscovered
retrospect
irrespective
injury
at the
have existed
relevant time . . .
of the time the
became
” (American
Ins.,
[diagnosable].’
Corp.
Liberty
Home
Products
Mut.
One of the cases apply injury theory was Gruol Construction Co. in the of context progressive property Co. America Insurance North Wn.App. P.2d 427] of case, (Gruol). his that a contractor in an action insurer against In prevailed had in who failed defend him under his a third general liability policy rot to a construction defect suit of recovery dry building. party The dirt had caused the against building contractor’s of improper piling a which rot. The court held that the continuous dry process began Armstrong carefully upon court noted that the trial court had “relied medical evidence to make findings processes upon of physiological actually factual on the that occur inhalation asbestos determining injury” apply trigger fibers and until . .” a continue death . . in “continuous in that case. Although Armstrong trigger coverage appears largely court’s of consistent discussion case, analysis present applicable principles coverage with our of third in the claims, unique bodily injury because we do not here we face the facts asbestos-related appropriate trigger involving it questions specifically deem asbestos claims decision, instance, a appropriate they be left for in the first on an record in case in which are presented. squarely argued: dumping 17Counselfor Admiral “The in is when the of toxic occurrence this case appreciable damage. waste resulted in Whether it was discoverable not is not issue. appreciable damage. regardless happened, issue is it resulted And it when when that occurred, certainly happened long policies incepted. a it time before the Admiral . . . When may may going depend which not be It’s on the facts of the the date manifestation. all particular case.” scrutiny, advancing trigger a injury-in-fact On close it can be seen that is not true Admiral coverage theory theory. explained, injury-in-fact lieu of manifestation As under subsequent theory, continuing injury which to the policy period occasioned occurs subject coverage. point injury-in-fact pinpointed time at which the be is It is the can first period exposure point first injury-in-fact retrospectively from initial which the is Admiral, contrast, arguing appears established for which no is to be afforded. established, injury-in-fact potential once an is cut off retrospectively, all even onward, point only injury-in-fact from that time the first on the at the insurer risk insured, indemnify injury-in-fact “occurs” is liable to ever regardless whether the manifested itself. *30 678 at the time of and negligent the construction continued the through manifes- “
tation of rot the ‘even there a dry damage, though of time lapse [was] between the the initial act and occurrence of the negligent ultimate damage
(Id. 430].) 636 at P.2d at Thus the of Gruol holding was that, facts, when warranted the be should deemed property damage occur over entire the of the An process continuing insurer injury. would become liable in any point at the for the entire loss to the process up policy limits, even the though continuing injury progressively deteriorating damage extend over several may periods. policy The first case discuss the of reported triggering potential California under third continuous or party liability policies, where involved, was progressively deteriorating damage was property California Co., Union Ins. Co. v. Landmark Ins. (California Cal.App.3d Union). That case involved a leak of water from a gradual swimming pool which damage caused The adjoining that the property. parties stipulated in to leak June and that a in pool began crack the was the sole pool cause of the ensuing damage. to the Damage adjoining property occurred between July 1979 and November 1980. Landmark Insurance (Landmark) was on from Company the risk 1978 to 1980. July July Califor- Union) (Cal nia Union Company Insurance provided liability coverage from (Id. 467-469.) July 1980 to 1981. at July pp. the source of was leakage damage Union discovered California of an the in October a
during inspection at time pool point of the following Landmark and the term of the expiration during trial, successive Cal Union At the two carriers policy. contested the occurred leak) that between October 1980 damage (discovery November of (repair the source the had under- damage). Landmark taken its repairs but prior expiration July apparently repaired and not only damage slopes adjoining property, undiscovered source of as-yet leaking Landmark damage: pool. (that contended that the which after October postdiscovery damage occurred 1980) a separate constituted occurrence within the definition of that term in the Cal Union was Cal policy, responsibility. therefore Union’s sole Cal Union turn a continuation of a occurrence argued damage single began Landmark period policies, provided by Union, sole was thus the Landmark. (California responsibility p. The trial court held that be each treated as manifestation of should occurrence under the separate policies, position Cal Union’s rejecting incidents of separate manifestation attributable to the are which *31 the continuous of same merely are manifestations cause underlying same Union, at p. 145 Cal.App.3d supra, (California damage. “occurrence” reversed, ruling court’s that the trial concluding Court of 469.) The Appeal (Ibid.) of each insurer’s policies. the language contravened express that readily acknowledged in Union both insurers On appeal, California 669-670), Remmer, (ante, at supra, pp. the rule of Cal.App.2d under at under at the point arose their policy language a coverable “occurrence” the the not time at which was actually damaged, which the complaining party Union, (California supra, or conditions initial act transpired. damage-causing 470.) court out agreed, at The Union p. pointing 145 Cal.App.3d California case were from those in the the facts of Remmer that precise distinguishable (a defectively the Remmer Observing dangerous before it. condition a the lot) years, had failed manifest of five graded any damage period it the Union noted that the before leaking pool court case California the active at work” months between eighteen “continuous force (the crack in the that first rise to “wrongful gave time of the act” pool of the actual and the manifestation damage property) water adjoining 473.) (Id. language loss. at on identical “one occurrence” p. Focusing (“ ‘all . . . damage Cal Union’s Landmark’s the same out of or repeated substantially continuous arising exposure ”), conditions be considered out one occurrence’ general arising shall that, Union concluded court given continuing progres California of the the trial court’s deteriorating pool leakage damage, nature sively determination that was a occurrence each manifestation damage separate conflicted with the “one occurrence” in each insurer’s language (Id. 469.) at policies. p. Union court next several California surveyed appellate California which, time, set,
decisions to that had for definitional up attempted to, timing of occurrences purposes, prior transpiring or after the effective of successive third during, periods liability party Union, 471-472, insurance at policies. (California Cal.App.3d pp. . cited.) and cases each case . . Although such exception “[w]ithout involved act and delays time between varying periods wrongful loss,” the Union the actual court observed [manifestation of] California none had involved continuous actual deteriorating progressively (Id. at of the 473.) The court note settled authorities injury. also took that an an insurer’s insured for holding obligation indemnify manifested (Ibid.)18 continue even after the term of losses may Even policy expires. context, in the third an insurer’s liability for a still insured and event not terminated continuing expiration Union, 475; term. (California accord, Harman American Casualty Co. Pa. (C.D.Cal. Reading, 1957) 155 F.Supp. As stated in Union: a ‘one occurrence’ case “[I]n involving California *32 continuous, progressive and the deteriorating carrier in whose damage, the first becomes policy period remains on the damage apparent risk until the is and damage finally totally complete, notwithstanding policy provision which to limit the to those purports accidents/occurrences solely Union, within the time (California parameters the stated term.” policy 476.) 145 at Cal.App.3d p. found Having under settled of law that insurer principles Landmark remained the insured for the obligated indemnify pool leakage damage to, after, which commenced but continued to prior deteriorate progressively Union court then turned to of Landmark’s the expiration policy, California insurer, Union, the unsettled of whether the successive Cal also question was on the risk for the its damage successive occurring during policy period. it was true that the force the Although producing continuing pool leakage was set in motion when Cal already Union came on the risk with the initiation of its successive that force continued into policy, damage-causing the Cal occurred Union’s further period policy, damage during policy frequently 18Oneof the cases most proposition Snapp cited for this Farm Fire & State Cas. Co. Cal.App.2d Cal.Rptr. (Snapp), 206 827 the first California case to [24 44] theory (See discuss a manifestation party property in the first insurance context. Prudential- LMI, supra, 694-696.) pp. Snapp declaratory 51 Cal.3d at was a relief action to determine the liability, extent of an insurer’s expiration both before and after the of a first standard policy, damage form fire premises resulting to the insured from a landslide. The 15,1956, effective date of three-year the was November it was to and continue for a term. The policy contained an against endorsement which extended to insure all term, physical property. During risks of loss to the policy Snapp the the land beneath the began residence laterally heavy to move due to unstable landfill and rainfall. trial court property only damages found the insurer was liable to the extent of the sustained before the expiration policy period. of the “ reversing, Snapp In court specific finding made reference to a that the ‘movement is ” still active prospect (Snapp, supra, Cal.App.2d and is without definite of stabilization.’ 206 831.) permit at The court continued: “To liability insurer terminate its while the peril during fortuitous which materialized the term of the was still active would not be applicable precedents understanding in accord either with or with the common of the nature insurance; injustice upon it purpose and would allow an to be worked the insured very protection substance of the defeating premiums paid. for which his were Once the [¶] covered, against contingent during period event insured has occurred of the potential remaining only, contractual rather than the sole issue is the carrier becomes obligation, may fully its and it is immaterial be ascertained at the end extent of that this not (Id. 831-832, policy period.” pp. original.) at italics in were necessary performed corrective procedures substantial period, itself pe- manifested damage after October-November 1980 Union, at (California Union’s policy. riod of Cal the risk to was on Cal Union Union court concluded The California occurring through insured for the continuous indemnify on reliance three The court placed period.19 primary its successive policy Gruol, Gruol, P.2d supra, Wn.App. 427]. cases. The first [524 677-678), (ante, property damage held pp. progressive noted above the continuing injury, to occur the entire process should be deemed over loss liable at in the for the entire process up with carrier any point a CGL limits, deteriorating the continuous though progressively even (11 at p. over successive policy periods. Wn.App. extends *33 430-431].) P.2d at pp. court was the Sixth case relied on the Union The second by California Insulations, 633 supra, in Forty-Eight
Circuit Court decision Appeals’ above, case on leading F.2d 1212. As noted Insulations was the Forty-Eight the that due to the continuing theory coverage, holding exposure diseases, nature of insurers cov providing cumulative asbestos-related erage at the time of the worker’s initial asbestos commencing exposure would held the indemnify be liable defend particles potentially insured manufacturer of asbestos third actions products underlying 674.) (Ante, the insured. at claims alleging bodily injury against p. Recog case, that an Forty-Eight liability Insulations was asbestos nizing products Union the court nonetheless concluded that because Sixth California Circuit Court of decision involved a CGL Appeals’ covering “single accident/occurrence, claims,” the basic rationale continuing damage decision was continuous applicable trigger analysis being injury invoked for the at Union. ongoing issue property California Union, 478.) (California supra, 145 at p. Cal.App.3d Union court’s aspect holding 19We do not endorse that both of the insurers California jointly severally liable for the full amount of damage occurring during were that case Union, 478.) policy period. (California supra, Cal.App.3d p. successive 145 at Allocation indemnify of the cost of indemnification once several insurers have been found liable to deteriorating portion continuing injury progressively insured for all or some of a damage requires application of terms and limitations principles express of contract law the (See Corp. Keene v. Ins. Co. North America various insurance on the risk. Insulations, (D.C. (Keene); Forty-Eight 1981) Cir. 667 F.2d App.D.C. 156] supra, 1225.) p. 633 F.2d at Keene, relied on Union court was supra, The third case by California Insulations, F.2d 1034.20Like Keene was a Forty-Eight products liability in which the manufacturer of insulation asbestos products case containing an action for a a determination of the brought declaratory judgment seeking of four insurance carriers to defend and it obligations indemnify liability litigation. Holding that “occurrence” which pending products took before the manifestation of bodily injury substantially caused place (asbestosis), ultimate the District of Columbia Circuit Court of found each insurer on the risk between the initial and the Appeals exposure manifestation of disease to be liable for indemnification and potentially 1046-1047; Union, (667 costs. F.2d at defense pp. California 478.) at The Keene court based its rationale on the primarily expectations and the it as inherent in the standard CGL parties ambiguities perceived to be policy language. Applying presumption requiring ambiguities insured, construed in favor of the the Keene court reasoned that Keene (the insured) could have that it was cov Corporation reasonably expected ered future liabilities: “A latent unknown and unknowable to injury, insurance, must, least, Keene at the time it be covered [liability] purchased (Keene, an insurer on the risk at the time it manifests itself.” asbestosis, F.2d at In the context of a disease like progressive where the medical indicates that the disease can evidence mani develop *34 fest as late as 20 or more after years continuous exposure, injury trigger Keene, of in consistent with the of potential coverage adopted expectations insured, fixes the of the at the of initial of timing point exposure third at the time of manifesta injured party injury-causing agent, tion of of symptoms bodily injury, development progres time. of the in in sion disease between those The Keene court also points to mean broadly bodily injury interpreted “any part single injurious (Id. 1047.) that asbestos-related diseases entail.” at process Co., Fireman’s Fund Ins. Co. v. Aetna & 223 Casualty Surety supra, (Fireman’s Fund) 1621 next deci was the California Cal.App.3d appellate sion Union to address the postdating directly question coverage California third CGL continuous losses under successive property damage party Gruol, 427], 20Although postdating supra, generally has Wn.App. 11 P.2d Keene 632 [524 regarded injury trigger adopt been as one of the first cases to a continuous bodily injury in analysis, deteriorating at in progressively least the context claims of (See, Liability e.g., Aspinwall, asbestos Insurance to Applicability cases. General (1984) Disposal 755.) in Waste 57 As the court Hazardous So.Cal.L.Rev. California recognized, case, although Union Keene of that decision is was an rationale asbestos the basic applied in the question trigger instructive on the of what should be of potential progressively damage. context of continuous or deteriorating property
683 Fund, insured a contractor that carriers two liability In Fireman’s policies. of a hotel. The first the exterior facade restoration of undertaken the had defects risk when construction Fund) (spalling was on the (Fireman’s carrier discovered; carrier first the second facade) were of the restored and cracking and when their cause when the defects on the risk (Aetna) progressed was Fund, 1623.) at On 223 (Fireman’s Cal.App.3d supra, known. became facts and pur based upon stipulated for summary judgment, cross-motions v. Landmark Ins. Co. of Home Ins. Co. on the rationale rely porting (a (Home) party property Cal.Rptr. 1388 Cal.App.3d 277] first insurers, successive the first of two that only insurance case holding of the property damage, manifestation the risk on the date of first carrier on Fireman’s Fund claim), determined the trial court was liable for the entire award for an arbitration the contractor to indemnify was solely responsible (the same court Court of it. The Fourth District Appeal returned against order, Fund’s Fireman’s Home) rejecting the trial court’s decided affirmed that case in was because that the of Home analysis inapposite argument third general insurance not coverage, party volved first party property Fund, at 1623- (Fireman’s supra, Cal.App.3d pp. insurance. liability third court standardized construing the Fireman’s Fund was Although CGL the court refused to the continuous injury trigger apply party policies, for third coverage analysis adopted party Union, Fund court 462. The Fireman’s supra, Cal.App.3d California of Cali observed that it had considered and already rejected reasoning Home, that cover and opined Union Cal.App.3d fornia essence, no third should policies, require under successive age which in the first party property different than that analysis applied short, court insurance context Home. In the Fireman’s Fund applied earlier in Home. manifestation which it had trigger adopted Fund, 1626-1627.) (Fireman’s The court pp. *35 the loss-in-progress indicated that the extent Home’s rationale rests on “[t]o 1627, rule, it, too, (Id. fn. is to third claim.” at fully p. applicable party that, omitted.) further And the Fireman’s Fund court reasoned “[l]ike [i.e., Home, in where the claimant situation here the issues arise in a context loss allocating been the case involves fully has satisfied and insured] is, therefore, Fireman’s to Contrary between insurers. Home dispositive. Co., contention, 48 Casualty supra, Fund’s Fire & Garvey v. State Farm (Id. Cal.3d 395 does not the result.” at change p. our admonish-
The Fireman’s Fund that court made in its opinion clear in first Garvey, party property ments respecting differences between insurance, court’s determination third party liability had on little impact 684 earlier in Home to the third
to its trigger coverage analysis party apply “In insurance case before it. The Fireman’s Fund court liability suggested: Court held it is the causation Garvey, Supreme ‘important separate be must in a first loss case from that which analysis necessary party property & Farm Fire undertaken in a third tort case.’ v. State (Garvey party liability Co., 406, However, added.) although 48 at Cal.3d italics Casualty supra, p. insurance there are differences between important property damage issues analysis—the insurance—not the least of which is causation holds nor do not even involve causation. neither remotely Garvey here cases are that all in first suggests legal developed party inappli- principles Thus, based solely cable in third cases. even if Home’s rationale party not), (which does not Garvey first insurance it upon party provisions Fund, (Fireman’s its prohibit application liability coverage.” supra, at italics Cal.App.3d original.) Fund court failed to discussion Fireman’s engage any meaningful
of what set first insurance from third factors party property policies apart Nor the court set forth did party comprehensive liability policies. definition of its or make the standard opinion, any attempt analyze, “occurrence” found in the standard form CGL Finally, apparently policy.21 terms, that, satisfied with its earlier observation in Home its section “[b]y both codified loss-in-progress applies first-party [property [the rule] (Home, cases” third-party [liability insurance] insurance] 4), the court made no further at fn. Fireman’s Fund Cal.App.3d rule differ in might effort to how analyze application loss-in-progress the third insurance context. party liability one California decision followed Fireman's Fund in
Only reported holding the manifestation in cases of continuous trigger coverage applicable third under successive progressively deteriorating CGL In Pines La Jolla Homeowners Assn. v. Industrial Indemnity policies. 53], (1992) 5 the Fourth District Court Cal.App.4th Cal.Rptr.2d Fund, in Fireman’s once on its earlier Appeal again, relying holding be concluded a manifestation should theory under coverage applicable applied determining trigger potential from con- resulting several CGL for continuous (5 721-722.) struction defects. Cal.App.4th pp. clause,” “insuring opinion 21The Fireman’s Fund does set the standard forth provides insured all sums which the company pay which that: “The will behalf of the on *36 ‘bodily injury’ of or legally obligated damages insured shall become because pay as ” (Fireman’s ‘property damage’ by an ‘occurrence.’ to which this applies, insurance caused
Fund, supra, policy of the standard Cal.App.3d portion at Citation to this language hardly analysis. support serves to Fund court’s Fireman’s Co. Court of decided Zurich Ins. the Fourth District Appeal Most recently, declaratory a (Zurich). Zurich involved Ins. Co. (Cal.App.) v. Transamerica action, succes of insurers who liability one four brought provided relief a to determine of construction company, sive periods regard insurer with of each indemnity obligations defense and respective pertaining actions the company three construction defect underlying against to a condominium project. of the rationale District Court of Zurich repudiated
The Fourth Appeal Fund, 1621. decision in Fireman’s Cal.App.3d its earlier in the first rule court that manifestation acknowledged developed “[t]he board,” that not context is across applied party appropriately “[i]n- context, stead, injury’ a liability ‘continuing trigger this party] [third used, . . . continued . . . should be because occurred that a of The court the manifestation several years].” period “[n]oted [over on first insured will be site to observe the rule that the party presupposes However, it is in the nature of rule. third damage; discovery party in their any discovery do not contain occurrence sections require- of an action after manifes- ment or a limitations period filing policy from “rather narrow tation of a defect.” The Zurich court also retreated Fund in connection with definition of Fireman’s espoused contingency” rule, and reached new opinion’s discussion loss-in-progress of conclusions that rule third applicability party liability regarding cases, with consistent the conclusions we reach today respecting (Post, 689-692.) rule to applicability pp. this case. Fund, the extent the decisions in Fireman’s Accordingly, 1621, and Pines La Jolla Homeowners Assn. v. Industrial are with the Indemnity, supra, inconsistent Cal.App.4th principles herein, discussed hereby those decisions are disapproved. 5. practical adoption Various considerations support further the continuous the third claims injury trigger party under deteriorating damage injury brought continuous progressively
the CGL case. policies in this
Our
CGL
foregoing
language,
incorpo-
review of
standard
rated into
as the relevant cases and authorities
as well
policies,
that have construed
us to conclude that the continuous
lead
that language,
for claims of continuous or
should be
injury
adopted
trigger
under
third
progressively
deteriorating damage
in issue in
this case.
*37
language supports applica-
We have shown why
express policy
that,
tion of the
We have
continuous
injury trigger
coverage.
explained
briefs,
to
in its
it has
been understood
contrary
long
Admiral’s arguments
or
damage
that the
for
liability coverage
standard form CGL policy provides
accident,
injury occurring
the
which results from an
or
during
policy period
from continuous or
conditions. There is no
repeated exposure
injurious
sudden,
event,
that the
act or
or the
requirement
accidental damage-causing
within
conditions
rise to the
or
themselves occur
giving
damage
injury,
in order for
to arise. We have also
policy period
liability coverage
potential
within the standard definition
how retention of the term “accident”
explained
of occurrence
in the “occurrence-based”
drafted after
rule,
was never intended to
intended to serve the one-occurrence
impose
accident, event,
or conditions occur
that
damage-causing
requirement
insurer
within the
We have noted the settled rule that an
on
policy period.
or
the risk when continuous or
deteriorating damage
injury
progressively
insured for the
first manifests
itself remains
indemnify
obligated
And we have reviewed the ratio-
of the
or
entirety
ensuing damage
injury.
Union,
462,
and the decisions
nale
California
therein, which,
with the
of more recent
weight
cited and relied on
together
authorities,22
been
conclude
that where successive CGL
have
highest
consistent with the conclusions
22Decisions of the
courts of other states which are
injury trigger
today—rejecting
trigger
adopting the continuous
we reach
a manifestation
continuing
progressively deteriorating bodily injury
property
for claims of
Owens-Illinois,
damage arising
policies—include
under third
CGL
Inc. v. United Ins.
974, 990,
(1994)
(New Jersey
unanimously
Court
Supreme
Co.
687 that is continuing progres- damage and property bodily injury purchased, is potentially than one policy period more deteriorating throughout sively those during periods. in effect covered all policies third differs from insurance how first party we have Lastly, explained rationale why fundamental in respects, insurance many party liability 674, Prudential-LMI, the mani- 51 Cal.3d adopting of our holding cases, if would be inapposite for first party of coverage trigger festation coverage. insurance liability of third party in the context applied should injury trigger coverage that the continuous Our conclusion in this case is also conformity CGL policies to the third party be applied Prudential-LMI, In considerations. several important with 699, observed, reason favoring adoption as one policy we Cal.3d page cases, in first property of coverage party manifestation trigger can be made predictable of the insurer “the underwriting practices insured with the loss once its contract is not liable for a because the insurer contract term.” its of loss occurred unless the manifestation ends favoring predictability that the Admiral here suggests general policy affected by adoption reserves will be negatively underwriting practices We insurance context. in the third CGL continuous injury trigger of a Admiral’s concerns. A number of factors undercut disagree. or “other
First,
excess
policies
aside the
(multiple)
leaving
availability
clauses,
the manner
decreeing
and absent
language
insurance”
express policy
insurers, the
successive
among
of contribution
apportionment
among
the cost
considerations
spread
courts will generally apply equitable
v.
(See,
CNA Casualty
the several
and insurers.
e.g.,
of California
598,
(1986)
Cal.Rptr.
619-620 [222
Seaboard
Co.
Surety
Cal.App.3d
(1981) 126
276];
Ins. Co.
Lines
Surplus
Ins. Co. v.
Olympic
Employers
908].)
601-602
Cal.Rptr.
Second,
form occurrence-based
reserves for the standard
establishing
the insurance
which
accident-based policies
CGL policies
replaced
shown,
the intended scope
aware of
fully
as we have
industry,
apportionment
policies, and actual
continuously
period
by different
insurers or
over a
covered
determine,
injury trigger may be
injury
impossible
the continuous
of the
is difficult or
insurers.”).
liability among
employed
equitably apportion
trigger
in environmental
recently applied
courts
have
a continuous
Other
which
occurrence-based
was claimed under standardized
cases for which
(St.
Co. v.
Fire & Marine Ins.
Paul
Oregon
Appeals
Court of
include the
260, 264-265]),
Creosoting
Co.
P.2d
McCormick & Baxter
Ore.App.
689 [870
Co. (Harleysville Mut. Ins.
of Delaware
the United States District Court for the District
law]).
County
(D.
1993)
Delaware
Sussex
Supp.
[applying
Del.
831 F.
with the
coupled
specific provision providing
of the new policies,
to conditions causing property
for continuous or repeated exposure
Indeed,
standard occur-
history
drafting
bodily injury.
did the drafters understand
reflects that not only
rence-based CGL
*39
conditions
or
to injurious
to mean an accident
exposure
term occurrence
the
policy period, they
or
damage
injury
in the occurrence
resulting
of
establish-
the
rejected
suggestion
language
considered and
specifically
the
be
into
coverage
incorporated
or
of
discovery trigger
a manifestation
ing
the
the
relied on
Among
rejecting
form CGL
reasons
policy.
standard
limitations
definitions in the cover-
into the standard
of such
incorporation
of
difficulty
applying
were several stated
concerns:
equitable
clauses
age
or
in cases of continuing damage
injury
limitations
requirements
such
of who would
of successive
uncertainty
over the course
policy periods,
(i.e.,
or third
the insured
party
the burden of a discovery requirement
bear
arbitrariness,
all
of
claimants),
from the carrier’s perspective,
telescoping
the fear
into a
in a
case
injury
single policy period,
continuing
(See Amer-
such an
could be disadvantaged by
approach.
that policyholders
1485,
Co.,
1501-
Mut. Ins.
565
supra,
F.Supp.
ican Home Prod. v. Liberty
mod.,
hear-
committee
joint
Finally, transform it unduly CGL would to an occurrence-based coverage devel- were made” Claims made policies specifically into a “claims policy. coverage single policy limit an insurer’s risk by restricting to oped insured, without regard against effect at the time a claim asserted the carrier to establish thus timing injury, permitting inflation, jury upward-spiraling reserves without regard possibilities awards, The insur- after the of tort liability policy period.24 enlargments the area of made” into introduction of “claims ance industry’s that, encourages insurers to monitor risks suggested “because it all 23One commentator has appears to be the most efficient premiums, trigger rule change appropriate the continuous Litigation, Developments Waste (Note, in the Law—Toxic doctrine for toxic waste cases.” supra, Harv. L.Rev. at predict accurately to the limits policies beneficially permit insurers more 24“Claims made” undertaken, resulting the risk needed to accommodate exposure premium of their and the Employ (See, e.g., charged policy. for an premiums lower than are occurrence-based Pacific 779].) Superior (1990) Cal.Rptr. ers Ins. Co. v. Court Cal.App.3d 1359-1360 [270 Consol., Inc. v. (VTN “discovery” policy. policy is a Another name for a “claims made” 172].) made” Cal.Rptr. “Claims Northbrook Ins. Co. Cal.App.3d 891 [155 insurance, liability initially professional years ago, arose more than 20 in the field understand- itself attests to the industry’s insurance comprehensive CGL policy provides the standard occurrence-based ing or manifested until after not be discovered that may or damage reflected in That understanding clearly expiration policy period. to offset be for occurrence-based coverage that must paid higher premiums Court, v. Ins. Co. (Pacific Employers Superior increased exposure. 1359-1360.) We with the conclusion of the agree pp. Court of a manifestation trigger below that Appeal apply would be to rewrite effectively occurrence-based Montrose, Admiral’s contracts of with the broader transforming and more occurrence-based CGL into claims made expensive Ins., 610 A.2d at (Accord, Mut. County pp. policy. Harford Harford 294-295.) *40 of coverage We therefore conclude that the continuous injury trigger claims of continuous or should be to the third applied underlying occurred during or have progressively deteriorating damage injury alleged Where, here, successive CGL are policy periods. policy periods and which is continuous or implicated, bodily injury property damage several is progressively deteriorating throughout policy periods potentially covered all in effect those periods.
III Loss-in-Progress Rule (sometimes on the rule also referred to as Relying loss-in-progress rule), the known loss Admiral contends there was no potential liability for, Montrose, in no to defend consequently duty String- cases. We disagree. fellow 22
Section defines “insurance” as a “contract one under whereby loss, takes to another from a indemnify against damage, liability arising adversely affecting because underwriters were concerned that occurrence-based was underwriting process. negligence giving malpractice rise to a claim Because omission, not years negligent professional often discoverable until after the act or carriers, exposure unpredictable lengthy in an “tail” effort reduce their to an lawsuits, (Pacific Employers Superior Ins. Co. policy. shifted to the “claims made” Court, 1358; (1988) p. Insurance Law: A at see also Keeton & Widiss Practices, Doctrines, 5.10(d), Legal Principles, Guide to Fundamental and Commercial § 598.) general field of concept subsequently The “claims made” extended into the liability coverage, and in ISO issued both a revised standard form occurrence-based (now standard commercial general liability policy) referred to as a and a new policy. form CGL “claims made” added.) Section (Italics 250 provides event.” or unknown contingent event, future, whether which may or unknown past contingent “any interest, create a liability against a an insurable damnify person having or. (Italics him, of this code.” against, subject provisions be insured may before a loss is “known or added.) apparent” when a Accordingly, issued, (Prudential-LMI, 51 Cal.3d there is no coverage. insurance is fn. & or “contingent” that the “event” be “unknown” Critically, requirement in sections 22 and 250. We in the rules embodied is stated the disjunctive an insurable risk is that is to establish required that all long ago recognized be damage might be Even where subsequent that there some contingency. “ inevitable, not alter the fact that at the ‘such does deemed “inevitability” into, the event was only of insurance was entered time the contract term of the not occur within the or risk that contingency might might ” (Sabella v. Wisler 59 Cal.2d Cal.Rptr. policy.’ 889], (Sabella).) italics in P.2d original Sabella, residence was to the insured’s
In the insurer claimed that damage occurred as a result thus not covered because “the damage not fortuitous and (includ in the soil conditions of forces inherent” underlying operation *41 installation of a defective in the fill and workmanship ing uncompacted broke). insurer’s conten Sabella rejected sewer outflow that ultimately a ‘risk’ “not fortuitous and hence not properly tion that loss was 34.) (59 supra, Cal.2d at on Relying Snapp, of insurance.” p. subject 827, the damage even if it were inevitable that Sabella held that house, of the the loss have at some time during ownership would occurred time the or risk at the contingency covered because such loss was a was 34; at see also (Sabella, 59 Cal.2d supra, p. entered into the policy. parties Prudential-LMI, 696.) 51 Cal.3d at supra, p. Admiral, of the Montrose’s knowledge problems
According Admiral to the points In coverage. particular, site defeats Stringfellow 31, PRP from the EPA on August letter fact of Montrose’s receipt 1982, four successive CGL of the first of Admiral’s prior inception PRP notice is just issued to Montrose. Admiral misses point. policies Montrose a “poten that EPA considered what its name suggests—notice action to recover true that an While it be may tially” responsible party. date, in that Montrose’s costs was inevitable as of that cleanup that and the fact There action was not a was still a certainty. contingency, would be sued that it Montrose knew it was more than not probable otherwise) is not the potential to defeat (successfully enough 34.) Cal.2d at (and, defend). (Sabella, consequently, duty Moreover, since Admiral’s did not to cover policies purport effect, that occurred to the time those went into prior and only those (or covered and bodily injuries damages continuing bodily injuries from “continuous or damages resulting conditions”) repeated exposure might that occur in the policy periods, the existence future extent of such were unknown and prospective injuries clearly contingent, from Montrose’s at the time Montrose first its standpoint, purchased from Admiral.
Courts which have addressed the issue have loss-in-progress recognized at which a threat of loss is point so immediate that it “[t]he may fairly be said that the loss was in and the insured knew progress of it at the time for or issued is applied (Sentinel a of fact.” generally question Co., 920; Ins. Co. v. First Ins. 875 P.2d at Inland Waters Pollution (6th 172, Control v. National 1993) Indeed, Union Cir. 997 F.2d that, several courts have observed in the context of third cover a age, or known loss loss-in-progress contention can seldom be successfully relied on an insurer to duty because the factual defeat defend uncertainties needed to be resolved in order to establish the defense gener cannot be ally resolved on a motion for (see summary judgment Nestle Foods v. Corp. (D.N.J. Aetna Casualty 1993) Sur. Co. 842 F.Supp. 130-131), or until the insurer conclusively establishes no possibility (see American Bumper & Co. Mfg. v. Fire Ins. Co. Hartford N.W.2d Mich.App. 845-846]). (See also Casu Maryland Co. alty (W.D.Wis. Wausau Chemical 1992) Corp. 809 F.Supp. 697-698 contention [insurers’ “principle fortuity” barred coverage due to insured’s knowledge “completed” “highly likely” property before purchase on policies precluded summary judg ment motion given existence of facts”].) “disputed
In the Court of
Devices,
Appeal, Admiral relied on Advanced Micro
Inc. v.
Great American Surplus
(1988)
Lines Ins. Co.
Although loss-in-progress between, to, sections 22 and 250 draws no distinction and thus is applicable first insurance and third insurance party property party liability policies, inherent in the distinctions two result in types coverage necessarily a when the rule analysis different is insurance applied context. As we have first insurance explained, party cover policies provide context, to the insured’s own In that insurance age property. cannot be obtained for which occurred has because the already 22, 250.) absence of risk Third (§§ insur precludes coverage. party liability contrast, ance afford which the insured shall policies, “sums become as because legally obligated pay damages bodily injury context, In the cannot be property damage.” liability insurance obtained for a “known liability.”
Where, here, there is about the uncertainty imposition of established, liability and no there is an insurable “legal obligation yet pay” (Austero risk for which be under a third coverage may sought party policy. 1, 27-28, Cas. Co. National Cal.Rptr. 653] fundamental contractual of the insurer in the third case is to duty party [“The such be pay judgments as shall recovered the insured . . . .” “In the against usual first case the the insurer is due under promise pay money, event, to the insured the risk of which policy, upon happening deleted, has added.)]; been insured italics new italics against.” (Original Keene, 667 F.2d at a CGL “the uncertain loss is the policy, [in & Aetna Cas. Sur. Co. v. Condict possibility incurring legal liability”]; (S.D.Miss. 1976) 417 F.Supp.
The United States Court of Second Circuit’s decision in Appeals, Johnstown, (2d 1989) City N.Y. v. Bankers Standard Ins. Cir. 877 F.2d case, instructive its facts. In that particularly given prior analogous issue, (the insured) to commencement of the term in liability policy city was aware that releases from its have dumpsite may polluted surrounding had been “landfill groundwater, notified the EPA that the posed *43 ” hazard,’ environmental ‘potential and had sued a “whose by family been well (Id. had been at reportedly contaminated the landfill.” pp. by Johnstown, 1151-1152.) The Second in City Circuit held Court of Appeals N.Y., that because future to third liability parties injury resulting rule would not bar remained damages contingent, loss-in-progress coverage.25 that,
We therefore hold in the context of continuous or progressively or insurable under a third deteriorating property damage bodily injury party as there remains about policy, long uncertainty occur and the liability may policy period imposition upon insured, and no to third claims has been estab- legal obligation pay party lished, there is a insurable risk within the of sections potentially meaning and 250 be for which Stated the loss-in- coverage may sought. differently, will progress rule not defeat for a claimed loss where it yet had established, be at the time the insurer entered into the contract of insurance with the that the insured had a policyholder, legal obligation pay damages to a third in connection with a loss. party
Montrose’s
PRP
letter
to its
receipt
prior
purchase
did not establish
any
legal obligation
pay damages
cleanup
site,
costs in connection with the contamination
at
such as
Stringfellow
would
rule and
implicate
loss-in-progress
Montrose from seek-
preclude
to obtain the
ing
The PRP letter did no more
liability coverage sought.
than
Montrose on notice of the
formally place
asserted
government’s
position
initiate
that could result in
proceedings
(See
subsequent findings
orders.
Const,
v. Indus.
Spangler
(1990)
Accordingly, conclude at least on the facts heretofore alleged action, this declaratory relief rule does not bar loss-in-progress potential defend, relieve Admiral of coverage, its under the duty issued Admiral to Montrose.
IV
Conclusion we Although have determined that the continuous of cover- injury trigger case, should be age in this applied and that the rule does not loss-in-progress Supreme 25The Hawaii Court has injured likewise concluded that even where an third insured, has filed a lawsuit against or claim any degree “if the insured’s is in rule, contingent, there is an insurable risk” meaning loss-in-progress within the (Sentinel Co., Ins. Co. v. First Ins. omitted.) 875 P.2d fn. *44 defend, serve to defeat the potential Admiral’s we coverage duty hasten to add that resolution of these issues Montrose’s favor would not to mark the end of the in this appear coverage-related complex inquiries litigation.
doWe not herein to reach whether under purport the merits of Admiral’s for the in the five policies and damage alleged underlying ante, (See lawsuits against Montrose can be established. at ultimately 2.) fn. Whether the were in damages injuries fact “continuous” is alleged itself a matter for (See, final determination trier of fact. v. by e.g., Carey Canada, Inc. (D.D.C. 8; Union 1990) Ins. Co. 748 F.Supp. California Publications v. Triangle (E.D.Pa. 1989) Mutual Ins. Co. Liberty 703 F.Supp. 367, 371.) effect, Nor do we determine the if exclusions any, any contained in Admiral’s on the defend or the ultimate issue of duty or reach the merits of coverage, affirmative defenses to any be available to might Admiral. Montrose,
As conceded by factual remain questions surrounding circumstance of Montrose’s of the PRP letter and its receipt failure alleged to advise Admiral of the same. An insured must make all required disclosures at the time it fact applies that the loss-in- coverage; rule does not defeat progress does not itself obviate the possibility of a [“Concealment, fraudulent finding concealment. (§ whether unintentional, intentional or insurance”]; entitles the to rescind injured party 332-337; omission, intentional and fraudulent on [“An §§ part § insured, one to communicate information of matters proving tending prove rescind”].) of a falsity warranty, entitles the insurer to We do not what, view if express any concerning anything, ought to have been disclosed Montrose to Admiral at the time of of the initial purchase policy, renewal, thereafter effect, each nor upon do we consider the if validity of the any, exclusion pollution contained in the last of provision short, four issued to Montrose. In we leave all factual necessary and the ultimate findings, question existence of for deter coverage, mination (Prudential-LMI, forum below. appropriate 51 Cal.3d 3; fn. Garvey, supra, Cal.3d at p. affirmed, of the Court of judgment and the matter remanded Appeal for further consistent proceedings with the views herein. expressed
Mosk, J., Kennard, J., Arabian, J., J., J., George, Werdegar, concurred.
695 BAXTER, I concurin the not in everything judgment, though J. For I do not is as plain believe the majority say. example, policy language com Montrose’s favor as the assert. Defendant Admiral’s plaintiff majority “which (CGL) cover or general liability prehensive “occurrence,” but defined occurs as the result of a period” policy a are when this leaves uncertain which language implicated policy periods accumulates, “occurrence” harm or af that single produces progresses, Indeed, fects an number of as the over time. increasing persons majority this ‘a acknowledge, ambiguity spawned bewildering plethora “[has] ” about how CGL authority’ to cumulative or coverage applies progressive (Owens-Illinois, (1994) Inc. v. United Ins. Co. 138 injuries. N.J. 437 [650 974, 979], (1990) A.2d Gottlieb v. Newark quoting Ins. Co. 238 N.J. Super. 443, 445].) 531 A.2d [570 read,
What matters is that the coverage can be language plausibly harm, Montrose to mean that each increment suggests, whether to person which “occurs” property, a during particular is covered policy period then in effect. Unless that exceeds the insured’s interpretation reasonable objectively (See we must it. Bank coverage expectations, adopt 1254, (1992) 538, the West v. Court 2 Superior Cal.4th Cal.Rptr.2d [10 545]; 807, 833 P.2d AIU Ins. Co. v. (1990) Court 51 Cal.3d Superior 1253].) P.2d Cal.Rptr. [274
As an abstract I proposition, claims might question that the majority’s insurance, of CGL purchaser unlike the of first buyer insur casualty ance, may reasonably expect harm multiple-policy coverage progressive (Cf. from a arising source. single Prudential-LMI Com. Insurance v. Superior Court 51 Cal.3d 693-699 P.2d Cal.Rptr. 1230] However, (Prudential-LMI).) circumstances which particular produced the current standard CGL me that such an coverage language persuade is not expectation unreasonable.
As the the standard-form majority explain, in Admi- coverage language ral’s after an intense debate developed 1960’s within the about how to fair industry provide long-term “expo- sure” This debate injuries. no solution provided for all the attendant explicit But problems. two themes of to the issue before us did importance emerge from the drafting process.
First, the drafters a “manifestation of plainly rejected like injury” trigger, Prudential-LMI, that we for first adopted party policies favor of the more nebulous and undefined requirement “occur” while injury merely Second,
a was in effect. the drafters recognized by defining covered “occurrence” to include “continuous or to condi- repeated exposure (italics added), tions” and by on the time at making coverage dependent *46 “occurs,” which or had created of cover- they possibility limits, successive age to their combined by multiple policies, up the various harms over time from a continuous emanating single exposure. (See, (S.D.N.Y. American Home Prod. v. e.g., Liberty 1983) Mut. Ins. Co. 1485, 1500-1502, 760; affd. F.Supp. (2d 1984) as mod. Cir. 748 F.2d Elliott, see also The New Comprehensive General Policy, in Liability Liability (PLI, 12-3, 12-5; Obrist, Insurance 1968) Schreiber Disputes edit. The pp. New General Comprehensive Insurance Liability Policy—A Coverage Analy- (Defense sis 1966) Research Inst. Monograph so,
This I cannot conclude that the being exceed the majority objectively reasonable of either expectations insurer or insured by interpreting to mean ambiguous policy language that “continuous from injury” exposure all triggers in effect while coverage by the harm I progressed. therefore feel compelled construction. accept
I also that the agree Code, (Ins. rule statutory “loss-in-progress” §§ 250) does not eliminate conclusively defend the duty help various suits Montrose. But the contamination-injury against majority appear to offer two conclusion, reasons for this separate I find one of them only persuasive.
The first majority suggest that because a CGL insures against the another, risk legal liability insurance of this kind bemay purchased for such any legal which then liability remains or “unknown.” If I “contingent” understand the a majority literal of this correctly, would application theory allow the purchase insurance for a liability tort completed up moment a final damage judgment imposed tortfeasor. upon
But the plain words of the loss-in-progress statutes suggest otherwise. Insurance “[ijnsurance Code section 22 provides is a contract whereby one loss, undertakes to another indemnify or against damage, liability arising from a or contingent (Italics added.) unknown event.” Insurance Code that, section 250 with provides irrelevant exceptions, “any or contingent event, future, unknown whether or which past may damnify person having interest, him, an insurable or create a liability against be insured may against (Italics clear, . . . .” added.) As both statutes make it is the event or events which produce itself, not which liability, merely must remain liability or unknown” at the “contingent time the insurance contract is created. California case on and I see no reason to cite no sound majority point, understanding from the clear Consistent with statutory language. my depart insurance, statutes that the “contingent loss-in-progress imply events, accidents, risk insured is real-world unknown” against hazards context, insurable loss or In the first damage. which produce party the insured relevant risk is direct or loss to casualty person damage, injury, context, act or In the third risk is the insured’s relevant property. another, omission, which to- and the or loss to resulting damage, injury, form the the insured. basis gether legal liability against Thus, insurance, once both act or omission purposes *47 are no or resulting legally compensable damage longer “contingent unknown,” no insurable risk remains. As the statutes it would suggest, contravene and the nature of the insurance contract to allow a public policy tortfeasor to wait he until has caused dam- already knowingly compensable before age his purchasing protection against resulting liability.
However, I with the that the rule agree does not majority loss-in-progress preclude liability unknown harm from a act or past future omission, even if the insured does know that some harm have may already arisen from his conduct. The insured cannot be held liable for his act or Thus, omission to the extent it causes harm. so except compensable long increment of any has not or is compensable damage injury yet happened, insured, unknown to the it remains a or unknown event . “contingent . . Code, such, which . . . create (Ins. him.” may liability against As § it is a insurable risk. properly
The various lawsuits Montrose each against new or allege progressive persons occurred of the Admiral period and Admiral’s motion for policies, did not summary judgment negate that such new possibility harm had occurred after its I coverage began. therefore concur in the conclusion that the rule does not bar loss-in-progress of these new potential coverage nor relieve Admiral of its injuries to defend duty Montrose these suits. against 31, 1995,
Respondent’s for a was denied petition and the rehearing August was modified to opinion read as above. printed