Charles E. Thomas Co. v. Transamerica Insurance Group

The Charles E. Thomas Company (Thomas) appeals from a judgment in favor of its insurance company, Transamerica Insurance Group (Transamerica), determining Transamerica owed no duty under its comprehensive general liability policy to defend Thomas in an action seeking to recover for losses caused by a leak in an underground fuel tank. We reverse.

Facts and Proceedings Below

For purposes of determining Transamerica’s duty to defend, there is no dispute as to the material facts.

Thomas designed and installed sensors for detecting leaks in two 10,000-gallon fuel storage tanks at a facility belonging to Blue Cross of California. Blue Cross kept the fuel on hand to power emergency backup equipment at the facility. A contractor working on one of the underground tanks punctured it, causing approximately 8,000 gallons of diesel fuel to escape. The leaks went undetected because Thomas’s sensors did not work.

When it discovered one of its storage tanks was empty, Blue Cross reported the accident to the Los Angeles Fire Department. The fire department issued two violation notices to Blue Cross requiring it to perform specified remedial actions. We discuss these required remedial…