Montgomery Ward & Co. v. Imperial Casualty & Indemnity Co.

Plaintiff and appellant Montgomery Ward filed this lawsuit against four insurance companies, seeking a declaration of coverage and compensatory damages for breach of contract under certain comprehensive general liability policies issued from 1962 to 1976. Montgomery Ward sought coverage for defense and indemnity costs it had incurred because of alleged environmental contamination occurring over a number of years at three automotive service centers it operated in California. After disposing of certain issues by summary adjudication, the trial court dismissed all remaining causes of action in Montgomery Ward’s suit. The court ruled Montgomery Ward’s “self-insured retentions” (SIR’s)—the amounts of any loss for which Montgomery Ward retained responsibility under the terms of its policies, ranging from $50,000 to $250,000 for each policy—were the equivalent of primary insurance. The court then applied the principle that all primary insurance must be exhausted before any excess insurer has any obligation under an excess policy, thus requiring Montgomery Ward to exhaust its SIR’s under as many as 20 potentially applicable policies before any of the insurers had any duty to…