Brian Chuchua's Jeep, Inc. v. Farmers Insurance Group

Brian Chuchua’s Jeep, Inc., and its shareholders, Brian and Kerstin Chuchua (Chuchua), filed an action against Farmers Insurance Group seeking coverage of cleanup expenses resulting from a leaking underground gasoline storage tank that had been damaged in an earthquake. Although the policy included earthquake coverage, the court found the pollution exclusion endorsement precluded coverage of the cleanup expenses and entered judgment for Farmers. Chuchua appeals. We reverse.

In 1984 Chuchua purchased business premises insurance, including earthquake coverage, from Farmers to cover its automobile dealership located in Placentia. In 1986 the policy was endorsed to add an absolute pollution exclusion. In October 1987 an earthquake centered in Whittier occurred, causing plate glass damage to Chuchua’s premises.

In 1988 Chuchua tested its underground gasoline storage tank, which had been installed in 1974, and discovered it was leaking. The tank was removed and a crack was discovered. Chuchua replaced the tank and was required to engage in extensive and expensive toxic waste cleanup activities. After having the tank tested, Chuchua determined the crack was caused by the…