McMillin Scripps North Partnership v. Royal Ins. Co. of America

In this case the insured under a first party property insurance policy concedes it has not experienced any loss covered by the policy. Nonetheless, the insured argues the insurer should reimburse it for expenses it incurred in determining whether its losses were covered by the policy.

We find nothing on the face of the policy which provides for reimbursement of the investigation costs the insured is seeking. Accordingly, we affirm the summary judgment entered in favor of the insurer.

Factual and Procedural Background

1. 1986 Leak

Plaintiff and appellant McMillin Scripps North Partnership (McMillin) owns a parcel of land on Scripps Trail Drive in San Diego which it leases to the operators of a gasoline station and convenience store. On May 6, 1986, the lessees performed a precision test on the gasoline tank system and discovered a leak. The leak was repaired in September 1986 and thereafter the system passed all further precision tests.

2. 1988 Policy

On May 30, 1988, defendant and respondent Royal Insurance Company of America (Royal) issued McMillin a commercial property insurance policy which covered the year ending May 30, 1989. By way of a renewal McMillin…

Dissenting.—In 1988 Royal issued McMillin a commercial property insurance policy which, among other things, provided coverage for damage caused by the discharge of pollutants if the discharge resulted from any of a varied list of specific factors including fire, vandalism, falling objects or water damage. McMillin does not dispute that the reports furnished to Royal established that the leak which caused the contamination occurred in or before 1986. Instead it argues that no fuel spillage was detected in 1986 and the loss only manifested itself in 1988 when odors were first noticed. 1 (See generally Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674 [ 274 Cal.Rptr. 387 , 798 P.2d 1230 ].) It correctly asserts that as of January 1990, the exact cause of the leak had not been established and that Royal’s investigation had not reasonably ruled out the possibility of a covered loss. (See generally Garvey v. State Farm Fire & Casualty Co. (1989) 48 Cal.3d 395, 406 [ 257 Cal.Rptr. 292 , 770 P.2d 704 ] [burden is on the insurer to prove a claim is excluded].)

In the context of the foregoing, the majority acknowledge that an insurer has a statutory obligation to…

In this case the insured under a first party property insurance policy concedes it has not experienced any loss covered by the policy. Nonetheless, the insured argues the insurer should reimburse it for expenses it incurred in determining whether its losses were covered by the policy.

We find nothing on the face of the policy which provides for reimbursement of the investigation costs the insured is seeking. Accordingly, we affirm the summary judgment entered in favor of the insurer.

Plaintiff and appellant McMillin Scripps North Partnership (McMillin) owns a parcel of land on Scripps Trail Drive in San Diego which it leases to the operators of a gasoline station and convenience store. On May 6, 1986, the lessees performed a precision test on the gasoline tank system and discovered a leak. The leak was repaired in September 1986 and thereafter the system passed all further precision tests.

On May 30, 1988, defendant and respondent Royal Insurance Company of America (Royal) issued McMillin a commercial property insurance policy which covered the year ending May 30, 1989. By way of a renewal McMillin extended the coverage through May 30, 1990. The policy…