State of California v. Superior Court

In this matter we are asked to determine whether or not the State of California (hereinafter State or petitioner) owns all of the groundwater present under the surface of the State. We conclude that it does, but that its “ownership” is not necessarily such as to trigger an “owned property” exclusion in a policy of liability insurance. Accordingly, we set aside the trial court’s ruling that the “owned property” exclusion applies, and remand for further proceedings on the question.

This action has its genesis in the State’s maintenance and/or operation of a toxic waste facility commonly known as the Stringfellow Acid Pits. In related litigation, the State has been found liable for massive damages related to environmental cleanup costs. In the hope of covering these enormous expenses, the State has turned to real parties in interest, the issuers of various insurance policies arguably covering the State’s liability. Real parties in interest have balked. In the instant litigation, the State seeks declaratory relief with respect to the insurers’ duties to defend and indemnify it in the related actions, and also seeks damages based on a number of versions of breach of the…