Topa Ins. Co. v. Fireman's Fund Ins. Companies

Will a good faith settlement between the issuer of a blanket excess liability policy of insurance and its insureds, with respect to an occurrence assertedly covered by the policy, bar the claim of the issuer of a second excess liability policy, which assertedly covers the same occurrence, against the first insurer, for contribution of a proportionate share of amounts the second insurer is obliged to pay under its policy? The trial court concluded that the settlement would bar the second insurer’s claim; the second insurer appeals. We disagree with the trial court’s conclusion and shall reverse its order dismissing the second insurer’s cross-complaint against the first insurer.

The record the parties have chosen to place before us does not provide all the factual details we might consider relevant, but for purposes of decision we take the following facts to be true.

The insureds, to whom we shall refer collectively as “Lohrey Enterprises,” were the owners and operators of a dry cleaning business. In the course of its operation Lohrey Enterprises accidentally released a chemical solvent known as perchlorethelene (or perc or PCE) into an unpaved alley behind its place of…