State v. Underwriters at Lloyd's London

Certified for Partial Publication. [*]

This is a coverage dispute between the State of California (the State) and four of its liability insurers. The insurers are All-state Insurance Company, Century Indemnity Company, Columbia Casualty Company, and Westport Insurance Corporation, to whom we shall refer collectively as Insurers. The dispute concerns whether Insurers are required to indemnify the State against liability for damage caused to third parties by the discharge of pollutants from the State's "Stringfellow Acid Pits" waste disposal site.

The trial court granted summary judgment in favor of Insurers, based on exclusions in their policies for liability based on pollution and on the discharge of pollutants into a watercourse. The State contends Insurers are estopped from asserting the pollution exclusion, and at any rate neither that exclusion nor the watercourse exclusion excludes coverage here. We reverse the summary judgment, because we conclude the record raised a triable issue whether the State sustained liability for discharge of pollutants that fell within the "sudden and accidental" exception to the pollution exclusion and did not fall within the…