A. C. Label Co. v. Transamerica Insurance

Defendant issued a comprehensive general liability (CGL) insurance policy to plaintiffs which was in effect from May 1981 to May 1982. Plaintiffs purchased a parcel of real property in 1984, and a cleanup and abatement action was brought against them in 1987 for groundwater *1191 contamination on that real property which had begun in 1967. In 1992, defendant refused to defend or indemnify plaintiffs in the cleanup and abatement action. Plaintiffs brought a breach of contract and bad faith action against defendant in 1993 based on defendant’s refusal to defend and indemnify. Defendant’s demurrer was granted without leave to amend, and judgment was entered in favor of defendant. On appeal, plaintiffs claim that the trial court erred in granting the demurrer because coverage under the CGL policy was “triggered” during the policy period. We disagree and affirm the judgment.

Analysis

“On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. . . .” (Aubry…

I dissent.

The question presented by this case is simply stated: for purposes of the duty to defend, does a 1981-1982 comprehensive general liability (CGL) policy cover plaintiff for a 1987 suit alleging 1981-1982 groundwater contamination cleanup liability unknowingly transferred to and assumed by plaintiff via a 1984 purchase of real property?

The majority focuses on plaintiff’s purchase of the real property and misconstrues plaintiff’s contention into a claim that an insurer should be hooked “after the fact.” It then makes new law in pronouncing that, for CGL coverage to be triggered, an insured must be theoretically liable during the policy period. It then gives as the rationale for this new law no more than the reasonable-expectation-of-coverage rule of construction. I disagree with this focus and analysis.

CGL policies insure people, not property. Thus, the focus in a CGL coverage case is on the insured, not the insured’s property. Plaintiff’s purchase of the real property in question is therefore, at best and if necessary, a secondary part of a coverage analysis.

As in any type of coverage case, the analysis whether coverage exists in this case necessarily begins with…

Defendant issued a comprehensive general liability (CGL) insurance policy to plaintiffs which was in effect from May 1981 to May 1982. Plaintiffs purchased a parcel of real property in 1984, and a cleanup and abatement action was brought against them in 1987 for groundwater contamination on that real property which had begun in 1967. In 1992, defendant refused to defend or indemnify plaintiffs in the cleanup and abatement action. Plaintiffs brought a breach of contract and bad faith action against defendant in 1993 based on defendant's refusal to defend and indemnify. Defendant's demurrer was granted without leave to amend, and judgment was entered in favor of defendant. On appeal, plaintiffs claim that the trial court erred in granting the demurrer because coverage under the CGL policy was "triggered" during the policy period. We disagree and affirm the judgment.

(1) "On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded...." ( Aubry…