County of San Diego v. Ace Property & Casualty Insurance

Introduction

In this matter we must determine whether a nonstandard “excess” third party liability policy issued by Ace Property & Casualty Insurance Company (Ace) to the County of San Diego (County) affords indemnity coverage for expenses incurred by the County in responding to an administrative agency order requiring it to remediate environmental contamination, and for sums expended by the County to settle related third party property damage claims outside the context of a lawsuit.

In Certain Underwriters at Lloyd’s of London v. Superior Court (2001) 24 Cal.4th 945 [ 103 Cal.Rptr.2d 672 , 16 P.3d 94 ] (Powerine I), we held that under the wording of the standard primary comprehensive general liability (CGL) policy, the term “damages” limits the insurer’s indemnification obligation to “money ordered by a court,” i.e., a money judgment entered against the insured in a third party suit for damages. (Id. at pp. 960, 964.) We went on to conclude that the duty to indemnify does not extend to the costs of complying with a governmental agency’s environmental cleanup and abatement orders because such administratively imposed liabilities do not constitute “money ordered by a…

I concur in the judgment under the compulsion of Certain Underwriters at Lloyd’s of London v. Superior Court (2001) 24 Cal.4th 945 [ 103 Cal.Rptr.2d 672 , 16 P.3d 94 ] and Foster-Gardner, Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857 [ 77 Cal.Rptr.2d 107 , 959 P.2d 265 ], decisions from which I dissented and which in my view deserve reconsideration.

I concur in the judgment. We were not asked to grant review to decide whether Certain Underwriters at Lloyd’s of London v. Superior Court (2001) 24 Cal.4th 945 (Powerine I) and Foster-Gardner, Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857 , should be overruled, nor were these issues addressed by the parties. (Cf. Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 292 [ 250 Cal.Rptr. 116 , 758 P.2d 58 ] [noting the arguments of counsel and amici curiae that our decision in Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880 [ 153 Cal.Rptr. 842 , 592 P.2d 329 ] should be reconsidered].) I therefore concur under compulsion of the principles set forth in those cases. I am uncertain, however, of the soundness of these two decisions. (See Powerine I, supra, 24 Cal.4th 945, 975 (dis. opn. of Kennard, J.); Foster-Gardner, supra, 18 Cal.4th 857, 888 (dis. opn. of Kennard, J.).)

In my dissenting opinion in Certain Underwriters at Lloyd’s of London v. Superior Court (2001) 24 Cal.4th 945, 975 [ 103 Cal.Rptr.2d 672 , 16 P.3d 94 ], I explained why, in my view, the word “damages” in a standard comprehensive general liability insurance policy’s indemnity provision does not refer only to judgments rendered in judicial proceedings but includes also the costs of complying with an administrative order to mitigate and remediate the effects of environmental pollution. Although the policies at issue here are excess/umbrella policies rather than comprehensive general liabilities policies, that difference is not material to the issue presented here. Therefore, unlike the plurality, I would not limit the word “damages” in the indemnity provisions of these policies to money ordered by a court. Instead, I would hold that it includes expenses that the County of San Diego incurred to comply with the Regional Water Quality Control Board’s cleanup and abatement order.

*427 I agree with the plurality, however, that the insurer was not obligated to indemnify the county for its costs of settling the claims of adjoining property owners, in the absence of the insurer’s consent to…

John J. Sansone, County Counsel, William A. Johnson, Jr., and William L. Pettingill, Deputy County Counsel; Massie, Berman & Millerick, LaSala & Millerick, Michael F. Millerick; Latham & Watkins, David L. Mulliken and Christine G. Rolph, San Diego, for Cross-complainant and Appellant.

Anderson Kill & Olick, Alex D. Hardiman, William G. Passannante; Law Offices of Amy Bach and Amy Bach, Mill Valley, for United Policyholders as Amicus Curiae on behalf of Cross-complainant and Appellant.

Zevnik Horton and David S. Cox, Los Angeles, for ITT Industries, Inc., and Rayonier, Inc., as Amici Curiae on behalf of Cross-complainant and Appellant.

Daley & Heft, Solano Beach, and Margaret A. Hendrick, for California State Association of Counties as Amicus Curiae on behalf of Cross-complainant and Appellant.

Stanzler Funderburk & Castellon, Jordan S. Stanzler and William W. Funderburk, Jr., San Francisco, for California Cast Metals Association as Amicus Curiae on behalf of Cross-complainant and Appellant.

Crowell & Moring, Jonathan H. Pittman, Mark D. Plevin, Washington, DC; Chapin Shea McNitt & Carter, Edward D. Chapin, Maria C. Roberts, Shirley A. Gauvin, San Diego; Berman & Aiwasian and…