Hydro Systems, Inc. v. Continental Insurance Company, a New Jersey Corporation

Hydro Systems, Inc. appeals the district court’s grant of summary judgment against it in its action for breach of an insurance contract and breach of the covenant of good faith and fair dealing. This court has diversity jurisdiction over the appellant’s timely appeal. 28 U.S.C. § 1332 . We affirm the judgment of the district court.

BACKGROUND

Appellant Hydro Systems, Inc. (“Hydro”) manufactures fiberglass bathtubs at a plant located in Simi Valley, California. The manufacturing process involves three raw materials: fiberglass, gel coat and resin. Gel Coat and resin are chemical compounds consisting, in part, of a hydrocarbon known as styrene. During Hydro’s manufacturing process, gaseous styrene is liberated from the gel coat and resin and dispersed into the air through exhaust fans and stacks.

During the spring and summer of 1988, residents of a Simi Valley neighborhood (the “Greek Tract”) made complaints about the odors connected with the styrene emissions from Hydro’s plant. The complaints were made to Simi Valley officials and the Ventura County Air Pollution Control District.

On April 15, 1988, the City of Simi Valley Community Services Department, Code Enforcement…