Villa Los Alamos Homeowners Ass'n v. State Farm General Insurance

In MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th 635 [ 3 Cal.Rptr.3d 228 , 73 P.3d 1205 ] (MacKinnon), our Supreme Court determined that the standard pollution exclusion clause in a comprehensive general liability (CGL) policy was intended to exclude coverage for injuries resulting from events commonly regarded as environmental pollution. The court therefore rejected a broader, literal interpretation of the clause that would foreclose coverage for any and all injuries arising from harmful substances. (Id. at pp. 649, 653.) So construed, the court further held that it was unlikely a reasonable policyholder would think that the activity in question—namely, the normal but negligent spraying of pesticides around an apartment building in order to kill yellow jackets—was an act of pollution. (Id. at p. 654.)

Today we are asked to decide whether MacKinnon’s interpretation limiting the scope of the pollution exclusion in a standard CGL policy to environmental pollution also governs the interpretation of a comparable pollution exclusion in a first party property insurance policy. We conclude that it does.

*527 We must further decide whether the disturbing of asbestos during…