State of Cal. v. Continental Insurance

This case considers complex questions of insurance policy coverage interpretation in connection with a federal court-ordered cleanup of the state’s Stringfellow Acid Pits waste site. We initially address the “ ‘continuous injury’ trigger of coverage,” as that principle was explained in Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 655 [ 42 Cal.Rptr.2d 324 , 913 P.2d 878 ] (Montrose) and the “all sums” rule adopted in Aerojet-General Corp. v. Transport Indemnity Co. (1997) 17 Cal.4th 38, 55-57 [ 70 Cal.Rptr.2d 118 , 948 P.2d 909 ] (Aerojet), and conclude that the principles announced in those cases apply to the insurers’ indemnity obligations in this case, so long as the insurers insured the State of California during the property damage itself.

Because we conclude that the continuous injury trigger and all sums rule apply to the duty to indemnify here, we must also determine how best to allocate the indemnity duty among the insurers responsible for covering the State of California’s liability. As we explain, we conclude that the Court of Appeal below correctly applied the “all-sums-with-stacking” allocation rule. We therefore affirm the judgment of…