1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 ARROWOOD INDEMNITY COMPANY, a No. 2:21-cv-00397 WBS JDP Delaware corporation, formerly 13 known as ROYAL INSURNACE COMPANY, and successor to ROYAL 14 GLOBE INSURANCE COMPANY, ORDER RE: CROSS MOTIONS FOR

SUMMARY JUDGMENT

15 Plaintiff, 16 v. 17 CITY OF WEST SACRAMENTO; and ROES 1-50, inclusive, 18 Defendant. 19

20 ----oo0oo---- 21 22 This is an insurance coverage dispute concerning 23 whether plaintiff Arrowood Indemnity Company (“Arrowood”) has an 24 obligation, under its duty to indemnity to pay a Stipulated 25 Judgment against its insureds in a related action, City of West 26 Sacramento v. R and L Business Management, 2:18-cv-900-WBS-JDP 27 (the “R&L Action”). Before the court are the parties’ cross 28 motions for summary judgment. (Docket Nos. 41, 48.) 1 I. Factual and Procedural Background 2 As detailed in the court’s previous order on the City 3 of West Sacramento’s (the “City”) Motion to Dismiss, (Docket No. 4 21), the City filed an environmental enforcement action against R 5 and L Business Management (“R&L”) as the successor in interest to 6 Stockton Plating, Inc., John Clark, and the Estate of Nick Smith, 7 Deceased, among others, to address environmental contamination at 8 and emanating from 319 3rd St., West Sacramento, California (the 9 “Site”). (Pl.’s First Amended Complaint (“FAC”) at ¶ 13 (Docket 10 No. 9).) On March 10, 2021, the court entered a stipulated 11 judgment against the R&L defendants in favor of the City. (See 12 id., Ex. F at 16-139.) 13 On March 3, 2021, Arrowood filed this suit seeking a 14 declaration that it has no obligation to satisfy the stipulated 15 judgment because the four insurance policies it and its 16 predecessor had issued to the R&L defendants between 1976 and 17 1986 do not provide coverage. (See FAC at ¶¶ 48-53.) 18 Alternatively, Arrowood seeks a declaration that even if it has a 19 duty to satisfy the stipulated judgment, the applicable policy 20 limit is $500,000. (See id. at ¶¶ 54-59.) 21 II. Summary Judgment Standard 22 A party seeking summary judgment bears the initial 23 burden of demonstrating the absence of a genuine issue of 24 material fact as to the basis for the motion. Celotex Corp. v. 25 Catrett, 477 U.S. 317, 323 (1986). A material fact is one that 26 could affect the outcome of the suit, and a genuine issue is one 27 that could permit a reasonable trier of fact to enter a verdict 28 in the non-moving party’s favor. Anderson v. Liberty Lobby, 1 Inc., 477 U.S. 242, 248 (1986). The moving party can satisfy 2 this burden by presenting evidence that negates an essential 3 element of the non-moving party’s case. Celotex, 477 U.S. at 4 322–23. Alternatively, the movant can demonstrate that the non- 5 moving party cannot provide evidence to support an essential 6 element upon which it will bear the burden of proof at 7 trial. Id. Summary judgment is appropriate when, viewing the 8 evidence in the light most favorable to the non-moving party, 9 there is no genuine dispute as to any material fact. Acosta v. 10 City Nat’l Corp., 922 F.3d 880, 885 (9th Cir. 2019) (citing 11 Zetwick v. Cnty. of Yolo, 850 F.3d 436, 440 (9th Cir. 2017)). 12 Where, as here, parties submit cross-motions for 13 summary judgment, “each motion must be considered on its own 14 merits.” Fair Hous. Council of Riverside Cnty., Inc. v. 15 RiversideTwo, 249 F.3d 1132, 1136 (9th Cir. 2001) (internal 16 citations and alterations omitted). “[T]he court must consider 17 the appropriate evidentiary material identified and submitted in 18 support of both motions, and in opposition to both motions, 19 before ruling on each of them.” Tulalip Tribes of Wash. v. 20 Washington, 783 F.3d 1151, 1156 (9th Cir. 2015). Accordingly, in 21 each instance, the court will view the evidence in the light most 22 favorable to the non-moving party and draw all inferences in its 23 favor. ACLU of Nev. v. City of Las Vegas, 333 F.3d 1092, 1097 24 (9th Cir. 2003) (citations omitted). 25 III. Discussion of the Parties’ Arguments 26 A. Policies’ Insuring Clause 27 In support of its motion, Arrowood argues that the 28 stipulated judgment is not covered by the four policies’ insuring 1 agreement. (Pl.’s Mot. at 14 (Docket No. 41).) Each policy 2 contains the same insuring agreement, which states: “The company 3 will pay on behalf of the insured all sums which the insured 4 shall become legally obligated to pay as damages because of 5 bodily injury or property damage to which this insurance applies, 6 caused by an occurrence . . . .” (Def.’s Statement of Facts in 7 Opp’n to Pl.’s Mot. (“Def.’s Statement of Facts”) at ¶ 2 (Docket 8 No. 55-4) (emphasis added).) The policies define “occurrence” as 9 “an accident, including continuous or repeated exposure to 10 conditions, which results in bodily injury or property damage 11 neither expected nor intended from the standpoint of the 12 insured.” (Id. at ¶ 4.) The burden is on the “insured to 13 establish that the occurrence forming the basis of its claim is 14 within the scope of insurance coverage.” Aydin Corp. v. First 15 State Ins. Co., 18 Cal. 4th 1183, 1188 (1998). 16 An “accident” is defined as “an unexpected, unforeseen, 17 or undesigned happening or consequence from either a known or 18 unknown cause” and “refers to the conduct of the insured for 19 which liability is sought to be imposed on the insured.” Delgado 20 v. Interinsurance Exch. of Auto. Club of S. Cal., 47 Cal. 4th 21 302, 308, 311 (2009). An event is not an accident when “all of 22 the acts, the manner in which they are done, and the objective 23 accomplished occurred as intended by the actor.” Id. at 312. 24 The insured’s intention to cause, or not cause, an injury is 25 irrelevant. See Collin v. Am. Empire Ins. Co., 21 Cal. App. 4th 26 787, 804 (2d Dist. 1994) (“‘[A]ccident’ refers to the insured’s 27 intent to commit the act giving rise to liability, as opposed to 28 his or her intent to cause the consequences of that act.”). The 1 definition of occurrence also includes the phrase “neither 2 expected nor intended from the standpoint of the insured” which 3 modifies the term “‘injury and damages,’ not ‘accident.’” See 4 Delgado, 47 Cal. 4th at 311. 5 Arrowood argues there are six different categories of 6 releases, or alleged releases, from the plating operations and 7 that none of those six categories count as “occurrences” within 8 the meaning of the insurance policies. 9 1. Concrete Migration Releases 10 The City argues that fluids fell onto the concrete 11 floor during the plating process and “remained on, and passed 12 through the concrete itself because of its porous nature or 13 possibly through cracks in it.” (Def.’s Statement of Facts at 14 ¶ 12.) These “spills of plating fluids and rinse water occurred 15 as bumpers were moved between tanks” and were not “unexpected” or 16 “unforeseen.” (Def.’s Opp’n at 16 (Docket No. 55)); see Delgado, 17 47 Cal. 4th at 308. Any releases that occurred through the 18 regular plating process as fluids fell to the floor for years are 19 not an “occurrence” within the meaning of the insuring 20 agreement. There is no genuine dispute of material fact as to 21 how the fluids spilled onto the floor, and no reasonable jury 22 could find that any release through the concrete was an 23 “occurrence.” Accordingly, summary judgment regarding any 24 alleged releases through the concrete floor will be granted in 25 favor of Arrowood. 26 2. Hole Releases 27 The City claims that the drain in the plating area 28 would sometimes overflow before a retaining wall was completed in 1 1974. (See Def.’s Statement of Facts at ¶ 14.) When the drain 2 overflowed, fluids ran out of the area and onto the exterior 3 ground through a hole in the wall. (Id.) Fluids had been 4 spilling out of the hole for nearly 20 years as plating 5 operations occurred. (See Decl. of Alexander Potente (“Potente 6 Decl.”), Ex. I, 2019 Depo. of Richard Leland (“2019 Leland 7 Depo.”) at 70:14-21 (Docket No. 44-14).) John Clark, the manager 8 of Capitol Plating at the time, piled dirt against the hole to 9 prevent the discharges. (Def.’s Statement of Facts at ¶ 15.) 10 Clark replaced these “dirt dams” five to ten times before 11 building a retaining wall around the plating area to direct 12 fluids down a drain in the floor. (See Def.’s Response to Pl.’s 13 Statement of Additional Facts (“Def.’s Resp. to Pl.’s Add’l 14 Facts”) at ¶ 62 (Docket No. 64-1).) 15 The City unpersuasively argues that Clark did not 16 “intend or expect the dam to fail,” therefore the failure of the 17 dams was an “occurrence.” (Def.’s Opp’n at 17.) Clark testified 18 that, although he built the dam to “stop[ ] any solution [or] 19 water from coming out” of the hole and thought it would prevent 20 water from escaping, he also expected the dam to fail because “it 21 wasn’t concrete” and considered it to be “just a deterrent.” 22 (See Potente Decl., Ex. C, 2021 Depo. of John Clark (“2021 Clark 23 Depo.”) at 97:6-10, 106:4-19; 196:23-198:4 (Docket No. 44-6).) 24 Clark may not have intended for the dirt dam to fail, but Clark’s 25 testimony shows that the dam failing multiple times was not 26 unexpected or unforeseen, as Clark recognized it would not 27 prevent water from escaping indefinitely. See Delgado, 47 Cal. 28 4th at 308, 311. There is therefore no genuine dispute of 1 material fact as to the manner in which the releases occurred 2 through the hole, and no reasonable trier of fact could find the 3 releases to be an “occurrence” within the insuring agreement. 4 3. Sewer Releases 5 The City claims that “occurrences” happened when fluids 6 from the plating area flowed into the sanitary sewer, but were 7 released into the environment because the sewer may have 8 leaked. (Def.’s Statement of Facts at ¶ 17.) However, the 9 City’s expert, Dr. Anne Farr, testified that there is no actual 10 evidence that there were any releases from the sanitary sewer, 11 through cracks and joints, to the subsurface as this had not been 12 investigated. (See Potente Decl., Ex. H, Depo. of Anne Farr 13 (“Farr Depo.”) at 30:24-31:2 (Docket No. 44-13).) Even when 14 viewing the facts in the light most favorable to the City, the 15 City has not produced any evidence that releases even occurred 16 from the sanitary sewer, so it cannot carry its burden to 17 demonstrate that these alleged releases are occurrences within 18 the meaning of the insuring agreement. 19 4. Dumpster Releases 20 The City claims metal particulates were disposed of in 21 an on-site dumpster and that those particulates escaped into the 22 groundwater and soil through “cracks or gaps in the sides or 23 bottom of the dumpster.” (Def.’s Opp’n at 18.) Dr. Farr states 24 that the particulates “likely escaped the dumpster” and that 25 there was contamination in the area. (See Decl. of Bret Stone 26 (“Stone Decl.”), Ex. 9, Expert Report of Dr. Anne Farr (“Farr 27 Report”) at 21 (Docket No. 56-9); Farr Depo. at 123:24-124:8.) 28 However, Dr. Farr also testified that she does not know what the 1 condition of the dumpster was and has no evidence that anyone saw 2 discharges from the dumpster. (See Farr Depo. at 122:8-11, 3 124:1-3.) Clark also testified that he did not recall ever 4 seeing any holes in the dumpster. (2021 Clark Depo. at 120:12- 5 13.) 6 The City argues that the area in which the dumpster was 7 kept had contamination, but does not provide sufficient evidence 8 that the contamination came from the dumpster and not another 9 source. (See Def.’s Opp’n at 18.) Without evidence that the 10 dumpster released these particulates, the City has not carried 11 its burden to demonstrate that these alleged dumpster releases 12 are “occurrences” within the meaning of the insuring agreement. 13 5. Fire Releases 14 The City argues that two fires, one in 1973 and one in 15 1985, which damaged the grinding and polishing room and jobbing 16 room at the site, each released metallic dust and plating fluids 17 into the environment. (See Def.’s Statement of Facts at ¶¶ 21- 18 22.) The City contends that metals from the polishing, grinding, 19 and jobbing processes were present in these rooms at the time of 20 the fires, that the fires caused some of this metal to be 21 released into the air, and that some of the metal was washed out 22 of the burning structure and onto the ground outside during 23 firefighting efforts. (See Def.’s Mot. at 17 (Docket No. 48-1).) 24 As discussed in detail below, the amount of contamination that 25 may have occurred due to the fires is in dispute. However, the 26 fact that the fires happened is not. At oral argument, Arrowood 27 agreed that both fires are “occurrences” within the policies’ 28 insuring agreement. 1 However, Arrowood contends that the firefighting 2 efforts involved in the two fires are not “occurrences.” 3 Arrowood argues that there is no evidence demonstrating whether 4 the firefighters intended to spray the waste materials or rather 5 “accidentally” sprayed the materials and relies on an out-of- 6 circuit case to further its argument. (Pl.’s Mot. at 36) As 7 Arrowood acknowledges, there is no evidence that the firefighters 8 expected, foresaw, and intended to spray the waste materials to 9 release them. Therefore, there is no genuine dispute of material 10 fact as to whether the firefighting efforts are “occurrences.” 11 See Delgado, 47 Cal. 4th at 308. 12 There is therefore no genuine dispute of material fact 13 as to whether the fires and firefighting efforts are 14 “occurrences” within the meaning of the insuring agreement. The 15 court concludes that the fires are “occurrences” within the 16 meaning of the insuring agreement and will therefore grant 17 summary judgment for the City on this point. 18 6. Rain Releases 19 The City claims that a large rain event in 1986 likely 20 caused the release of contaminants from the plating area because 21 the roof of the area was not repaired after the 1985 fire. 22 (Def.’s Mot. at 7-8.) Arrowood relies on Travelers Casualty and 23 Surety Company v. Superior Court, 63 Cal. App. 4th 1440, 1464 24 (6th Dist. 1998), to argue that rain is not a sudden and 25 accidental event, but Travelers does not establish why an 26 unusually large rain event would not qualify as an occurrence and 27 Arrowood makes no argument on this issue. (See Pl.’s Opp’n at 28 18-21 (Docket No. 52).) A large rain event in this context is 1 not expected, foreseen, or intended. See Delgado, 47 Cal. 4th 2 at 308. Viewing the facts in the light most favorable to the 3 City, there is therefore no genuine dispute of material fact 4 regarding whether the 1986 rain event is an occurrence. The 5 court determines that the rain event is an “occurrence” within 6 the basic scope of the insuring agreement. 7 In sum, alleged releases through the concrete floor, 8 hole in the wall, sewer, and dumpster are not “occurrences” 9 within the meaning of the insuring agreement and therefore are 10 not covered by the policies. The fire and rain events are 11 “occurrences” within the meaning of the insuring agreement and 12 are therefore within policy coverage unless an exclusion applies. 13 B. Pollution Exclusion 14 The parties also dispute whether either of two 15 exclusions removes the stipulated judgment from coverage under 16 the policies. The first -- the “Pollution Exclusion” -- states 17 that the policies “do[ ] not apply . . . . to bodily injury or 18 property damage arising out of the discharge, dispersal, release 19 or escape of . . . contaminants or pollutants into or upon land, 20 the atmosphere or any water course or body of water.”1 (Potente 21 Decl., Ex. A-1 at 105 (Docket No. 44-1).) The insurer bears the 22 burden of proving a policy’s exclusion removes an otherwise- 23 covered claim from coverage. Aydin, 18 Cal. 4th at 1188. 24 1 Because the Pollution Exclusion operates to remove 25 otherwise-insured events from coverage, it has no applicability to events not within the basic scope of the policies. Because 26 events that are not “occurrences” within the meaning of the 27 policies are not covered, here the court will address only those events that did constitute occurrences, as explained above. 28 1 The City argues that much of the environmental damage 2 at issue does not fall within the scope of the Pollution 3 Exclusion because some of the discharged pollutants traveled 4 through the ground into groundwater, which the City contends does 5 not constitute a “water course or body of water.” (See Def.’s 6 Mot. at 15.) However, the City does not contend that any 7 pollutants were discharged directly into groundwater rather than 8 into land. Nor does the City identify any precedent establishing 9 that contamination from pollutants initially discharged into land 10 ceases to fall within the Pollution Exclusion’s scope when those 11 pollutants subsequently migrate downward into groundwater.2 12 Rather, a common-sense reading of the Pollution 13 Exclusion’s language indicates that “discharge” and similar terms 14 refer to discharges initially made “into or upon land . . . or 15 any water course or body of water,” regardless of the subsequent 16 fate of the discharged contaminants. The phrase “into or upon” 17 is in direct reference to the “discharge” event and thus is best 18 read as describing the initial location within the environment 19 into or upon which contaminants are released. The only other 20 district court that appears to have addressed this precise issue 21

22 2 The authorities the City cites all appear to have involved releases in which pollutants were at least in part 23 discharged directly into groundwater because the releases occurred underground. (See Def.’s Mot. at 15 (citing Aetna Cas. 24 & Sur. Co. v. Dow Chem. Co., 28 F. Supp. 2d 440, 447 (E.D. Mich. 1998); Lumbermens Mut. Cas. Co. v. Plantation Pipeline Co., 447 25 S.E.2d 89, 93 (Ga. Ct. App. 1994); State v. Travelers Indem. Co. of R.I., 508 N.Y.S.2d 698, 701 (N.Y. App. Div. 1986)).) This 26 stands in contrast to the facts here, as the parties do not 27 seriously dispute that the pollutants were in the first instance discharged into the ground from the surface before some of them 28 migrated downward. 1 reached the same conclusion. See U.S. Fire Ins. Co. v. Bunge N. 2 Am., Inc., 05-2192-JWL, 2008 WL 3077074, at *5 (D. Kan. Aug. 4, 3 2008) (citing Mesa Operating Co. v. Cal. Union Ins. Co., 986 4 S.W.2d 749, 758 (Tex. Ct. App. 1999) (holding same)); see also 5 Standun, Inc. v. Fireman’s Fund Ins. Co., 62 Cal. App. 4th 882, 6 888 (2d Dist. 1998) (distinguishing between initial deposition of 7 waste into landfill and subsequent flow of pollutants from 8 landfill into surrounding environment); Travelers Cas. & Sur. 9 Co., 63 Cal. App. 4th at 1461 (rejecting argument that Pollution 10 Exclusion did not apply to groundwater contamination, as 11 contamination had first been discharged into landfill before 12 migrating into groundwater). Accordingly, that some of the 13 pollutants discharged into or upon the ground at the Site 14 subsequently migrated into groundwater does not remove those 15 discharges from the scope of the Pollution Exclusion.3 16 The undisputed facts show that all relevant discharges 17 identified by the City were “into or upon land” or, in the case 18 of any airborne releases from the two fires, “into . . . the 19 atmosphere.” (See Pl’s Response to Def.’s Statement of Facts 20 (“Pl.’s Resp. to Def.’s Facts”) at ¶ 3 (Docket No. 54); Def.’s 21 Resp. to Pl.’s Add’l Facts at ¶¶ 33-40, 56, 59, 77-88.) There is 22 therefore no genuine dispute of material fact as to whether the 23 discharges at issue here fall within the basic scope of the 24 3 Because the court concludes that the Pollution 25 Exclusion encompasses discharges of pollutants “into or upon land” regardless of whether those pollutants subsequently 26 travelled into groundwater, it does not reach the issue of 27 whether groundwater constitutes a “water course or body of water” within the meaning of the policies. (See Def.’s Mot. at 15; 28 Pl.’s Opp’n at 30-31; Def.’s Reply at 16-17 (Docket No. 64).) 1 Pollution Exclusion, and the court concludes that they do. 2 1. Sudden and Accidental Exception 3 The Pollution Exclusion is subject to an exception, 4 however, for discharges that are “sudden and accidental” (the 5 “Sudden and Accidental Exception”). Although an insurer bears 6 the burden of proving that a policy’s exclusion precludes 7 coverage of a claim, see Aydin, 18 Cal. 4th at 1188, “[t]he 8 insured under a third party liability policy has the burden of 9 proving . . . an exception to a policy exclusion when the insurer 10 has shown the exclusion applicable,” California v. Allstate Ins. 11 Co., 45 Cal. 4th 1008, 1036 (2009) (addressing Sudden and 12 Accidental Exception). Because the Pollution Exclusion applies, 13 the City bears the burden of proving that the releases that 14 qualify as occurrences are covered by the Sudden and Accidental 15 Exception. (See supra n.1.)4 16 When determining whether an event is sudden and 17 accidental, the court must first determine which “particular 18 discharges or discharges . . . gave rise to [the] property 19 damage.” See Allstate, 45 Cal. 4th at 1021. It must then 20 evaluate each discharge separately to determine not only whether 21 it was “sudden” and “accidental,” but also whether it was a 22 “substantial factor” in the insured’s liability. See id. at 23 1036-37. 24 An event is “sudden” if it is “abrupt or immediate in 25 nature.” Shell Oil Co. v. Winterthur Swiss Ins. Co., 12 Cal. 26 4 As noted in the court’s prior order, this burden 27 applies notwithstanding the fact that the City is the nominal defendant in this declaratory relief action. (See Docket No. 21 28 at 8-9.) 1 App. 4th 715, 755 (1st Dist. 1993). It is “accidental” if it “is 2 both unintended and unexpected” from the standpoint of the 3 insured. Id.; Allstate, 45 Cal. 4th at 1024. 4 To qualify for the exception, the insured must prove 5 that a sudden and accidental event was also “a substantial cause 6 of the injury or property damage for which the insured is 7 liable.” Allstate, 45 Cal. 4th at 1036. Although “[t]he 8 substantial factor standard is a relatively broad one,” Bockrath 9 v. Aldrich Chem. Co., Inc., 21 Cal. 4th 71, 79 (1999) (citation 10 omitted), the standard is not met where the insured can do no 11 more than show that the “sudden and accidental event[ ] ha[s] 12 contributed only trivially to the property damage from 13 pollution,” Allstate, 45 Cal. 4th at 1037 (citing Travelers Cas. 14 & Sur. Co., 63 Cal. App. 4th at 1460 (insured must show sudden 15 and accidental event caused an “appreciable amount of 16 environmental damage”); Highlands Ins. Co. v. Aerovox Inc., 676 17 N.E.2d 801, 806 (Mass. 1997) (insured must show sudden and 18 accidental event caused “more than a de minimis amount of the 19 damages for which it is now liable”)); see also Bockrath, 21 Cal. 20 4th at 79 (to qualify as substantial factor, event’s contribution 21 must be more than “negligible,” “theoretical,” or 22 “infinitesimal”). 23 The parties have identified multiple events or forms of 24 discharge that are relevant here. (See Def.’s Mot. at 15-18; 25 Pl.’s Mot. at 32-36.) The court will address each of those that 26 it has determined could constitute an “occurrence” in turn. 27 2. Fire Releases 28 The City argues that the September 1973 and September 1 1985 fires caused sudden and accidental releases of pollutants 2 into the environment. (See Def.’s Mot. at 17.) John Clark and 3 Robert Bennett, who also worked at the facility, testified that 4 each fire destroyed the eastern portion of the facility, which 5 contained the polishing and grinding room and the jobbing room. 6 (See Potente Decl., Ex. F (“Bennett Depo.”) at 158:6-16 (Docket 7 Nos. 44-9, 44-10, 44-11); 2021 Clark Depo. at 123:23-124:9.) The 8 City contends that metals from the polishing, grinding, and 9 jobbing processes were present in these rooms each time a fire 10 occurred, that each fire caused some of these metals to be 11 released into the air, and that some of these metals were washed 12 out of the burning structures and onto the ground outside during 13 both firefighting efforts. (See Def.’s Mot. at 17.) 14 The parties have not put forward evidence regarding the 15 origin of either fire, but the court has already determined that 16 both fires qualify as accidental, and it will likewise assume 17 that each fire qualifies as sudden, there being no indication 18 that either occurred gradually. Even so, the evidence 19 demonstrates that the amount of pollutants released as a result 20 of each fire was not more than trivial or de minimis.5

21 5 The City is required to prove that each fire was a 22 substantial factor in causing the pollution for which the insureds were liable. See Allstate, 45 Cal. 4th at 1021, 1036- 23 37. However, in its briefing the City simply states that all identified releases were substantial factors in causing the 24 Site’s pollution without individually addressing whether each fire was a substantial factor and why. (See Def.’s Mot. at 18; 25 Def.’s Reply at 24-25; Def.’s Opp’n at 25-26.) Nonetheless, the court has examined the available evidence in order to make this 26 determination for itself. 27 The City’s observation that Arrowood stipulated that its insureds’ “conduct was a substantial factor in causing the 28 nuisance and condition of pollution or nuisance at the Site,” 1 The City argues that some of the relevant pollution 2 occurred when plating fluids present in the jobbing room were 3 discharged to the ground by the fires or firefighting efforts. 4 (See Def.’s Mot. at 17.) It relies on Dr. Farr’s report, in 5 which she states that plating of small parts for cars occurred in 6 the jobbing room, citing Bennett’s deposition. (See Farr Report 7 at 18-19 (citing Bennett Depo. at 40:1-2).) On this basis, in 8 her rebuttal report she also states that “[t]he destruction of 9 the jobbing area would have resulted in a substantial 10 contribution of contamination to the northeastern area of the 11 Site.” (Stone Decl., Ex. 10, Expert Rebuttal Report of Anne Farr 12 (“Farr Rebuttal”) at 12 (Docket No. 56-10).) 13 However, in the portion of Bennett’s deposition Dr. 14 Farr cites, Bennett merely stated that the room in question “was 15 small jobbing, what we call small parts for cars.” (Bennett 16 Depo. at 39:23-40:2.) He did not state, then or at any other 17 point during his deposition, that any plating occurred in the 18 jobbing room. (See generally id.) Dr. Farr’s assertion that it 19 did thus appears to represent an unsupported inference from 20 Bennett’s testimony and is therefore insufficient to create a 21 triable issue of fact.6 Arrowood, on the other hand, has 22 (Def.’s Mot. at 18), evinces an apparent related misconstruction 23 of the legal standard. A stipulation that the insured’s overall conduct was a substantial factor is not the same as a stipulation 24 that each (or any) discrete sudden and accidental event was. 6 Accord Travelers Cas. & Sur. Co., 63 Cal. App. 4th at 25 1662 (“Expert declarations cannot create a triable question of fact if the expert’s opinion is based upon factors which are 26 remote, speculative, or conjectural. Particularly, expert 27 declarations regarding purported sudden and accidental releases of pollution, which do no more than offer conclusory assertions 28 or speculation regarding any causal link between the purported 1 submitted a declaration from Bennett specifying that the jobbing 2 room was used for polishing small car parts and that no plating 3 was in fact done there. (See Potente Decl., Ex. G at ¶ 3 (Docket 4 No. 44-12).)7 There is accordingly no genuine dispute of 5 material fact as to whether plating fluids would have been 6 present in the jobbing room at the time of the fires and would 7 therefore have escaped during firefighting efforts. 8 The City also contends that fluid likely escaped from 9 tanks in the plating room because the chrome tank was uncovered 10 and thus water may have entered during firefighting efforts. 11 (See Def.’s Mot. at 17.) The only evidence that might support 12 this inference is hearsay testimony from Richard Leland, another 13 employee, who testified at his deposition that although there was 14 no damage to the plating room from the 1985 fire, he was told by 15 another person that some water from the firefighting effort had 16 entered tanks in the plating room, diluting some of their 17 contents. (See 2019 Leland Depo. at 89:6-16, 90:3-19.) He did 18 not testify that he was told any fluid escaped. (See id.) But 19 he did testify that he did not visit the property for about one

20 releases and the claimed damages, are insufficient to defeat summary adjudication.”) (citations omitted). 21

22 7 The City has objected to consideration of Bennett’s declaration for purposes of the cross-motions for summary 23 judgment. (See Docket No. 61-2.) Although the City states that the declaration was signed after the close of discovery and that 24 statements it contains were not part of Bennett’s deposition testimony, the City does not explain how consideration of the 25 declaration would be prejudicial. It also argues that the statements it contains cannot be presented in an admissible form, 26 but there is no indication that Bennett could not personally 27 testify to these details at trial, much as he could be called to testify to the details he disclosed during his deposition. The 28 City’s objection is therefore overruled. 1 week after the fire and that when he did, he did not see evidence 2 that water had been sprayed into the plating room. (See id. at 3 90:8-17.) 4 On the other hand, Clark and Bennett each testified 5 that they arrived at the facility on the mornings after the 1973 6 and 1985 fires, respectively, and saw no evidence water had been 7 sprayed into the plating area on either occasion. (See 2021 8 Clark Depo. at 123:3-14, 128:12-130:6; Bennett Depo. at 167:24- 9 168:20.)8 Dr. Farr’s conclusion that fluid from the chrome tanks 10 were “likely” released during the fires is therefore speculative, 11 and the court concludes that there exists no genuine dispute of 12 fact on this point. See Allstate, 45 Cal. 4th at 1037 (Sudden 13 and Accidental Exception does not apply “where the policyholder 14 can do no more than speculate that some polluting events may have 15 occurred suddenly and accidentally”); Bockrath, 21 Cal. 4th at 79 16 (“theoretical” contribution to harm insufficient to qualify as 17 substantial factor in causing it); Travelers Cas. & Sur. Co., 63 18 Cal. App. 4th at 1462. 19 Finally, the City argues that waste metals which would 20 have been present in the polishing and grinding room would have 21 been washed out during firefighting efforts. (See Def.’s Mot. at 22 17.) In that room, during the relevant periods for both fires, 23

24 8 Moreover, even if some fluid had spilled out of the chrome tanks during either fire, there is no evidence indicating 25 that this fluid was discharged from the building by means other than the floor drain leading to the sewer. And it is undisputed 26 that by the time of the 1985 fire, a retaining wall had been 27 built around the plating area, preventing any releases through the hole in the wall. (See Def.’s Resp. to Pl.’s Add’l Facts at 28 ¶ 65.) 1 workers buffed and sanded bumpers to prepare them for plating, a 2 process which produced fine metal particles. (Def.’s Resp. to 3 Pl.’s Add’l Facts at ¶¶ 80-81.) These particles either fell onto 4 the floor or onto instruments in the room, or they were sucked 5 into a dust collector on the wall that was present at the times 6 of both fires. (Id. at ¶ 82; Stone Decl., Ex. 2 (“2020 Clark 7 Depo.”) at 93:1-94:1 (Docket No. 56-2); Bennett Depo. at 166:3- 8 15.) Clark and Bennett testified that at the end of each day, 9 particles that landed on instruments in the room were blown off, 10 the floor was swept, and the dust was collected into a garbage 11 bag and disposed of. (2021 Clark Depo. at 48:11-52:20; Bennett 12 Depo. at 54:8-57:6, 58:23-59:22, 157:12-15, 162:16-164:20.)9 13 Despite Bennett’s testimony that all of the residue 14 produced in the straightening, polishing, and grinding areas was 15 removed during each cleaning, (see Bennett Depo. at 59:15-22, 16 233:14-22), the City argues that some amount of dust would have 17 necessarily remained and therefore would have burned or been 18 washed away during each fire, (see Def.’s Mot. at 17; Farr Report 19 at 16; Farr Rebuttal at 11). The possibility that a small amount 20 of residual dust not cleaned up at the end of the day may have 21 remained when the fires started, however, does not establish that 22

23 9 Although the City disputes that Clark’s and Bennett’s testimony conclusively establish that these cleanings occurred 24 daily, (see Def.’s Resp. to Pl.’s Add’l Facts at ¶ 83), it puts forward no evidence to the contrary. Additionally, although the 25 City contends that Bennett did not personally perform these cleanings beyond the early part of his employment at the 26 facility, Bennett testified that he had never arrived at the 27 grinding and polishing room in the morning to find that it had not been cleaned the night before. (See Bennett Depo. at 164:17- 28 20.) 1 more than a trivial amount would have been present and discharged 2 during the fires. 3 Some of the particles produced in the polishing and 4 grinding room were also sucked into the dust collector, which 5 consisted of a fan in the wall that pulled airborne particles 6 through a duct and into a bag for disposal. (See 2020 Clark 7 Depo. at 93:1-22; Bennett Depo. at 166:3-167:12.) Clark 8 testified that this bag was disposed of frequently enough that it 9 was not allowed to become full. (See 2020 Clark Depo. at 93:6- 10 19.) Although his and Bennett’s testimony conflicted as to 11 whether the bag was disposed of every day, (compare id. at 93:17- 12 22 with Bennett Depo. at 167:13-23), the mere possibility that 13 some metal dust would have been in the dust collector at the time 14 of the fires is insufficient to create a genuine dispute of 15 material fact as to whether any amount of dust discharged during 16 the fires would have been non-trivial.10 See Allstate, 45 Cal. 17 4th at 1037. 18 On the evidence presented, a reasonable trier of fact 19 could not conclude that either the 1973 or 1985 fire caused more 20 than a trivial amount of contamination to the site, and thus 21 could not conclude pollution from either fire was a substantial 22 10 In his expert report, Delfino estimated that at the end 23 of the average day, the total amount of dust that would have remained in the polishing and straightening rooms each day, 24 including in the dust collector, would have been between 0.0144 and 2.08 pounds. (See Stone Decl., Ex. 18, Expert Report of 25 Thomas Delfino at 12-13 (Docket No. 48-21).) Although Dr. Farr contests the accuracy of these estimates, and therefore the court 26 does not rely on them in reaching its conclusion, they 27 nonetheless represent additional evidence that the amount of metal discharged during the fires was negligible. See Bockrath, 28 21 Cal. 4th at 79. 1 factor in causing the damage for which the insureds were liable. 2 See id. The court will therefore deny summary judgment on this 3 point for the City and grant it for Arrowood. 4 3. Rain Releases 5 The City also argues that a rain event in February 1986 6 caused a sudden and accidental release of pollutants. (See 7 Def.’s Mot. at 17.) It contends that the plating area’s roof was 8 damaged during the 1985 fire and was not repaired, and that the 9 rain would have then entered through the missing portion of the 10 roof. (See id.) It argues that this “would have resulted in 11 further migration of the contamination at and under the plating 12 building as a result of infiltration of water through the plating 13 building foundation.” (Id.) 14 Although Leland testified that the 1985 fire “did some 15 damage in the plating department,” he does not appear to have 16 specified that the roof was damaged. (See Stone Decl., Ex. 6, 17 2020 Deposition of Richard Leland (“2020 Leland Depo.”) at 38:16- 18 39:6 (Docket No. 48-11).) On the other hand, Bennett testified 19 that he arrived at the facility the morning after the 1985 fire 20 and saw no damage to the plating area, including to the roof. 21 (See Bennett Depo. at 167:24-168:12, 174:10-17, 175:13-15.) 22 Bennett also testified that the facility was not 23 repaired or rebuilt after the 1985 fire. (See id. at 168:21- 24 169:11.) He testified that beginning roughly one week after the 25 fire, he and another person cleaned and packed up the plating 26 shop, including by emptying the tanks, storing the solution in 27 waste barrels, removing the tanks and other equipment from the 28 premises, and cleaning the plating room. (See id. at 176:20- 1 180:22, 237:2-15.) 2 The City has not put forward evidence to indicate that 3 any meaningful amount of plating materials or other residual 4 contaminants were present in the plating room at the time of the 5 rain -- whereas Arrowood has put forward evidence to the contrary 6 -- and that would thus have migrated downward through the floor 7 in the manner the City suggests. To the extent that the City 8 argues the rain caused contaminants that had already passed 9 through foundation and into the soil to migrate further downward, 10 precedent makes clear that this does not constitute a discharge 11 that may satisfy the Sudden and Accidental Exception. Cf. 12 Standun, 62 Cal. App. 4th at 889-90 (holding, in suit over 13 release of pollutants from landfill into surrounding environment, 14 that discharge to be analyzed for purposes of Sudden and 15 Accidental Exception is initial deposition of wastes into 16 landfill, not subsequent migration of pollutants therefrom); 17 Travelers Cas. & Sur. Co., 63 Cal. App. 4th at 1463 (citation 18 omitted). 19 Even viewing the evidence in the light most favorable 20 to the City, and therefore assuming that there was indeed a hole 21 in the roof after the 1985 fire, the City has failed to show that 22 a non-trivial amount of contaminants would have been present in 23 the plating room at the time of the rain and could therefore have 24 been discharged from the building because of the rain. The only 25 evidence on this point is that which Arrowood has offered, which 26 demonstrates the opposite. Accordingly, the court concludes that 27 there is no genuine dispute of material fact and that, on the 28 evidence presented, a jury could not reasonably conclude that the eee ee eee een enn nnn on nn nnn IE ED eee

1 1986 rain event caused a sudden and accidental discharge of 2 pollutants. Therefore, on this issue, the court will deny the 3 City’s motion and grant summary judgment for Arrowood. 4 Because the court has concluded that none of the events 5 that qualify as occurrences fall within the Sudden and Accidental 6 | Exception, the contamination for which the City seeks 7 indemnification is excluded from coverage under the policies’ 8 Pollution Exclusion,!! 9 IT IS THEREFORE ORDERED that the City’s motion for 10 summary judgment be, and the same hereby is, DENIED. 11 IT IS FURTHER ORDERED that Arrowood’s motion for 12 summary judgment be, and the same hereby is, GRANTED. 13 The Clerk is hereby directed to enter Judgment, 14 pursuant to 28 U.S.C. § 2201, declaring that plaintiff Arrowood 15 Indemnity Company has no duty to satisfy the Judgment entered 16 against R and L Business Management, John Clark, and the Estate 17 of Nick Smith in the case City of West Sacramento v. R and L 18 Business Management, 2:18-cv-900 WBS JDP, and to close the file 19 accordingly. 20 IT IS SO ORDERED . 21 | Dated: January 11, 2022 atte A hh be

WILLIAM B. SHUBB

22 UNITED STATES DISTRICT JUDGE 23 24 25 26 1 Because the Site contamination is excluded from coverage under the Pollution Exclusion, the court does not reach 27 the issues of whether the Owned Property Exclusion applies or of what the applicable policy limits would be for non-excluded 28 | occurrences. 23