FMC Corp. v. Plaisted and Companies

• Decision Date: 03 March 1998
• Docket Number: H016674,H015090,H015511,Nos. H013360,H016104,H017215,H016806,H016805,s. H013360
• Court: California Court of Appeals Court of Appeals
• Parties: , 98 Cal. Daily Op. Serv. 1535, 98 Daily Journal D.A.R. 2121 FMC CORPORATION, Plaintiff and Appellant, v. PLAISTED AND COMPANIES et al., Defendants and Appellants.

Page 467

72 Cal.Rptr.2d 467

61 Cal.App.4th 1132, 98 Cal. Daily Op. Serv. 1535,

98 Daily Journal D.A.R. 2121

FMC CORPORATION, Plaintiff and Appellant, v. PLAISTED AND COMPANIES et al., Defendants and Appellants.

Nos. H013360, H015090, H015511, H016104, H016674, H016805, H016806, H017215.

Court of Appeal, Sixth District, California.

March 3, 1998.

As Modified on Denial of Rehearing March 27, 1998.

Review Denied May 27, 1998. ^*

Troop Meisinger Steuber & Pasich; David W. Steuber, Los Angeles; Mary Craig Caulkins, Catherine L. Rivard, Los Angeles; Jeffrey M. Jacobberger, Fort Irwin, Holland & Hart, R. Brooke Jackson; Jack M. Englert, Denver, CO, Neil G. Epstein, Philadelphia, PA; John F. O'Riordan, San Francisco, Bowen H. Tucker, Chicago, IL, for FMC Corporation.

Hancock, Rothert & Bunshoft, Paul J. Killion; Barry L. Bunshoft; W. Andrew Miller; Peter J. Whalen; Michael L. Donovan; Monica M. Slakey; Colleen A. Cassidy; Lisa A. Mango; Mary C. Anderson; Katherine A. Knopoff; John Garnett; Eve F. Lynch; Rice Fowler Booth & Banning, Elizabeth R. Palmer; Kurt Micklow, San Francisco, for Plaisted and Companies, et al.

Bien & Summers, San Francisco, Elliot L. Bien, Lon A. Berk, Washington, DC, for Amicus Curiae on behalf of Plaisted and Companies, et al.

BAMATTRE-MANOUKIAN, Associate Justice.

These eight appeals arise from a single superior court action, and address specific aspects of the duty of a general liability insurer to indemnify its insured for the cost of reimbursing government agencies and of complying with orders for investigation and remediation of toxic contamination to soil, surface water, and groundwater beneath the surface of the soil.

The general liability insurance policies, issued by London insurers, are of the type known in American insurance practice as comprehensive or commercial general liability (or CGL) policies. The policies contain indemnification provisions similar to those of standard form CGL policies but omit the explicit duty-to-defend provisions commonly included in CGL policies. The policies' indemnification provisions require, in pertinent part and subject to many qualifications, that the insurer indemnify the insured for all sums the insured shall be obligated to pay by reason of liability for property damage as defined. In a writ proceeding arising out of this action the Supreme Court has established as general propositions, and insofar as applicable to these policies, that contamination of the environment is property damage and, in essence, that amounts the insured is required to pay to reimburse government agencies and to comply with government orders under statutes such as the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (42 U.S.C. § 9601 et seq.) and similar statutes, once hazardous wastes have been released, are sums the insured is obligated to pay by reason of liability for property damage. (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 824-843, 274 Cal.Rptr. 820, 799 P.2d 1253.) These appeals call upon us to resolve additional coverage issues, as well as procedural and evidentiary questions which arose in the course of trial.

FMC Corporation, a diversified manufacturer of equipment and chemical compounds, acknowledges that over a period of many years its commercial activities, and the activities of others at sites for which FMC was or Throughout the relevant period FMC had purchased and maintained extensive general liability insurance. Liberty Mutual Insurance Company provided FMC's primary coverage to limits of $10 million. FMC also bought umbrella and excess coverage provided by a number of insurers including certain underwriters at Lloyds of London and certain London insurance companies. We shall refer to these London underwriters and insurance companies, including one company that engaged separate counsel in the course of the proceedings, as "the London insurers" or "the London defendants," and to the umbrella and excess policies they issued as "the London policies." Many other insurers were involved in the proceedings below, but of all of FMC's insurers only the London defendants are now before this court. Exhaustion of FMC's primary coverage (cf. Community Redevelopment Agency v. Aetna Casualty & Surety Co. (1996) 50 Cal.App.4th 329, 337-340, 57 Cal.Rptr.2d 755) is not an issue on these appeals.

became responsible under environmental laws, caused toxic contamination to soil and groundwater at and near many sites throughout the country. Beginning as early as 1959, FMC spent substantial sums to investigate the nature and extent of the contamination, to undertake measures of its own to remediate [61 Cal.App.4th 1143] the contamination, to reimburse government agencies for their remediation work, and to comply with related orders of state and federal agencies.

Early in November 1987, FMC for the first time formally demanded that the London defendants investigate, defend and indemnify FMC with respect to toxic contamination at specified sites. Eleven days later FMC brought this action, against Liberty Mutual, the London defendants and many other insurers, for a declaration of rights as against all the insurers and for damages as against Liberty Mutual. Over a period of nearly 10 years, many of the sites for which, and many of the insurers against which, FMC had claimed coverage were removed from the action by pretrial order, voluntary dismissal, or stipulated disposition. In 1988, a few months before he was appointed to this court, the action was assigned to the Honorable Eugene M. Premo for all purposes, and he continued as single-assignment judge in the action until the spring of 1993, shortly before trial began. Justice Premo has taken no part in the consideration or decision of the issues on this appeal.

Beginning in 1993, a total of 57 sites were assigned for trial in eight groups, with eight separate juries empaneled to hear factual issues and render special verdicts at a series of eight separate trial phases to which we shall refer (as the court and counsel did in the trial court) as "trials." Of the 57 sites 4 did not involve the London defendants, and of the remaining 53 more than half were removed from jury consideration by dismissal, stipulation, or court order in the course of pretrial and trial proceedings. Thus, for example, of the six sites assigned to the first trial, two were dismissed by FMC before trial, one was dismissed by stipulation among the parties, one did not involve the London defendants, and only the remaining two went to special verdicts and judgment with respect to the London defendants. And although all of the six sites assigned to the second trial went to judgment as to the London defendants, as to one of the sites the judgment was based on a summary adjudication order and as to another it was based on the parties' stipulation. By the time the last trial was concluded, in early 1997, a total of 35 sites had gone to judgment with respect to the London defendants, 22 of them on the basis of special verdicts. By this time only the London insurers remained as defendants.

Following each of the eight separate trials the trial court entered a separate, detailed recitation of the proceedings had, findings made, and conclusions reached at that trial. Each of these eight recitations was denominated a "judgment." Neither FMC nor the London defendants were fully satisfied with any of these eight "judgments": FMC appealed, and the London defendants cross-appealed, from each of them. This court concluded that the interests of justice would best be served by considering the eight appeals together.

Three issues lend themselves to summary disposition:

(1) Appealability. The London defendants initially took the position that none of the individual "judgments," viewed in isolation, could be deemed a single final judgment disposing of all issues or be brought within an exception to the one final judgment rule, and therefore that none of the individual "judgments" was separately appealable. (Cf. Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 736-744, 29 Cal.Rptr.2d 804, 872 P.2d 143.) This court's decision to consider the appeals from the eight separate "judgments" together effectively moots the appealability issue: We shall treat the eight "judgments" heretofore entered collectively, as a single judgment disposing of all issues, and the eight appeals as a single collective appeal from that single judgment. For convenience we shall continue to use the terms "judgment" and "judgments," in quotation marks, to refer to the trial court's eight separate recitations.

(2) Instructions on late-notice defense. As to each of the two sites that reached the jury at the first trial--the Fresno site in California and the Conservation Chemical site in Kansas--the London defendants asserted as a defense that FMC had not given them the notice required by the London policies within a reasonable time. The trial court instructed the jury that, to sustain the defense, the London defendants would be required to prove they had been prejudiced by the delay. In this court FMC contends that in preinstructions the trial court improperly authorized the jury to consider prejudice to the London defendants in defending FMC's coverage action, arguing that the law permits a late-notice defense only where the insurer can show it was prejudiced in asserting a defense to the underlying claim against the insured. But at the first trial the jury explicitly found that FMC had not been late in giving notice, and the point has not been raised as to any subsequent trial. Because FMC was not aggrieved by the preinstruction of which it complains, we need not reach the issue in order to dispose of FMC's appeal. We respectfully decline FMC's request that we nevertheless discuss the issue, essentially in the abstract, against the possibility it will recur in future proceedings.

(3) Standing to raise other issues. In their re...