Montrose Chemical Corp. of California v. American Motorists Ins. Co.

Decision Date25 January 1993
Docket NumberNo. B058060,B058060
CourtCalifornia Court of Appeals Court of Appeals
PartiesPreviously published at 12 Cal.App.4th 846, 18 Cal.App.4th 133 12 Cal.App.4th 846, 18 Cal.App.4th 133 MONTROSE CHEMICAL CORPORATION OF CALIFORNIA, et al., Plaintiffs and Respondents, v. AMERICAN MOTORISTS INSURANCE COMPANY, et al., Defendants and Appellants.

Drinker Biddle & Reath, John Chesney, Lawrence A. Nathanson and Paul H. Saint-Antoine, Philadelphia, PA, Mindlin Tigerman & Holtzman and Michael Holtzman, Coudert Brothers, Douglas L. Hallett, Robert M. Churella, and William M. Samoska, Los Angeles, Boornazian, Jensen & Garthe, Charles I. Eisner, Alan E. Swerdlow, Oakland, and John W. Morrison, Chicago, IL, pro hac vice, O'Melveny & Myers, Ralph W. Dau, H. Douglas Galt, Holly E. Kendig and Daniel Aronowitz, Los Angeles, for defendants and appellants.

Latham & Watkins, David L. Mulliken, Kristine L. Wilkes, Barry J. Shotts and Donna J. Williams, San Diego, Covington & Burling, Kirkpatrick & Lockhart, Washington, DC, Paul, Hastings, Janofsky & Walker, Munger, Tolles & Olson, Los Angeles, and Marc S. Mayerson, Washington, DC, for plaintiffs and respondents.

ORTEGA, Associate Justice.

In these consolidated declaratory relief actions, we must determine whether the trial court properly ordered the defendant insurers to pay their insureds' defense costs. We affirm the order, which we find to be a final judgment (order) on a collateral issue (the duty to defend).

INTRODUCTION

The insureds, Montrose Chemical Corporation of California and Stauffer Chemical Company, are being sued in several pending environmental pollution actions in state and federal courts.

Plaintiffs Montrose and Stauffer herein are seeking declaratory relief to establish the duty of six defendant insurers to defend and to indemnify them in the underlying tort actions. In addition, Stauffer is seeking breach of contract damages, and Montrose is seeking damages for breach of the covenant of good faith and fair dealing and breach of statutory duties.

With respect to the insurers' duty to defend, the superior court has summarily adjudicated that such duty exists and will continue to exist until such time as a court determines there is no potential for indemnity. Despite those summary adjudication orders, several insurers unilaterally refused to pay portions of the insureds' mounting defense costs. Their refusal led the insureds to move for an order requiring the immediate payment of defense costs in each underlying action.

The superior court granted the motion and ordered the insurers to pay, within 30 days of receipt, the insureds' defense bills in the underlying liability actions. Four insurers have appealed.

The appellant insurers contend the order to pay is invalid. They point out that because the summary adjudication (duty to defend) orders were not final for the purpose of appeal, and because there are unresolved issues concerning indemnity, coverage, breach of contract, bad faith, and statutory violations, no final judgment has been or could be entered at this stage of the proceedings. The appellants contend any interlocutory order to pay defense costs must comply with the pleading, proof, and bond requirements of a preliminary injunction (or some other provisional remedy).

The insureds, on the other hand, contend the summary adjudication orders establishing the duty to defend were final for the purpose of appeal, and that the insurers could have immediately appealed those orders but did not. The insureds maintain that the subsequent enforcement order is thus a permanent injunction which is exempt from the bond and other procedural requirements of a preliminary injunction.

We agree with the insurers that the summary adjudication (duty to defend) orders were not final for the purpose of appeal, and they did not waive their right to appellate review by failing to bring an immediate appeal of those interlocutory orders. However, we conclude the summary adjudication orders were incorporated in the final

judgment (order) on a collateral issue (the duty to defend), which has in effect been severed from the remaining issues in this action.

FACTS
A. The Underlying Tort Actions

Montrose, a defunct chemical company, manufactured DDT for use in pesticides from 1947 until 1982. Stauffer (now known as Rhone-Poulenc Basic Chemicals Company) owned 50 percent of Montrose at all relevant times.

Numerous actions are pending against Montrose and Stauffer for property damage (and one alleging bodily injuries) resulting from alleged contamination at sites where they allegedly manufactured their product or disposed of hazardous waste.

1. The Stringfellow Cases

United States v. Stringfellow (C.D.Cal.Civ. No. 83-2501) and Newman v. Stringfellow (Super.Ct. Riverside County, No. 165994MF) (jointly, the Stringfellow cases) involve the alleged dumping of hazardous waste by the insureds and about 15 others at the Stringfellow acid pits in Riverside County. In United States v. Stringfellow, the United States and the State of California are seeking reimbursement, pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, 42 U.S.C. § 9601 et seq.), from the insureds for the costs of investigating, removing and remediation of alleged contamination, as well as compensation for damaging the state's natural resources. In Newman v. Stringfellow, a private party toxic tort action, the plaintiffs seek damages from the insureds for personal injuries and property damage caused by the alleged dumping of hazardous waste. Both Stringfellow cases allege the damage occurred beginning in 1956 and continuing to the present.

2. Levin Metals Cases

Parr-Richmond Terminal Co. v. Levin Metals Corp. (N.D.Cal. No. C 85-4776 SC), Levin Metals Corp. v. Parr-Richmond Terminal Co. (N.D.Cal., Nos. C 84-6273 SC and 84-6324 SC) and Levin Metals Corp. v. Parr-Richmond Terminal Co. (Super.Ct. Contra Costa County, No. 255836) (collectively referred to as the Levin Metals cases) 1 involve the alleged contamination of the United Heckathorn site in Contra Costa County. These cases began as a state fraud action concerning Levin Metals's 1981 purchase of the United Heckathorn site from Parr-Richmond, who allegedly had failed to disclose the alleged contamination to Levin Metals. Montrose and Stauffer were brought into the litigation on indemnity and contribution theories. Montrose and Stauffer allegedly had contracted for the treatment, processing or disposal of DDT and other chemical substances at the United Heckathorn site at some time during the period when the alleged contamination occurred, from 1947 to the present.

3. Iron Mountain Proceedings

In addition to the above litigation, Stauffer is involved in proceedings (hereafter the Iron Mountain proceedings) before the Environmental Protection Agency (EPA) concerning alleged contamination of the Iron Mountain Mine, which Stauffer formerly owned, near Redding, California. Pursuant to the CERCLA (42 U.S.C. § 9607(a)), the EPA notified Stauffer in 1982 of its possible liability for cleanup costs associated with the alleged contamination of this site. Following investigations, the EPA ordered Stauffer in 1989 and 1990 to perform remedial work at the site. The EPA also notified Stauffer in 1990 of its potential liability for alleged damages to natural resources at the site from the late 1950's to the present.

B. The Insurance Policies

Montrose and Stauffer have been covered since 1960 by comprehensive general All of the relevant CGL policies contained language substantially similar to the following: "The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of: (a) Bodily injury and/or (b) Property damage to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the Insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent...."

liability (CGL) insurance policies issued by seven carriers. The four carriers involved in this appeal are Insurance Company of North America (INA), American Motorists Insurance Company (AMICO), The Travelers Indemnity Company, and Centaur Insurance Company (which covered Montrose only). 2

C. The Instant Complaints

On April 3, 1986, Montrose filed its complaint for declaratory relief against all seven CGL carriers. The complaint alleged the carriers had agreed to pay Montrose's interim defense costs under a reservation of rights. Because the carriers had reserved their rights, Montrose sought a declaration requiring each carrier to provide a defense and to indemnify Montrose for any damages or settlement costs incurred in the Stringfellow and Levin Metals cases. In addition, Montrose sought "specific performance" of the insurance policies.

Thereafter, Montrose and six CGL carriers executed a second interim defense agreement whereby the carriers agreed to pay Montrose's past and future defense costs in the Levin Metals cases under a reservation of rights. AMICO, however, did not sign the agreement and refused to pay Montrose's defense costs in the Levin Metals cases. As a result, Montrose amended its complaint and added causes of action against AMICO for breach of the covenant of good faith and fair dealing and breach of statutory duties (Ins.Code, § 790.03).

Stauffer filed its own action for declaratory relief and breach of contract against, among others, appellants INA, AMICO, and Travelers. 3 Stauffer alleged these insurers had agreed to defend Stauffer in the Stringfellow cases subject to a reservation of rights. Because the carriers had reserved their rights, Stauffer sought a declaration requiring each...

To continue reading

Request your trial
4 cases
  • DeFeo v. Procter & Gamble Co.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • 23 Septiembre 1993
    ...831 F. Supp. 776. Neil P. DeFEO, a California resident, and The Clorox Company, a Delaware ...Excess Ins. Co., 316 U.S. 491, 495, 62 S.Ct. 1173, 1175, 86 ..., Plaintiffs rely primarily on Mobil Oil Corp. v. City of Long Beach, 772 F.2d 534 (9th ... refusal to grant declaratory relief." Montrose Chemical Corp. of California v. American ......
  • International Ins. Co. v. Superior Court (Rhone- Poulenc Basic Chemicals Co.), RHONE-POULENC
    • United States
    • California Court of Appeals
    • 26 Marzo 1998
    ...Corp. v. Home Insurance (Apr. 28, 1993) B049974 [nonpub. opn.], and Montrose Chemical Corp. v. American Motorists Ins. Co. (1993) 12 Cal.App.4th 846, 16 Cal.Rptr.2d 516. In 1994, there was Montrose Chemical Corp. v. Superior Court (June 8, 1994) B076530 [nonpub. opn.]. In 1995 and 1996, we ......
  • Montrose Chemical Corp. v. American Motorists Ins. Co.
    • United States
    • United States State Supreme Court (California)
    • 10 Febrero 1994
    ......v. AMERICAN MOTORISTS INSURANCE COMPANY et al., Appellants. No. S031548. Supreme Court of California,. In Bank. Feb. 10, 1994.         Prior report: Cal.App., 16 Cal.Rptr.2d 516.         Pursuant to Rule 29.4(c), California Rules of ......
  • Montrose Chemical Corp. of California v. American Motorists Ins. Co., S031548
    • United States
    • United States State Supreme Court (California)
    • 29 Abril 1993
3 books & journal articles
  • CHAPTER 10 Directors and Officers Liability and Professional Liability Insurance
    • United States
    • Full Court Press Insurance for Real Estate-Related Entities
    • Invalid date
    ...Bankers Standard Insurance Co., 877 F.2d 1146, 1148 (2d Cir. 1989).[64] Montrose Chemical Corp. v. American Motorists Insurance Co., 16 Cal. Rptr.2d 516, 530 (Cal. App. 1993) (upholding order requiring immediate payment of policyholder’s defense costs in underlying action and reimbursement ......
  • Insurance
    • United States
    • James Publishing Practical Law Books California Causes of Action
    • 31 Marzo 2022
    ...of an early declarative determination of the issue exists” Montrose Chemical Corp. of California v. American Motorists Ins. Co. , 16 Cal. Rptr. 2d 516, 528 (1993). • Cumulative relief. The remedy of declaratory relief is cumulative of other remedies (Code of Civ. Proc. §1062, Fed. Rules Civ......
  • Chapter 9
    • United States
    • Full Court Press Business Insurance
    • Invalid date
    ...Bankers Standard Insurance Co., 877 F.2d 1146, 1148 (2d Cir. 1989).[64] Montrose Chemical Corp. v. American Motorists Insurance Co., 16 Cal. Rptr.2d 516, 530 (Cal. App. 1993) (upholding order requiring immediate payment of policyholder’s defense costs in underlying action and reimbursement ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT