Montrose Chemical Corp. v. Admiral Ins. Co.

Decision Date27 February 1992
Docket NumberNo. B048757,B048757
Citation15 Cal.App.4th 975,5 Cal.Rptr.2d 358
CourtCalifornia Court of Appeals Court of Appeals
PartiesPreviously published at 15 Cal.App.4th 975, 20 Cal.App.4th 678, 25 Cal.App.4th 1503, 3 Cal.App.4th 1511, 30 Cal.App.4th 1474, 35 Cal.App.4th 335, 9 Cal.App.4th 1021 15 Cal.App.4th 975, 20 Cal.App.4th 678, 25 Cal.App.4th 1503, 3 Cal.App.4th 1511, 30 Cal.App.4th 1474, 35 Cal.App.4th 335, 9 Cal.App.4th 1021 MONTROSE CHEMICAL CORPORATION OF CALIFORNIA, Plaintiff and Appellant, v. ADMIRAL INSURANCE COMPANY, Defendant and Respondent.

Latham & Watkins, David L. Mulliken, Richard A. Conn, Jr., Kristine L. Wilkes, L. Susan Odell and Dorn G. Bishop, San Diego, for plaintiff and appellant.

Hill Wynne Troop & Meisinger, Kirk A. Pasich and Martin D. Katz, Los Angeles, Heller, Ehrman, White & McAuliffe, Barry S. Levin, Wondie Russell, David B. Goodwin and Sharon C. Corda, San Francisco, Mid-America Legal Foundation and Martha Churchill, Thomas & Porrazzo and Michael H. Porrazzo, San Jose, Anderson Kill

Olick & Oshinsky, Eugene R. Anderson, Jerold Oshinsky, Jordan S. Stanzler and Paul L. Friman, New York City, as amici curiae on behalf of plaintiff and appellant.

Wilson, Kenna & Borys, Lawrence Borys and Jeffrey Burt, Los Angeles, for defendant and respondent.

Gibson, Dunn & Crutcher, Fred F. Gregory and Kurt L. Schmalz, Los Angeles, Peterson & Ross, Richard L. Blatt, Robert W. Hammesfahr and Bruce M. Engel, Chicago, Ill., Crosby, Heafey, Roach & May, Raoul D. Kennedy, Peter W. Davis and James C. Martin, Oakland, Coudert Brothers, Pamela G. Ostrager, Seth A. Ribner, Edward T. Schorr and Julie N. Mack, New York City, Hufstedler, Kaus & Ettinger, John P. Olson and Margot A. Metzner, Los Angeles, Wiley, Rein & Fielding, Thomas W. Brunner, James M. Johnstone and James P. Anasiewicz, Washington, D.C., Mindlin, Tigerman & Holtzman and Michael Holtzman, Los Angeles, Drinker Biddle & Reath, John Chesney and Paul H. Saint-Antoine, Philadelphia, Pa., Carroll, Burdick & McDonough and Donald T. Ramsey, San Francisco, as amici curiae on behalf of defendant and respondent.

VOGEL, Associate Justice.

We are called upon to decide whether four comprehensive general liability (CGL) policies issued by Admiral Insurance Company to Montrose Chemical Corporation obligate Admiral to defend Montrose in lawsuits seeking damages for personal injuries and property damage allegedly caused by Montrose's disposal of hazardous wastes at times predating the inception of Admiral's policies. We hold that Admiral's CGL policies provide coverage for bodily injuries and property damage which "occurred" during each policy period and that bodily injuries and property damage which are continuous and progressive throughout successive policy periods are covered by all policies in effect during those periods. We therefore reverse a summary judgment granted in favor of Admiral.


Montrose, a defunct chemical company, manufactured DDT for use in pesticides from 1947 until 1982. It has been covered since 1960 by comprehensive general liability insurance policies purchased from seven different carriers, ending with Admiral. Admiral issued four separate CGL policies to Montrose, covering the period from October 13, 1982, to March 20, 1986. 1

Admiral's policies obligate it to "pay on behalf of [Montrose] all sums which [Montrose] shall become legally obligated to pay as damages because of ... bodily injury, or ... property damage to which this insurance applies, caused by an occurrence...." "Occurrence" is defined as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of [Montrose]."

Five actions are pending against Montrose, all alleging property damage (and one alleging bodily injuries) resulting from the contamination of certain sites where Montrose manufactured its product or disposed of its hazardous wastes.

1. In United States of America, et al. v. J.B. Stringfellow, Jr., et al. (Civ. No. 83- 2. In Newman, et al. v. J.B. Stringfellow, Jr., et al. (Super.Ct. Riverside County, No. 165994MF), a private party toxic tort action, the plaintiffs seek damages for personal injuries and property damage alleged to have occurred beginning in 1956 and continuing to the present time. This is the only action in which damages are sought for bodily injuries. 2

2501 (HLH) C.D.Cal.), the United States seeks reimbursement for costs incurred pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, 42 U.S.C. § 9601 et seq.) in investigating, removing and remediating alleged contamination at and near the Stringfellow Acid Pits in Riverside County. The government also seeks damages for "injury to natural resources," abatement of conditions and clean-up at and near the Stringfellow site. According to the complaint, the property damage allegedly occurred beginning in 1956 and continues to the present time. No bodily injury is alleged.

3. Parr-Richmond Terminal Co., et al. v. Levin Metals Corp., et al. (No. C 85-4776 SC, N.D.Cal.), Levin Metals Corp., et al. v. Parr-Richmond Terminal Co., et al. (Nos. C 84-6273 SC and 84-6324 SC, N.D.Cal.), and Levin Metals Corp. v. Parr-Richmond Terminal Co., et al. (Super.Ct. Contra Costa County, No. 255836) all arise out of a state court action brought by Levin Metals against Parr-Richmond, alleging that real property sold by Parr-Richmond to Levin Metals in 1981 was contaminated with hazardous waste and seeking damages for fraud based on Parr-Richmond's failure to disclose the alleged contamination. According to Levin Metals' complaint, it discovered the contamination in August 1982 (a date prior to the inception of Admiral's initial policy). Parr-Richmond cross-complained against Montrose and others for contribution and indemnity. Although the Levin Metals Cases were further complicated by Parr-Richmond's efforts to avoid CERCLA liability and other related federal actions, all that matters here is that Montrose was being sued for indemnity and contribution for allegedly contaminating the United Heckathorn site in Contra Costa County during a period beginning in 1947 and continuing to the present time. 3

Montrose tendered defense of these actions to its seven CGL carriers, including Admiral, and all but one agreed to defend subject to a reservation of rights. In 1986, Montrose sued the carriers, seeking a declaration that Admiral and the other insurers had a duty to both defend and indemnify in all five actions. In 1989, Admiral filed motions for summary judgment and summary adjudication of issues, asking the trial court to find (1) that it had no duty to defend or indemnify in the Levin Metals Cases because the alleged injuries did not "occur" during Admiral's policy periods, and (2) that it had no duty to defend or indemnify in the Stringfellow Cases because the contamination alleged in those actions was an uninsurable "known loss" prior to the effective date of the first policy issued by Admiral (October 13, 1982). The evidence submitted in support of and in opposition to Admiral's motion established the following undisputed facts.

The Stringfellow Cases

Although the Stringfellow site opened in 1956 and closed in 1972, chemical wastes generated by Montrose were deposited there only between 1968 and 1972. As early as 1970, toxic wastes were observed seeping from the site and in 1975 the Santa Ana Regional Water Quality Control Board declared the site to be a public nuisance. 4

According to the plaintiffs in Newman v. Stringfellow, 27 wrongful deaths occurred between 1982 and 1986 (the period Admiral's policies were in effect) and property damage occurred during that same period. According to the plaintiffs in both Stringfellow Cases, between February 1982 and February 1983, the concentration of Trichloroethylene (a suspected human carcinogen) tripled in the ground water located between the Stringfellow site and the town of Glen Avon. Unquestionably, Montrose knew, during the period the Admiral policies were in effect, that something was wrong at the Stringfellow site. For example, on August 31, 1982, Montrose was notified by the United States Environmental Protection Agency (EPA) that it considered Montrose a potentially responsible party (PRP) for money expended for response activities at the Stringfellow site. At about the same time, Montrose notified its environmental impairment liability (EIL) carrier, International Insurance Company, of the Stringfellow "claim" but did not notify Admiral. 5

The Levin Metals Cases

All chemical processing at the Parr-Richmond Terminal site ceased in 1964 or 1965 and, according to the plaintiffs in the Levin Metals Cases, the environmental contamination at that site manifested itself no later than August 1982. (This is the sum total of the evidence presented on these cases.)

Admiral's motion for summary judgment was granted and this appeal followed.


In the trial court, Admiral advanced two theories to defeat coverage. Relying on the "manifestation of loss" rule articulated by our Supreme Court in a first-party insurance case (Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674, 274 Cal.Rptr. 387, 798 P.2d 1230), Admiral argued that injury and damage "occurred" when, prior to the effective date of Admiral's policies, Montrose discovered (or should have discovered) the problem at the Stringfellow site. Alternatively, Admiral contended the risks for which Montrose now seeks coverage were known to it at the time the Admiral policies were purchased and that, therefore, the "known loss" doctrine bars coverage. (Ins.Code, § 22 [an insurance contract is an agreement to indemnify against loss, damage or liability "arising from a contingent or unknown event"].) 6 On this appeal, Admiral's first argument remains unchanged but its second argument has been refined ...

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