Pepper Industries, Inc. v. Home Ins. Co.

Decision Date11 March 1977
Citation67 Cal.App.3d 1012,134 Cal.Rptr. 904
CourtCalifornia Court of Appeals Court of Appeals
PartiesPEPPER INDUSTRIES, INC., Plaintiff and Respondent, v. HOME INSURANCE COMPANY, Defendant and Appellant. Civ. 14544.
Haight, Lyon, Smith & Dickson by Roy G. Weatherup, Los Angeles, for defendant and appellant

Wingert, Grebing & Anello by John R. Wingert and Michael M. Anello, San Diego, for plaintiff and respondent.

AULT, Acting Presiding Justice.

Respondent Pepper Industries, Inc. (Pepper) filed this action in declaratory relief against Harbor Insurance Company (Harbor) and appellant Home Insurance Company (Home) and was granted summary judgment determining that the general liability insurance policies issued by the two companies provide coverage for Pepper's liability, if any, to the City of San Diego for an explosion and fire allegedly resulting from Pepper's discharge of some 5,000 gallons of gasoline into the city sewer system on February 6, 1973. The judgment specifically declares the 'pollution endorsement' in each policy does not exclude coverage for the incident. The City had filed a complaint against Pepper and others, alleging both negligence and willful misconduct and seeking $250,000 for property damage, $50,000 for the cost of fire suppression, and apparently $250,000 in punitive damages in addition. 1

Harbor, Pepper's primary insurer under a policy with a property damage limit of $100,000 per occurrence, did not oppose Pepper's motion for summary judgment and has not appealed. Home, Pepper's excess insurer under a policy providing coverage for property damage over $100,000 up to $1 million, opposed the motion and now appeals from the judgment, contending:

(1) The judgment does violence to the plain language of the pollution endorsement, and even if some ambiguity is found in its language, uncontradicted evidence supports Home's contention its policy was not intended to cover the City's (2) In any event, it was error to grant the summary judgment because there were triable issues of fact.

claim for property damage arising out of the discharge of a petroleum derivative, for fire suppression costs, or for punitive damages.

As part of the insuring agreement of its policy, Home agreed, subject to the limitations stated later in the policy, to indemnify Pepper for all sums Pepper became obligated to pay by reason of liability imposed by law for property damage, direct or consequential and expenses; property damage was defined as loss of or direct damage to or destruction of tangible property other than that owned by the named insured.

Attached to the policy as Endorsement 8 was what is commonly called a 'pollution endorsement' and which stated:

'In consideration of the premium charged, it is agreed that this policy does not apply to:

'1) Bodily Injury or Property Damage arising out of the discharge, dispersal, release or escape of oil or other petroleum derivatives or substances (including oil refuse or oil mixed with wastes) smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water; whether or not sudden and accidental.

'2) the cost of removing, nullifying or cleaning up seeping, polluting or contaminating substances.

'3) loss of, damage to, or loss of use of property directly or indirectly resulting from subsidence caused by sub-surface operations of the Insured.

'4) removal of, loss of or damage to subsurface oil, gas or any other substance, the property of others.

'5) to expenses incurred or to bodily injury, sickness, disease or death or injury to or destruction of property, including the loss of use thereof, resulting from the emission of gases, fumes, smoke, vapors or other air pollutants.

'6) loss of hole or in-hole equipment, or any expense incurred by the Insured in regaining control of any oil and/or gas well.

'7) fines, penalties, punitive or exemplary damages resulting from seepage, contamination or pollution.'

After filing this action for declaratory relief against both Harbor and Home and receiving their answers to written interrogatories, Pepper moved for summary judgment on the ground there were no triable issues of material fact and that as a matter of law the policies provided coverage, and the pollution endorsements did not exclude coverage, for its liability arising out of the explosion and fire. With its notice of motion, Pepper filed a declaration by Yale Combs, its vice president, briefly describing the two insurance policies and the City's lawsuit against Pepper and asserting that the two insurance companies had rejected its claims on the basis of their pollution endorsements. Before the hearing Pepper filed two additional declarations: one by its attorney John R. Wingert, disclosing that Harbor had indicated it would pay the full policy limit and not appear at the hearing; the other declaration by Jon R. Robson, stating he had acted as the agent of Home, and attaching a complete copy of the Home policy and its various endorsements.

In opposition Home filed the declaration by Leonard Beiser, its Los Angeles claims representative for excess insurance. After stating he was responsible for the interpretation of endorsements to excess policies and was familiar with the alleged facts underlying the lawsuit, Beiser declared:

'The Home endorsement was specifically drafted to exclude the type of release of In December 1974, after oral argument by counsel, the court granted the motion for summary judgment without explanation. In January 1975 the court signed a judgment declaring both insurance policies provide coverage for the February 6, 1973 incident '. . . as alleged in the City of San Diego's complaint, and that the pollution endorsement in each said policy does not exclude coverage for liability, if any, arising out of the alleged discharge of a petroleum type substance into the City of San Diego's sanitary sewer system by plaintiff, which ignited and caused damage to said sewer system and a pumping station.'

gasoline into a public sewer which allegedly occurred here, or the release of Any petroleum products by Any means into Any medium. The endorsement was so worded to reflect that intent. Furthermore, I understand the premium set by the Home Insurance Company was significantly lower than the premium which would have been charged for the coverage for which Pepper Industries, Incorporated, argues.'

DISCUSSION

Summary judgment is an appropriate vehicle to determine coverage under an insurance policy when it appears there is no material issue of fact to...

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