CDM Investors v. Amer. Nat. Fire Ins. 10/15/03 CA6

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: H024142

Case Date: 10/15/2003

Preview:Filed 10/15/03

CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT CDM INVESTORS et al., Plaintiffs and Appellants, v. AMERICAN NATIONAL FIRE INSURANCE COMPANY et al., Defendants and Respondents. In this insurance coverage action, plaintiffs CDM Investors and Ralph Borelli appeal from a judgment that resulted after the trial court sustained the demurrers of defendants American National Fire Insurance Company, American Alliance Insurance Company, and Great American Insurance Companies (collectively, Great American), Travelers Casualty & Surety Company (Travelers), and Transamerica Insurance Group (TIG). They principally contend that the trial court misinterpreted standard form comprehensive or commercial general liability and excess/umbrella insurance policies (CGL policies) as not providing coverage for "response costs" incurred pursuant to an administrative order that charged plaintiffs with being suspected dischargers of pollutants causing damage to soil and groundwater. We affirm the judgment. SCOPE OF REVIEW We review a general demurrer under well-established principles. The appeal presents the question of law whether the complaint, liberally construed, contains facts sufficient to entitle plaintiff to any relief. We assume the truth of all material facts properly pleaded in the complaint unless they are contradicted by facts judicially noticed, H024142 (Santa Clara County Super. Ct. No. CV791029)

but no such credit is given to pleaded contentions or legal conclusions. (Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 768-769.) INSURANCE CONTRACT INTERPRETATION " `While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply.' [Citations.] `The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties.' [Citation.] `Such intent is to be inferred, if possible, solely from the written provisions of the contract.' [Citation.] `If contractual language is clear and explicit, it governs.' [Citation.]" (Foster-Gardner, Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857, 868, hereafter Foster-Gardner.) Ambiguity exists when an insurance policy provision " `is capable of two or more constructions, both of which are reasonable.' [Citations.] The fact that a term is not defined in the policies does not make it ambiguous. [Citations.] Nor does `[d]isagreement concerning the meaning of a phrase,' or ` "the fact that a word or phrase isolated from its context is susceptible of more than one meaning." ' [Citation.] ` "[L]anguage in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract." ' [Citation.] `If an asserted ambiguity is not eliminated by the language and context of the policy, courts then invoke the principle that ambiguities are generally construed against the party who caused the uncertainty to exist (i.e., the insurer) in order to protect the insured's reasonable expectation of coverage.' [Citation.]" (FosterGardner, supra, 18 Cal.4th at p. 868.) But if "a term in an insurance policy has been judicially construed, it is not ambiguous and the judicial construction of the term should be read into the policy unless the parties express a contrary intent." (Bartlome v. State Farm Fire & Casualty Co. (1989) 208 Cal.App.3d 1235, 1239.)

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FACTUAL BACKGROUND Plaintiffs owned commercial real property that they leased to tenants. In 1989, the California Water Quality Control Board (Board) ordered them to test the property for pollutants after it concluded that they were suspected dischargers of pollutants causing damage to soil and groundwater in the vicinity of the property. Plaintiffs notified defendants of the Board's order and claimed insurance coverage for the costs to respond. Defendants denied coverage. Plaintiffs paid a consulting firm approximately $230,000 to comply with the order. In 1997, the Board closed its investigation without taking further action after essentially concluding that plaintiffs' property was not the source of the pollution. Plaintiffs filed this action in 2000. They basically allege that coverage existed and seek reimbursement for the response costs. LEGAL BACKGROUND "[T]he standard comprehensive general liability insurance policy was developed in 1940. [Citations.] Over the years that have followed, it has periodically been revised, appearing in various versions. [Citations.] It had its name changed to the standard commercial general liability insurance policy in 1986." (Certain Underwriters at Lloyd's of London v. Superior Court (2001) 24 Cal.4th 945, 955, hereafter Powerine.) CGL policies generally indemnify the insured for all sums the insured shall be obligated to pay by reason of liability for property damage as defined. (FMC Corp. v. Plaisted & Companies (1998) 61 Cal.App.4th 1132, 1142.) The Supreme Court has established as general propositions "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.

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