Lick Mill Creek Apartments v. Chicago Title Insurance Co.

231 Cal. App. 3d 1654, 283 Cal. Rptr. 231 (1991)

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Nature of the Case

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Facts

In 1979, Kimball Small Investments 103 (K) purchased the property. Prior to 1979 various corporations operated warehouses and chemical processing plants on the 30 acres of land near the Guadalupe River in Santa Clara County. Between 1979 and 1981 the California Department of Health Services ordered K to remedy the toxic contamination of the property. K did not comply with this order. In early 1986, Lick Mill Creek Apartments (P) bought lot 1 of the property from K. P purchased title insurance from Chicago Title Insurance Co. (D). The policy was an ATLA policy. Prior to issuing the policy, D commissioned a survey and inspection of the property by Carroll Resources Engineering & Management (C). Ps subsequently bought lots 2 and 3 from K and secured 2 additional ATLA policies from D and First American Title Insurance Company. The entire site was surveyed and inspected. During the survey and inspection, pipes, tanks, and pumps, among other things, were found on the property. There were also records held by local governmental agencies indicating the presence of hazardous substances and an order for K to clean up the contamination. P incurred the expense of cleaning up the hazardous materials. P claimed that the policy given by D insured marketability of title and that the presence of hazardous materials made the property unmarketable. The trial court held that D's insurance policy did not cover the costs of removing hazardous substances. P appealed.