Montrose Chemical Corporation Of California v. Admiral Insurance Company

913 P.2d 878 (1995)

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Nature of the Case

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Facts

From 1947 until 1982, P manufactured the pesticide dichloro-diphenyl-trichlorethane (DDT). In 1972, the federal government prohibited all domestic use of DDT. P continued to manufacture the chemical for export until its plant closed in 1982. Between January 1960 and March 1986, seven different carriers, ending with D, furnished CGL policies to P. D issued four policies to P, covering the period from October 13, 1982, to March 20, 1986. The remaining six CGL insurers involved in this litigation are not parties to this appeal. D's policies obligate it to 'pay on behalf of the insured all sums which the insured 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 the insured.' The issue was whether any of the seven CGL carriers, including D, were obligated to defend P in five actions pending against it in connection with P's disposal of toxic or hazardous wastes at several locations in California. D joined an interim defense agreement to provisionally fund P's defense. P filed its declaratory relief action, and d moved for summary judgment on the issue of its duty to defend given the effective dates and terms of coverage of its policies. The trial court found there was no potential for coverage under D's policies, and that D had no duty to defend the liability actions. The court held that coverage for third party claims of progressive property damage under a CGL policy is 'triggered' when the damage is first discovered; in essence, an application of the 'manifestation' or 'manifestation of loss' rule. The trial court reasoned there was no possibility of coverage under D's policies because the third party Levins Metal claimants allegedly discovered contamination at the Parr-Richmond site no later than August 1982, before the start of D's first policy term. In the Stringfellow cases, the trial court found that coverage was further barred under the 'loss-in-progress' rule codified in sections 22 and 250. P appealed, and the Court of Appeal reversed. It rejected a 'manifestation of loss' or 'discovery' trigger of coverage analysis finding it incompatible with the language of D's third party CGL policies. It held that the continuous or progressively deteriorating property damage 'occurred' throughout the period D's policies were in effect which triggered the duty to defend. The court further held that the loss-in-progress rule did not bar coverage in the Stringfellow cases because the damage alleged to have 'occurred' throughout the period of D's policies was still 'contingent,' and thus insurable, under section 250, even if damage as defined in D's policies was inevitable. D appealed.