Insurance Law

Limits of Coverage in "Continuous Trigger" Cases:
They Keep Going and Going and Going . . .

By George Wallace

The Stringfellow Acid Pits of Riverside County have been spawning (spewing?) litigation for decades, both as to when, how and by whom the site must be cleaned up and as to which of the responsible parties' insurers must bear what portion of the cost.  The State of California filed suit in 1983 against an assortment of defendants that it blamed for conditions and discharges at the site, leading ironically to a 1998 determination that the State itself bore much of the culpability.  The State promptly turned to its various liability insurers, leading to extensive litigation over those insurers' responsibilities. 

A number of the insurers extricated themselves via summary judgment.  Others settled.  In May of 2005, Decs&Excs took note of the Riverside Superior Court's judgment imposing responsibility on those insurers that remained in the case.  However, because of the manner in which the trial court calculated the available policy limits and applied offsets for payments made by the various settling insurers, the State ultimately found itself the proud possessor of a judgment in its favor for: $0.00. 

The inevitable appeal followed and yesterday California's Fourth District Court of Appeal issued an epic 76-page decision: State of California v. Continental Insurance Company (E041425, Jan. 5, 2009). 

In the newsworthy portion of the opinion, the Court of Appeal reversed the trial court' calculation of the amount of the available policy limits.  The trial judge had concluded that the maximum amount each insurer could be responsible to pay was the policy limits for a single policy period.  If the policy had been renewed for subsequent periods, no additional limits were available even though the covered damage continued in to those subsequent periods.  The Court of Appeal disagrees, concluding that when an insurer has issued a policy over several policy periods, during each of which covered damage was accumulating, the limits available in each period may be "stacked" on the limits available for each other period to determine that insurer's maximum responsibility:

If an occurrence happens entirely within one policy period, the insured has paid one premium and can recover up to one policy limit; however, if an occurrence is continuous across two policy periods, the insured has paid two premiums, and can recover up to the combined total of two policy limits. We see nothing unfair or unexpected in this.

The State's claims against the insurers who extricated themselves by motions for summary judgment remain pending before the California Supreme Court, to be determined who knows when.  It is probable that some or all of the insurers involved in this latest decision will also be seeking Supreme Court review.  And so the saga continues, and continues, and continues.

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Incidental Intelligence:

In a case of "everything old is new again," California Attorney General Edmund G. "Jerry" Brown, Jr., appears in the long list of attorneys representing the State in this case.  He was, of course, Governor of California in 1981 when Stringfellow was first designated as the state's top priority site for cleanup.  Given ongoing rumors concerning his intentions in 2010, Jerry Brown may be Governor again whenever the various Stringfellovian lawsuits finally come to an end.

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Photo by Greg Crowder (July 2, 1980), via Center for Community Action and Environmental Justice. 

Full post as published by Declarations and Exclusions on January 06, 2009 (boomark / email).