Judge Glenda Sanders, Case 2012-00586683 2022-10-07 Tentative Ruling

Judge: Glenda Sanders, Case: 2012-00586683, Date: 2022-10-07 Tentative Ruling

1. Motion for Summary Judgment and/or Adjudication

2. Status Conference

Defendant Fireman’s Fund Insurance Company (“FFIC”) moves for summary adjudication that any duty FFIC had to pay plaintiff Embee, Inc. for defense costs incurred pursuant to the California Department of Toxic Substances Control (“DTSC”) consent decrees has terminated as of August 25, 2020. The motion is denied.

FFIC has not met its burden under Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849-850.

FFIC issued two Blanket Excess Liability Policies to Embee which, together, covered the period from April 1, 1980 through April 1 1982. (UF 1, 3). Each policy provides that FFIC “shall assume charge of the settlement or defense of any claim or suit against the insured seeking damages on account of personal injury, property damage or advertising liability covered by this policy and to which no primary insurance applies or on account of exhaustion of the aggregate limits of liability of the primary policies.” (UF 2, 4).

Embee entered into two Consent Agreements with the DTSC, one in 2001 and the other in 2012. (UF 6). The DTSC has not filed a civil action lawsuit against Embee seeking damages. (UF 7). On August 4, 2014, FFIC accepted a duty to defend Embee with respect to the DTSC Consent Agreements under the two aforementioned policies. This was subject to a reservation of rights. (UF 5).

In August 2016, this court (Judge Andler presiding) ruled on FFIC’s motion for summary adjudication regarding its duty to defend and indemnify Embee against DTSC proceedings. (Exh. H).

Contrary to FFIC’s characterization, Judge Andler did not find that there was a duty to defend the DTSC Consent Agreements; rather, Judge Andler only found that there were triable issues of fact as to whether there was a duty to defend. Judge Andler noted that site investigation costs that were incurred in order to comply with the directives of the DTSC were also incurred for the additional purpose of defending the separate Orange County Water District (“OCWD”) Action. (Exh. H at MSA p. 140). Per Aerojet-General Corp. v. Transport Indemnity Co. (1997) 17 Cal.4th 38, such costs can fall within the scope of the duty to defend when incurred in connection with a suit.

FFIC now asks the court to find that the potential duty to defend the DTSC Consent Agreements was conclusively terminated because the OCWD action was dismissed. However, when a court finds a triable issue of fact and denies a summary adjudication motion, the court is not concluding that the triable issue of fact mentioned in the ruling is the only triable issue.

Here, the moving papers are insufficient to meet FFIC’s burden because FFIC assumes that Judge Andler found that the only basis for FFIC’s potential duty to defend the DTSC Consent Agreements is via the OCWD action.

The ruling does not support this interpretation and FFIC has not provided sufficient material facts which would enable the court at this juncture to make such a determination. The separate statement includes the undisputed facts that Embee entered into two Consent Agreements with the DTSC and that DTSC has not filed a civil action lawsuit against Embee seeking damages in a court of law. (UF 6-7). FFIC also includes language from its reservation of rights letter. (UF 5).

However, as Judge Andler correctly found:

“Where a duty to defend is limited to ‘suits,’ there is no duty to defend ‘claims’ which have not yet become ‘suits.’ (Foster-Gardner, Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857, 870-71.) But Fireman's Excess Policies also provide for defense of claims. [] A proceeding before an administrative agency pursuant to an environmental statute implicates a ‘claim.’ (Certain Underwriters at Lloyd's of London v. Superior Court (2001) 24 Ca1.4th 945, 960 ("Powerine I").) As Fireman's Excess Policies provide for defense of both a suit and a claim, its duty to defend is not limited to civil actions prosecuted in a court.”

In connection with this motion, FFIC has not demonstrated that the dismissal of the OCWD Action on August 25, 2020 disposed of all bases for FFIC’s potential duty to defend the DTSC proceeding. This is because FFIC has not met its burden to demonstrate that the duty to defend was solely tied to the OCWD Action. FFIC’s statements in its reservation of rights letter amount to legal conclusions drawn by FFIC and do not provide a basis for the court to find in FFIC’s favor.

The motion is therefore denied.