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Aerojet-General Corp. v. Transport Indemnity Co.

Supreme Court of California

December 29, 1997, Decided

No. S054501.

Opinion

 [*45]  [**912]  [***121]    MOSK, J. 

In this cause, we resolve two issues relating to standard commercial general liability insurance policies, which were formerly called comprehensive general liability insurance policies. The first question is whether site investigation expenses--broadly, expenses for determining the existence, nature, extent, effect, etc., of the discharge of hazardous substances at a location--may constitute defense costs that the insurer must incur in fulfilling its duty to defend. The second is whether defense costs may be allocated to the insured. As [****4]  we shall explain, we conclude that, as to each, the answer is qualifiedly affirmative.

This is still another chapter in the yet-to-be-completed volume relating the story of Aerojet-General Corporation in Sacramento County. (See, e.g.,  [*46]  Mangini v. Aerojet-General Corp. (1996) 12 Cal. 4th 1087 [51 Cal. Rptr. 2d 272, 912 P.2d 1220]; Aerojet-General Corp. v. Transport Indemnity Insurance (1993) 18 Cal. App. 4th 996 [22 Cal. Rptr. 2d 862]; Mangini v. Aerojet-General Corp. (1991) 230 Cal. App. 3d 1125 [281 Cal. Rptr. 827]; Aerojet-General Corp. v. Superior Court (1989) 211 Cal. App. 3d 216 [257 Cal. Rptr. 621].) Aerojet-General Corporation is, and has been, a leading manufacturer in the aerospace and defense markets. Throughout the course of its operations from the early 1950's into the 1980's, it discharged hazardous substances, including trichloroethylene, in an ongoing fashion at its Sacramento site and thereby caused pollution in and around that location as such substances spread onto the ground, into the groundwater, and beyond toward the American River.

In 1982, Transport Indemnity Company and Associated International Insurance Company (hereafter [****5]  collectively Transport Indemnity) filed a complaint for declaratory relief in the Superior Court of San Mateo County, which was docketed under No. 262425, against, inter alios, numerous other insurers and their common insureds, Aerojet-General Corporation and its wholly owned subsidiary Cordova Chemical Company (hereafter collectively Aerojet), regarding the parties' rights and duties under various comprehensive general liability and other insurance policies. 1 It appears that what was stated above was already known or believed--that, throughout the course of its operations from the early 1950's into the 1980's, Aerojet had discharged hazardous substances in an ongoing fashion at its Sacramento site and had thereby caused pollution in and around that location resulting in continuous and/or progressively deteriorating bodily injury and/or property damage. In its complaint, Transport Indemnity sought declarations including that it was not obligated  [***122]  to provide, and Aerojet was not entitled to receive, either indemnification or defense.

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17 Cal. 4th 38 *; 948 P.2d 909 **; 70 Cal. Rptr. 2d 118 ***; 1997 Cal. LEXIS 8343 ****; 97 Daily Journal DAR 15551; 97 Cal. Daily Op. Service 9704; 28 ELR 20590; 46 ERC (BNA) 1025

AEROJET-GENERAL CORPORATION et al., Cross-complainants and Appellants, v. TRANSPORT INDEMNITY COMPANY et al., Cross-defendants and Respondents.

Subsequent History:  [****1]  As Modified March 11, 1998. Rehearing Denied March 11, 1998, Reported at: 1998 Cal. LEXIS 1467.

Prior History: Superior Court of San Mateo County. Super. Ct. No. 262425. John J. Bible, Judge.

Aerojet-General Corp. v. Transport Indem. Co., 50 Cal. App. 4th 354, 53 Cal. Rptr. 2d 398, 1996 Cal. App. LEXIS 514 (Cal. App. 1st Dist., 1996)

Disposition: The court Affirmed in part and Reversed in part.

CORE TERMS

insured, defense costs, site, costs, expenses, superior court, indemnity, duty to defend, policies, pollution, policy period, coverage, allocated, indemnification, occurrence, phase, cleanup, incur, property damage, triggering, Chemical, insurance policy, bodily injury, damages, reimburse, contractual, fulfilling, hazardous substance, duty to indemnify, fronting

Environmental Law, Hazardous Wastes & Toxic Substances, CERCLA & Superfund, General Overview, Civil Procedure, Writs, Common Law Writs, Mandamus, Judgments, Relief From Judgments, Vacation of Judgments, Appeals, Citations, Precedence & Publication, Publication of Opinions, Financial Responsibility, Insurance Law, Policy Interpretation, Ambiguous Terms, Business & Corporate Compliance, Cleanup Standards, Evidence, Judicial Notice, Obligations of Parties, Policyholders, Notice of Claims, Business Insurance, Commercial General Liability Insurance, Independent Actions, Damages, Indemnification, Coverage, Triggers, Multiple Insurers, Liability & Performance Standards, Good Faith & Fair Dealing, Duty to Defend, Claim, Contract & Practice Issues, Burdens of Proof, Allocation