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AIU Ins. Co. v. Superior Court

Supreme Court of California

November 15, 1990

No. S012525


 [*813]  [**1258]  [***825]    We are called on to decide whether, under comprehensive general liability (CGL) insurance policies issued by petitioners (insurers) to real party in interest FMC Corporation (FMC), insurers are obligated to  [*814]  provide coverage to FMC for cleanup and other "response" costs incurred pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C. § 9601 et seq.) and related state and federal environmental laws. FMC seeks review of the peremptory writ of mandate issued by the Court of Appeal, which directed the superior court to enter summary adjudication on this issue in favor of the insurers.

 [**1259]  [***826]   We reverse the decision of the Court of Appeal. The insurance policies at issue provide coverage to FMC for all sums FMC becomes legally obligated to pay as "damages" (under two policy forms) or "ultimate net loss" (under a third) because [****3]  of property damage. Under established principles of contract interpretation, we construe policy language according to the mutual intentions of the parties and its "plain and ordinary" meaning, resolving ambiguities in favor of coverage. Applying these rules, we conclude that the policies cover the costs of reimbursing government agencies and complying with injunctions ordering cleanup under CERCLA and similar statutes. Although many of the policies contain exclusions arguably relevant to whether environmental cleanup costs are covered, we do not consider the applicability of exclusions in this case, which comes to us on motion for summary adjudication solely as to the coverage clauses. (See post, pp. 816-817.)

I. Factual and Procedural Background

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51 Cal. 3d 807 *; 799 P.2d 1253 **; 274 Cal. Rptr. 820 ***; 1990 Cal. LEXIS 5050 ****; 21 ELR 20315; 32 ERC (BNA) 1257


Prior History:  [****1]  Superior Court of Santa Clara County, No. 643058, Eugene M. Premo, Judge.


damages, policies, reimbursement, insured, costs, response costs, coverage, injunction, property damage, courts, restitution, agencies, injunctive relief, cleanup, ambiguous, detriment, remedies, hazardous waste, mitigation, expenses, environmental, purposes, sites, insurance policy, decisions, parties, third party suit, prophylactic, reasonable expectation, dictionary definition

Contracts Law, Contract Formation, Mistake, General Overview, Contract Interpretation, Intent, Defenses, Ambiguities & Mistakes, Insurance Law, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Coverage Favored, Labor & Employment Law, Conditions & Terms, Duration of Employment, Claim, Contract & Practice Issues, Reasonable Expectations, Environmental Law, Hazardous Wastes & Toxic Substances, CERCLA & Superfund, Financial Responsibility, Governments, Legislation, Statute of Limitations, Civil Procedure, Jury Trials, Right to Jury Trial, Actions in Equity, Business Insurance, Commercial General Liability Insurance, Damages, Cleanup, Real Property Law, Environmental Regulations, Liabilities & Risks, Contractual Relationships, Enforcement, Cost Recovery Actions, Strict Liability, Torts, Remedies, Types of Damages, Property Damages, Measurements, Judgments, Relief From Judgments, Independent Actions, Damages, Monetary Damages, Compensatory Damages, Landlord & Tenant, Rent Regulation, Criminal Law & Procedure, Sentencing, Restitution, Statutory Remedies & Rights, Injunctions, Permanent Injunctions, Preliminary & Temporary Injunctions, Coverage, Environmental Claims, Business & Corporate Compliance, Clean Water Act, Injunctions, Property Claims