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Montrose Chemical Corp. v. Superior Court

Supreme Court of California

November 22, 1993, Decided

No. S024390.

Opinion

 [*291]  [**1154]  [***468]    This declaratory relief action presents issues relating to the scope of a liability insurer's duty to defend its insured in an underlying third party lawsuit. The parties before us--carriers who issued comprehensive general liability (CGL) policies and the pesticide manufacturer to which the policies were sold--disagree on the proper  [**1155]   [***469]  use of extrinsic evidence in determining the scope of the defense duty and the nature of the parties' respective burdens on motions for summary adjudication of defense obligations. We conclude that ] evidence extrinsic to the underlying complaint can defeat as well as generate a defense duty, and that summary adjudication of the defense duty follows the same procedural rules as those applicable in any other type of litigation. Because the Court of Appeal correctly applied the law in this case, we affirm the judgment.

 [*292]  FACTUAL AND PROCEDURAL [****3]  BACKGROUND

From 1947 to 1982, Montrose Chemical Corporation of California (Montrose) manufactured the pesticide dichloro-diphenyl-trichlorethane (DDT) at its facility in Torrance, California. During the 1960's conservationists began to raise serious concerns about the effect of DDT on the environment (see, e.g., Carson, The Silent Spring (1963)), and in 1972 the federal government prohibited its use within this country. Montrose continued to manufacture DDT for export at the Torrance facility until it closed the plant in 1982.

In 1990 the United States and the State of California sued Montrose in the United States District Court for the Central District of California under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. § 9607 et seq.) (CERCLA). (United States, et al. v. Montrose Chemical Corporation of California, et al. (U.S. Dist. Ct. C.D.Cal.), 1990, No. CV 90-3122-AAH (JRx)).) The CERCLA action alleges that Montrose's operation of its Torrance facility caused environmental contamination that damaged land, water, and wildlife in the Los Angeles Harbor and neighboring waters. CERCLA imposes liability [****4]  without fault on present and former owners of hazardous waste disposal sites, transporters of hazardous wastes, and those who arrange for the transport and disposal of hazardous wastes. (42 U.S.C. § 9607(a).) The complaint does not allege that Montrose intentionally caused the alleged contamination. Montrose is also named as a defendant in a cross-complaint filed by the Los Angeles County Sanitation District. The cross-complaint alleges that Montrose's operations at the Torrance facility resulted in property damage over a lengthy period, for which Montrose should be held liable on theories of strict liability and negligence.

Montrose had purchased liability insurance from various carriers 1 to cover its operations at the Torrance facility from 1960 to 1986. The carriers issued to Montrose CGL policies in which they promised to defend it against "any suit . . . seeking damages on account of bodily injury or property damage, even if any of the allegations of the suit are groundless, false, or fraudulent." The carriers also agreed to indemnify Montrose for "bodily injury or property damage . . . caused by an occurrence." "Property damage" was defined [****5]  as "injury to or destruction of tangible property which results during the policy period." "Occurrence" was defined as "an accident, including continuous or repeated exposure to conditions which results in . . . property  [*293]  damage neither expected nor intended from the standpoint of the insured. . . ."

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6 Cal. 4th 287 *; 861 P.2d 1153 **; 24 Cal. Rptr. 2d 467 ***; 1993 Cal. LEXIS 5812 ****; 93 Daily Journal DAR 14745; 93 Cal. Daily Op. Service 8631; 37 ERC (BNA) 1989

MONTROSE CHEMICAL CORPORATION OF CALIFORNIA, Petitioner, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; CANADIAN UNIVERSAL INSURANCE COMPANY, INC., et al., Real Parties in Interest.

Prior History:  [****1]  Superior Court of Los Angeles County, No. BC005158, John Zebrowski, Judge.

Disposition: The judgment of the Court of Appeal is affirmed. As to American Motorists Insurance Company only, the matter is remanded to the trial court for further proceedings in accordance with the views expressed in this opinion.

CORE TERMS

insurer, coverage, duty to defend, policies, defense duty, trial court, summary judgment, declaratory relief action, extrinsic evidence, summary adjudication, property damage, carriers, undisputed, occurrence, notice, insurance company, named insured, defeat, indemnity, litigated, declaratory relief, contamination, allegations, determines, extrinsic, third party complaint, underlying action, underlying claim, seek damages, third party

Business & Corporate Compliance, Environmental Law, Hazardous Wastes & Toxic Substances, Pesticides, Civil Procedure, Summary Judgment, Entitlement as Matter of Law, General Overview, Opposing Materials, Insurance Law, Business Insurance, Commercial General Liability Insurance, Duty to Defend, Liability & Performance Standards, Good Faith & Fair Dealing, Transportation Law, Carrier Duties & Liabilities, Damages, Procedure, Evidence & Trial, Burdens of Proof, Remedies, Declaratory Judgments, State Declaratory Judgments, Immigration Law, Judicial Proceedings, Declaratory Judgments, Bad Faith & Extracontractual Liability, Refusals to Defend, Stays of Proceedings