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Montrose Chemical Corp. v. Superior Court

Court of Appeal of California, Second Appellate District, Division Three

August 31, 2017, Opinion Filed

B272387

Opinion

 [**751]  EDMON, P. J.—Petitioner Montrose Chemical Corporation of California (Montrose) for many years manufactured the pesticide dichloro-diphenyl-trichloroethane (DDT). Real parties in interest are insurers that issued excess comprehensive general liability (CGL) policies to Montrose in relevant years. The present dispute concerns the sequence in which Montrose may access its excess CGL policies to cover its liability for environmental injuries caused by DDT.

Through a motion for summary adjudication, Montrose sought a declaratory judgment that it may “electively stack” excess policies—i.e., that it may access any excess policy issued in any policy year so long as the lower lying policies for the same policy year have been exhausted. All of the excess insurers opposed [***4]  Montrose's motion for summary adjudication; many of the excess insurers also sought through a cross-motion for summary adjudication a ruling that no insurer had a duty to pay a covered claim until Montrose had “horizontally exhausted” its lower lying excess policies in all triggered policy years.

The trial court rejected “elective stacking” in favor of “horizontal exhaustion,” ordering that higher level excess policies could not be accessed until lower level policies had been exhausted for all policy years. It thus denied Montrose's motion for summary adjudication and granted the excess insurers' cross-motion for summary adjudication. Montrose then filed the present petition for writ of mandate challenging the trial court's summary adjudication order.

We agree with the trial court that “elective stacking” is inconsistent with the policy language of at least some of the  [**752]  more than 115 excess policies at issue and is not compelled by California Supreme Court authority. We therefore conclude that the trial court properly denied Montrose's motion for summary adjudication. Our holding is not as expansive as the trial court's, however. Specifically, we do not hold that policies must be horizontally [***5]  exhausted at each coverage level and for each year before higher-level policies may be accessed. Instead, we conclude that the sequence in which policies may be accessed must be decided on a policy-by-policy basis, taking into account the relevant provisions of each policy. We therefore reverse in part the trial court's grant of the insurers' motion for summary adjudication.

 [*1313] 

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14 Cal. App. 5th 1306 *; 222 Cal. Rptr. 3d 748 **; 2017 Cal. App. LEXIS 759 ***

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.

Notice: THE SUPREME COURT OF CALIFORNIA GRANTED REVIEW IN THIS MATTER (see Cal. Rules of Court, rules 8.1105(e)(1)(B), 8.1115(e)) November 29, 2017, S244737.

Subsequent History: Modified by Montrose Chemical Corp. v. Superior Court, 2017 Cal. App. LEXIS 779 (Cal. App. 2d Dist., Sept. 8, 2017)

Review granted by, Request granted, Request denied by Montrose Chemical Corporation of California v. Superior Court, 225 Cal. Rptr. 3d 796, 406 P.3d 327, 2017 Cal. LEXIS 9353 (Cal., Nov. 29, 2017)

Request granted Montrose Chemical Corporation of California v. Superior Court, 2017 Cal. LEXIS 9816 (Cal., Dec. 14, 2017)

Request granted Montrose Chemical Corp. of California v. Superior Court, 2018 Cal. LEXIS 1631 (Cal., Mar. 6, 2018)

Request granted Montrose Chemical Corp. of California v. Superior Court, 2018 Cal. LEXIS 3777 (Cal., May 10, 2018)

Request granted Montrose Chemical Corp. of California v. Superior Court, 2018 Cal. LEXIS 4001 (Cal., May 25, 2018)

Request granted Montrose Chemical Corp. of California v. Superior Court, 2018 Cal. LEXIS 4647 (Cal., June 20, 2018)

Request granted Montrose Chemical Corp. of California v. Superior Court, 2018 Cal. LEXIS 5669 (Cal., July 10, 2018)

Request granted Montrose Chemical Corporation of California v. Superior Court, 2018 Cal. LEXIS 6727 (Cal., Aug. 29, 2018)

Request granted Montrose Chemical Corp. of Califonia v. Superior Court, 2018 Cal. LEXIS 7345 (Cal., Sept. 26, 2018)

Request granted Montrose Chemical Corp. of California v. Superior Court, 2018 Cal. LEXIS 7338 (Cal., Sept. 26, 2018)

Reversed by, Remanded by Montrose Chemical Corp. of California v. Superior Court, 2020 Cal. LEXIS 2095 (Cal., Apr. 6, 2020)

Prior History:  [***1] Petition for writ of mandate from an order of the Superior Court of Los Angeles County, No. BC005158, Elihu Berle, Judge.

Montrose Chemical Corporaation of California v. Superior Court, 2016 Cal. LEXIS 8391 (Cal., Oct. 12, 2016)

Disposition: Granted in part and denied in part with directions.

CORE TERMS

policies, insured, exhausted, excess policy, coverage, layer, stacking, policy period, provisions, triggered, underlying insurance, summary adjudication, horizontal, elective, summary adjudication motion, policyholder, underlying policy, attach, limits, insurance clause, cause of action, policy limit, excess insurance, trial court, primary policy, obligations, italics, terms, excess coverage, indemnification

Civil Procedure, Summary Judgment, Burdens of Proof, Movant Persuasion & Proof, Judgments, Partial Summary Judgment, Nonmovant Persuasion & Proof, Appeals, Summary Judgment Review, Standards of Review, Insurance Law, Types of Insurance, Excess Insurance, Excess Insurance, Apportionment of Liability, Commercial General Liability Insurance, Coverage, Environmental Claims, Claim, Contract & Practice Issues, Policy Interpretation, Question of Law, Contracts Law, Contract Interpretation, Intent, Triggers, Exposure Triggers, Policy Interpretation, Defenses, Public Policy Violations