Supreme Court of California Justia
Citation 45 Cal. 4th 1008, 201 P.3d 1147, 90 Cal. Rptr. 3d 1

State of California v. Allstate Ins.

Filed 3/9/09

IN THE SUPREME COURT OF CALIFORNIA

STATE OF CALIFORNIA,
Plaintiff and Appellant,
S149988
v.
Ct.App. 4/2 E037627
ALLSTATE INSURANCE COMPANY
et al.,
Riverside County
Super. Ct. No. RIC381555
Defendants and Respondents. )
___________________________________ )
)
STATE OF CALIFORNIA,
Plaintiff,
v.
Riverside County
Super. Ct. No. CIV239784
UNDERWRITERS AT LLOYD’S
LONDON et al.,
)
Defendants.

This case arises from efforts by the State of California (State) to obtain
insurance coverage for property damage liability imposed in a federal lawsuit as a
result of discharges from the “Stringfellow Acid Pits,” a State-designed and -operated
hazardous waste disposal facility in Riverside County. The trial court granted
summary judgment to four of the State’s excess insurers, and the Court of Appeal
reversed. The case presents several issues regarding application of pollution exclusions
1


in comprehensive general liability policies: (1) In determining whether the “sudden
and accidental” discharge exception to the policies’ pollution exclusion applies, is the
proper focus on the initial deposit of chemical wastes into storage on the site or,
instead, on the escape of pollutants from the site into the larger environment? (2) Does
whether an absolute exclusion for pollution of a “watercourse” applies to a 1969
overflow, in which polluted runoff ran down a creek bed, present a triable issue of fact?
(3) Does whether an emergency release of polluted runoff in 1978 was “accidental”
present a triable issue of fact? (4) If triable issues exist as to whether some, but not all,
discharges of pollutants from the site were sudden and accidental, did the trial court
properly grant the insurers summary judgment on the ground that the State cannot
prove what part of its property damage liability resulted from sudden and accidental
discharges?
On these issues, we conclude: (1) Because the State’s liability for property
damage was founded on its negligence in allowing pollutants to escape from the
Stringfellow evaporation ponds into the surrounding groundwater and land, the proper
focus of analysis here is on discharges from the ponds, rather than deposits to them.
(2) A triable issue exists whether the entirety of the 1969 overflow discharge was
limited to a watercourse. (3) A triable issue exists whether the 1978 release was
“accidental.” (4) Because a triable issue of fact exists as to whether sudden and
accidental discharges were a substantial factor in causing indivisible property damage
for which the State was found liable, the trial court erred in granting summary
judgment on the ground that the State cannot prove how much of its liability is
traceable to those discharges. Based on these conclusions, we will affirm in part and
reverse in part the judgment of the Court of Appeal.
FACTUAL AND PROCEDURAL BACKGROUND
The State seeks coverage from four insurers, Allstate Insurance Company,
Century Indemnity Company, Columbia Casualty Company, and Westport Insurance
2
Corporation (collectively Insurers), for liability imposed in a federal court civil action
based on discharge of hazardous wastes from the Stringfellow Acid Pits. In the federal
action, the State and the United States sued companies that had disposed of waste at the
Stringfellow Acid Pits, and the companies counterclaimed against the State. In 1998,
the federal district court held the State 100 percent liable for claims under California
law, and 65 percent liable for claims under federal law, for past and future costs of
remediating contamination of land and groundwater. The State expects those
remediation costs to exceed $500 million. (See United States v. Stringfellow (C.D.Cal.
1995) 1995 WL 450856, pp. *5-*6.)1
Many of the undisputed facts that follow are taken from the November 1993
report of a special master in the federal case, which was adopted, with modifications,
by the district court, and which was added to the summary judgment record by one of
the Insurers. (United States v. Stringfellow (C.D.Cal. 1993) 1993 WL 565393; see
United States v. Stringfellow, supra, 1995 WL 450856, at p. *1.)
In the 1950’s, the State selected the location for and designed and directed the
construction of a class I hazardous waste disposal site (i.e., one capable of accepting all
types of liquid wastes) known as the Stringfellow Acid Pits. The facility, located in the
Jarupa Mountains just north of the community of Glen Avon, in Riverside County, sat
on the floor of a canyon drained by Pyrite Creek. In 1955, geologist Robert Fox
inspected the Stringfellow site for the State. After a brief inspection that included no
borings or soil analysis, Fox deemed the site suitable because of what he believed to be

1
In Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, we
addressed issues regarding insurance coverage for liability on the part of a business that
had disposed of hazardous waste at the Stringfellow site, arising in part from the same
federal court action in which the State was held liable. (See id. at pp. 656-657.) We
did not, however, address there any issue regarding pollution exclusions in
comprehensive general liability policies. (See id. at p. 694.)
3


an impermeable layer of rock, which he assumed had no water in it, beneath the site.
Fox’s investigation resulted in a report concluding that with construction of a
watertight barrier dam across the canyon, and with adequate measures to divert runoff,
the site would pose no threat of environmental pollution.
The State directed construction of open, unlined evaporation ponds to contain
the hazardous waste, channels to divert rainwater around the site, and a barrier dam at
the bottom of the site. The hazardous waste disposal facility was opened in 1956. At
the direction and under the control of the State, more than 30 million gallons of liquid
industrial waste were deposited in the Stringfellow ponds during the facility’s
operation; the State closed the site to new deposits in 1972 after the discovery of
groundwater contamination.
Fox’s assessment of the site proved inaccurate. In fact, the site was underlain by
decomposed granite and fractured bedrock, through which an underground alluvial
channel ran. By 1960, a later report by a State expert found, chemical pollution was
seeping into the groundwater through the fractured rock and around the ends of the
barrier dam, which had been negligently constructed. A plume of contaminated
groundwater moved downgradient from the site.
In addition to underground leaking, two major overflow episodes occurred at the
site. In March 1969, a rainstorm of around 20 inches (statistically expected to occur no
more than once every 50 years), following on earlier heavy rains in January and
February, flooded the site, causing the waste ponds to overflow and send polluted water
down the canyon. In March 1978, again following extraordinarily heavy rains, the
ponds were once more near overflowing and the retention dam began to fail. The State
made a series of controlled discharges from the ponds, releasing about one million
gallons of diluted waste down the Pyrite Creek channel. (The circumstances of the
1969 and 1978 releases are discussed in greater detail in connection with the legal
issues.)
4
The State requested coverage for the liability imposed in the federal action from
several insurers, including the four involved in this appeal. All four of the pertinent
comprehensive general liability polices contain coverage exclusions for liability
resulting from environmental pollution. Three of the policies (all but Columbia
Casualty Company’s) contain a then standard exclusion, qualified by a “sudden and
accidental” exception as to pollution to land or air, but absolute as to pollution to
watercourses and bodies of water: “This policy does not apply: [¶] . . . [¶] H. To
Personal Injury or Property Damage arising out of the discharge, dispersal, release or
escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases,
waste materials or other irritants, contaminants or pollutants into or upon land or the
atmosphere, but this exclusion does not apply if such discharge, dispersal, release or
escape is sudden and accidental. [¶] It is further agreed that the Policy does not apply
to Personal Injury or Property Damage arising out of the discharges, dispersal, release
or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or
gases, waste materials or other irritants, contaminants or pollutants into or upon any
watercourse or body of water.” (Italics added.)
Columbia Casualty Company’s policy combined the exclusion for pollution of
land and air with that for pollution of watercourses and bodies of water, making both
subject to the exception for “sudden and accidental” discharges.
Insurers denied coverage. The State then brought this action for declaratory
relief, breach of contract, and bad faith denial of coverage. The trial court granted
Insurers summary judgment based on their policies’ pollution exclusions. The Court of
Appeal reversed. As relevant here, the appellate court held that the focus in applying
the pollution exclusion was properly on release of pollutants from containment on the
Stringfellow site, that triable issues of fact exist as to whether the 1969 overflow of
waste was “sudden and accidental” and whether it discharged pollutants onto land as
well as into a watercourse, but that the undisputed facts show the 1978 release was not
5
“accidental” because the State had been warned, after the 1969 events, that it needed to
cover the ponds to avoid a reoccurrence.
Regarding the State’s inability to separate out the cost of remediating sudden
and accidental releases from costs attributable to the gradual seepage of pollutants from
the evaporation ponds into the groundwater (the State had effectively so admitted in
response to discovery requests), the Court of Appeal, relying on our decision in State
Farm Mut. Auto. Ins. Co. v. Partridge (1973) 10 Cal.3d 94, held the policies covered
the State’s liability for indivisible damage caused partly by covered causes and partly
by excluded causes. The appellate court therefore reversed the grant of summary
judgment to Insurers, but ordered the superior court, on remand, to grant their
alternative motion for summary adjudication of issues, establishing that the 1978
release as well as the gradual escape of pollutants were excluded events under the
policies.
We granted Insurers’ petitions for review, which challenged the Court of
Appeal’s holdings on the relevant release for application of the pollution exclusions,
whether the 1969 discharge was within the watercourse pollution exclusion, and the
burden of allocating costs between covered and excluded causes. The State’s answer to
the petitions raised the further issue of whether the Court of Appeal had correctly held
the 1978 release to be nonaccidental as a matter of law.
DISCUSSION
“ ‘A trial court properly grants a motion for summary judgment only if no issues
of triable fact appear and the moving party is entitled to judgment as a matter of law.
(Code Civ. Proc., § 437c, subd. (c); see also id., § 437c, subd. (f) [summary
adjudication of issues].) The moving party bears the burden of showing the court that
the plaintiff “has not established, and cannot reasonably expect to establish,” ’ the
elements of his or her cause of action. (Miller v. Department of Corrections (2005) 36
Cal.4th 446, 460.)” (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720.) We
6
review the trial court’s decision de novo, liberally construing the evidence in support of
the party opposing summary judgment and resolving doubts concerning the evidence in
favor of that party. (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037.)
“Our goal in construing insurance contracts, as with contracts generally, is to
give effect to the parties’ mutual intentions. [Citations.] ‘If contractual language is
clear and explicit, it governs.’ [Citations.] If the terms are ambiguous, we interpret
them to protect ‘ “the objectively reasonable expectations of the insured.” ’ ” (Boghos
v. Certain Underwriters at Lloyd’s of London (2005) 36 Cal.4th 495, 501.) The
“sudden and accidental” exception to the pollution exclusion, which we construe and
apply in this case, acts to reinstate coverage where it would otherwise be barred by the
exclusion, and, “[a]s a coverage provision, the exception will be construed broadly in
favor of the insured.” (Aydin Corp. v. First State Ins. Co. (1998) 18 Cal.4th 1183,
1192.)
I. The Relevant Discharge for Application of the Pollution Exclusion
The Court of Appeal held that because the basis for the State’s federal court
liability was the escape into the environment of pollutants from containment ponds on
the site, “the release of the wastes from the site after they had been deposited there by
other entities” was “the relevant discharge for purposes of determining whether the
State’s discharge of pollutants was ‘sudden and accidental.’ ” Insurers, relying on
Standun, Inc. v. Fireman’s Fund Ins. Co. (1998) 62 Cal.App.4th 882 (Standun), argue,
to the contrary, that the relevant discharges are the “initial disposals of waste into the
unlined ponds,” which discharges were, of course, neither sudden nor accidental.
We agree with the Court of Appeal. The State seeks indemnity from Insurers
for its liability for property damage as determined in the federal action. The policies
exclude such liability if the property damage arises out of a discharge of pollutants to
land, unless the discharge was “sudden and accidental.” Because the issue is thus
7
whether the discharge causing the property damage for which the State was found
liable was “sudden and accidental,” the focus of analysis must be on the particular
discharge or discharges that gave rise to that property damage. Here the State’s
liability was based on its having sited, designed, built, and operated the Stringfellow
facility in such a negligent manner as to allow hazardous chemicals to escape from the
evaporation ponds (by both seepage and overflow) into the surrounding environment.
The State was not held liable for polluting the evaporation ponds, but for polluting the
land and groundwater outside the ponds.2 The relevant discharges for application of
the pollution exclusion, then, are those in which, due to the State’s negligence,
pollutants were released from the Stringfellow evaporation ponds into the surrounding
soils and groundwater.
Standun is not to the contrary. The insured in that case was a manufacturer who
had dumped its liquid wastes at a landfill operated by a third party. The liquid wastes
were not held in containment ponds at the landfill but were deposited on the soil or
mixed with solid refuse. (Standun, supra, 62 Cal.App.4th at pp. 885-886, 891.) The

2
The report of the special master in the federal action, which was largely adopted
by the federal district court, makes this plain. The special master found the State did
not conduct a competent assessment of the site’s geology, which would have found the
underlying rock “fractured and permeable.” (United States v. Stringfellow, supra, 1993
WL 565393, at p. *6.) The State did not follow remedial recommendations made after
the 1969 flood; if it had, “[t]he release of waste in 1978 would not have occurred.” (Id.
at p. *8.) The State also did not create a hydraulic barrier against subsurface waste
flows as recommended in 1974, resulting in significant increases in remedial costs. (Id.
at pp. *7-*8.) In contrast to the State, the counterclaimants (the landowner and waste
producers) did not negligently contribute to “releases of waste from the Site.” (Id. at
p. *118.) The State, not the landowner, negligently caused “release[s] of hazardous
substances to the ground or surface water.” (Id. at p. *119.) In sum, the special master
found, “the State played the central and negligent role in . . . causing the releases and
potential releases of wastes from the Site that are the subject of this suit.” (Id. at p. *47,
italics added.) It was on this basis that the special master, and the district court in
adopting his findings, found the State fully liable for the remediation costs.
8


appellate court concluded “[t]he relevant discharge as to [the insured] is the discharge
of its wastes into the landfill,” not the subsequent migration of wastes from the landfill
to other property. (Id. at p. 892.)
Though it reached a different result, the Standun court’s approach resembles our
own. As have we, the court “look[ed] first to the underlying claims to determine the
polluting event.” (Standun, supra, 62 Cal.App.4th at p. 890.) The underlying actions,
a United States Environmental Protection Agency claim and a third party action for
contribution, sought damages from the insured “arising out of [its] disposal of
hazardous wastes at the . . . landfill.” (Ibid.) Because the policyholder’s liability was
based on this set of discharges, which were “purposeful and regular,” not sudden or
accidental, its liability policy’s pollution exclusion barred coverage. (Id. at p. 892.)
The result in Standun thus depended, as it does here, on identification of the
discharge that formed the basis for the insured’s liability, in that case the insured’s
depositing liquid wastes at the landfill. The Court of Appeal in this case explained the
importance of the factual distinction: “Here, in contrast, the State was not held liable
for dumping wastes into the site. It was held liable for negligently selecting, designing,
building, and operating the site. Its liability was based not on the release of wastes into
the site — that was, after all, the intended purpose of the site — but on the release of
wastes from the site when, because of the State’s negligence, the site failed to contain
them properly. Because the bases for the underlying liability in Standun and this case
were different, Standun does not support denying coverage here.”
The Standun court also opined that where wastes are deposited directly onto the
land, not into a containment facility, “the subsequent release of pollutants from the
landfill into the water, air and adjoining land” was merely an instance of “damages
arising out of the discharge.” (Standun, supra, 62 Cal.App.4th at p. 891.) Again,
Standun is distinguishable. We agree that in the “sudden and accidental” exception,
“ ‘[a]ccidental’ means an unexpected or unintended discharge, not unexpected or
9
unintended damage.” (Id. at p. 889; accord, Shell Oil Co. v. Winterthur Swiss Ins. Co.
(1993) 12 Cal.App.4th 715, 783-784.) When, as in Standun, pollutants are deposited
directly onto land or into water, without any attempt at containment, their further
migration may reasonably be viewed as an aspect of property damage rather than an
additional release or discharge; arguably, the only “discharge” to be considered in such
a case is the initial deposit. In this case, however, the hazardous wastes were deposited
into ponds intended and expected to contain them, albeit ones poorly sited and designed
for the purpose. Because the wastes were placed into containment in the evaporation
ponds rather than directly dispersed widely into the environment, the initial deposit of
chemical wastes into the Stringfellow ponds was not itself a “discharge, dispersal,
release or escape” within the meaning of the pollution exclusion.
In MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th 635, we held an
apartment building owner’s liability for spraying the building with insecticides was not
excluded from coverage by a pollution exclusion phrased similarly to that here (though
lacking an exception for sudden and accidental events). (See id. at p. 639.) We noted
that the terms “release” and “escape” in a pollution exclusion “connote some sort of
freedom from containment” (id. at p. 651); “the word ‘dispersal,’ when in conjunction
with ‘pollutant,’ is commonly used to describe the spreading of pollution widely
enough to cause its dissipation and dilution” (ibid.); and in the pesticide context
“discharge” was most commonly used “to describe pesticide runoff behaving as a
traditional environmental pollutant” (id. at p. 652). Because of the tension between the
potentially broad literal meanings of these terms and their connotations in common
usage, the pollution exclusion as phrased here and in MacKinnon is ambiguous as to its
exact scope of application.
The initial deposit of wastes at the Stringfellow site put them into confinement,
imperfect though it was, and did not itself spread chemical wastes widely through the
environment. A reasonable insured would not understand an exclusion for “release” of
10
pollutants to apply where, as here, the wastes are deposited into intended containment
ponds and do not behave as environmental pollutants until they are later released or
discharged from the ponds. (See MacKinnon v. Truck Ins. Exchange, supra, 31 Cal.4th
at p. 654 [reasonable insured would not understand spraying of pesticides to control
insects in building as an act of pollution]; Patz v. St. Paul Fire & Marine Ins. Co. (7th
Cir. 1994) 15 F.3d 699, 704 [unlined evaporation pit “was a containing structure,
despite its lack of artificial materials” and “[t]he discharge of wastes into the
environment did not occur until the water leached through the bottom of the pit”];
Queen City Farms v. Central Nat. Ins. Co. (Wash. 1994) 882 P.2d 703, 719 [placement
of wastes into earthen pits intended to contain them was not a “discharge, dispersal,
release, or escape” of pollutants, as “ ‘none of the[se] terms is normally used to
describe the placement of a substance into an area of confinement’ ”; rather, “the
polluting event is the discharge, dispersal, release, or escape from that place of
containment into or upon the land, the air or water”].)
But even considering the initial deposit of chemicals into the evaporation ponds
to be a “discharge, dispersal, release or escape” (or rather a set of such events), the
subsequent escape of those chemicals from the ponds into the surrounding soils and
groundwater was clearly another. And, as we have seen, the State’s liability was based
on its negligence in allowing the second set of discharges, not the first. The instances
of seepage and overflow from the ponds were therefore liability-causing events, not
merely aspects of the property damage as in Standun, supra, 62 Cal.App.4th at page
891. (See SMDA v. American Ins. Co. (Mich.Ct.App. 1997) 572 N.W.2d 686, 703
[pollution exclusion is applied to escape of pollutants from landfill facility, not initial
dumping: “ ‘If waste materials are placed in a contained area or structure and later
escape into the environment, the latter discharge is the relevant discharge’ ”]; Key
Tronic v. Aetna (Cigna) Fire Ins. Co. (Wash. 1994) 881 P.2d 201, 206 [“Depending
upon the circumstances, the initial depositing of wastes may be a polluting event. For
11
example, the dumping of toxic wastes into a lake could fit this category, as well as so-
called ‘midnight dumping’ along a county road. [¶] However, where wastes are
deposited in a sanitary landfill, the escape of polluting materials from the landfill is the
relevant polluting event”].)
We conclude the initial deposit of wastes was not a polluting event subject to the
policy exclusion (i.e., a “discharge, dispersal, release or escape” of pollutants) and,
even if it were, the State’s liability was based not on the initial deposit, but instead on
the subsequent escape of chemicals from the Stringfellow ponds into the surrounding
soils and groundwater, making that the relevant set of polluting events. In light of
these conclusions, we need not address Insurers’ argument that the damages here
“ar[ose] out of” the initial deposit of wastes in a simple (“but-for”) causal sense.
II. Application of the Watercourse Pollution Exclusion to the 1969
Overflow
Insurers did not seek review of the Court of Appeal’s holding that triable issues
exist as to whether the 1969 overflow was “sudden and accidental” within the meaning
of the qualified pollution exclusion, but did seek review of whether the 1969 overflow
was “into or upon any watercourse” within the meaning of the absolute pollution
exclusion for watercourses contained in all the policies but Columbia Casualty
Company’s. We agree with the lower court that triable issues exist on this factual
issue.
A general dictionary defines “watercourse” as “a stream of water, as a river or
brook” or “the bed of a stream that flows only seasonally.” (Random House Dict.
Unabridged (2d ed. 1987) p. 2147.) Similarly, a legal dictionary defines the term as
“[a] body of water, usu[ally] of natural origin, flowing in a reasonably definite channel
with bed and banks.” (Black’s Law Dict. (8th ed. 2004) p. 1623.) We have explained
that it is “not necessary to the existence of a watercourse that the flow should be
continuous throughout the year” (Lindblom v. Round Valley Water Co. (1918) 178 Cal.
12
450, 453), but have distinguished a watercourse, i.e., “water flowing in a fixed
channel,” from surface water, i.e., “[w]ater diffused over the surface of land, or
contained in depressions therein” (Keys v. Romley (1966) 64 Cal.2d 396, 400). Perhaps
the simplest and most concise definition is “ ‘the channel through which the water of a
particular district or watershed usually or periodically flows.’ ” (Phillips v. Burke
(1955) 133 Cal.App.2d 700, 703.)
Insurers have the burden of proof to show the watercourse pollution exclusion
applies. (See Aydin Corp. v. First State Ins. Co., supra, 18 Cal.4th at p. 1194.) To
establish their entitlement to summary judgment or summary adjudication on this basis,
Insurers must show by undisputed evidence the 1969 overflow was confined to the
regular channel of the stream draining the canyon where the Stringfellow site was
located, Pyrite Creek, though they need not show the creek was flowing at the time.
Evidence the contaminants flowed onto land drained by Pyrite Creek, by itself, is
insufficient. (Keys v. Romley, supra, 64 Cal.2d at p. 400; Phillips v. Burke, supra, 133
Cal.App.2d at p. 703.) While the evidence Insurers point to in the record does suggest
the 1969 flood waters flowed directly from the site into Pyrite Creek, rather than onto
the surrounding land, it falls short of establishing the waters’ path as an undisputed
fact.3
The parties have not directed us to any eyewitness account of the 1969 flood in
the summary judgment record. The nearest thing to a contemporaneous description
appears to be the following, in a 1972 letter written by Richard A. Beeurmann,

3
The watercourse pollution exclusion could in theory be applied in part to
discharges that were partly, but not wholly, confined to a watercourse. In the present
procedural context, however, Insurers would be entitled to summary adjudication on
the issue only if they could demonstrate on the summary judgment record that the 1969
overflow was wholly confined to the Pyrite Creek channel. Absent such a showing, an
allocation issue of the type discussed in part IV, post, arises.
13


executive officer of the California Regional Water Quality Board, Santa Ana Region, to
a Riverside County official: “In the spring of 1969, the heavy rains exceeded the
capacity of the storm water diversion ditches and runoff flowed through the dump site
carrying some of the waste out of the dump and down a natural drainage ditch parallel
to Pyrite Street crossing Highway 60 and Mission Boulevard. Samples collected on
March 18, 1969 at the dam across the mouth of the dumpsite and in the ditch at the NW
corner of Pyrite and Mission Boulevard showed the presence of acid wastes in the
storm runoff.”
In 1980, a State interagency status report on the Stringfellow site stated: “The
1969 high rainfall conditions caused an undetermined quantity of sediments that had
been contaminated by toxic wastes at the Stringfellow site to be eroded and deposited
downstream in the Pyrite Creek drainage channel.”
Much later, in 2004, an expert for the State summarized the 1969 event as
follows: “In 1969 during a period of heavy rainfalls the Site overflowed, discharging
waste and stormwater into Pyrite Creek below the Site (NBS, 1973). During this
discharge the conductivity (a measure of the degree of contamination) of the discharged
fluids was measured just below the dam and at the intersection of Pyrite and Mission
Streets. The measurements at these two locations were 7500 and 2800 micromhos
respectively, an indication that wastes were discharged from the site.”
Insurers contend that maps in the record show the Pyrite Creek channel extends
upslope to the disposal site, from which Insurers infer that overflow from the site went
directly into the channel. The maps, however, are not detailed enough to make clear
the topography or hydrology of the area. Where exactly the channel ran relative to the
site’s evaporation ponds and dam, and where and how the 1969 floodwaters exited the
disposal site, are not shown. Thus it cannot be determined from the maps, for example,
that water passing over “the dam at the mouth of the dumpsite,” where Beeurmann
reported a sample showed contamination, flowed from there directly into the Pyrite
14
Creek channel. The maps also show that “the NW corner of Pyrite and Mission
Boulevard,” where Beeurmann also reported contamination was found, is not in the
Pyrite channel, which at that point runs parallel to, but east of, Pyrite Street.4 Despite
the references in Beeurmann’s letter, the 1980 interagency report and the 2004 report of
the State’s expert to a flow of contaminated water down the Pyrite drainage, then,
Insurers have not established as an undisputed fact that the 1969 floodwaters
overflowing the Stringfellow site were restricted to the Pyrite Creek channel and did
not also flow onto and contaminate areas of land below the site.
III. Application of the “Sudden and Accidental” Exception to the 1978
Release
The Court of Appeal concluded the State, having experienced the 1969 overflow
and been advised on, but not taken, measures to avoid a repetition, must have expected
the 1978 flooding, making the 1978 release nonaccidental. The State insists it did take
protective measures after 1969, but these were ineffective in the extraordinary
circumstances of the 1978 rains; the evidence, the State argues, shows at most it was
negligent in allowing the overflow conditions of 1978 to occur, not that it expected or
intended the 1978 release. We conclude the record reflects a triable issue of fact on
this issue.
As the parties agree, an “accidental” discharge, within the meaning of the
“sudden and accidental” exception to the pollution exclusion, is one the insured neither
intended nor expected to happen (Shell Oil Co. v. Winterthur Swiss Ins. Co., supra, 12
Cal.App.4th at p. 755 (Shell Oil Co.)), and a discharge is considered “expected” only

4
Beeurmann may have incorrectly noted the location of the Pyrite Creek channel,
or he may have been mistaken about whether the water sample was taken from that
channel. On this summary judgment record it appears impossible to say which
occurred.
15


when the insured subjectively knew or believed it was highly likely to occur (id. at
p. 746 [“The plain meaning of ‘expected’ does not include ‘should have known.’
Rather, the word comprehends actual belief in the probability of a future event”]). (See
also Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 304-305 [citing
Shell Oil Co. for the proposition that the “test for ‘expected’ damage is whether the
insured knew or believed its conduct was substantially certain or highly likely to result
in that kind of damage”].) While the State bears the ultimate burden of proving the
exception applicable (Aydin Corp. v. First State Ins. Co., supra, 18 Cal.4th at p. 1194),
on summary judgment we ask only whether the record reflects the existence of a triable
factual issue on the question.
The evidence, liberally construed in favor of the State as the nonmoving party
(Yanowitz v. L’Oreal USA, Inc., supra, 36 Cal.4th at p. 1037), shows the following:
After the 1969 overflow, which resulted from a 50-year storm that overwhelmed the
site’s runoff diversion channels, the State temporarily closed the site, rebuilt the ponds
and modified the diversion channels to improve storm drainage. Before the site was
reopened, the county flood control agency checked it and found the drainage adequate.
After the site was permanently closed to new waste in 1972, the State’s chief geologist,
Alvin Franks, inspected and assessed it, finding that in addition to leakage, there was a
danger of overflow in sufficiently heavy rains. In his 1974 report, Franks suggested,
among other measures, leveling and capping the site to prevent flooding of the ponds.
Neither that measure nor the others recommended, however, were taken before the
1978 rains, though the State did transfer about 375,000 gallons of waste from the site to
other facilities. Had Franks’s recommendations been followed, the federal court
special master found, the 1978 release would not have occurred.
In early 1978, severe rainstorms struck the region. A state of emergency in
Riverside County was declared by Governor Brown on February 5, and on February 15
President Carter declared the county a disaster area. On March 3, concerned about
16
rising levels in the Stringfellow site’s evaporation ponds, James Anderson, executive
officer of the Regional Water Quality Control Board, had additional storage ponds dug
on the site and started pumping water to the new ponds. On March 5, as heavy rain
continued, the main pond was again full. National Guard troops placed sandbags on
top of the dam and pumping continued, though it was limited when one of the two
pumps broke. When a crack was observed in the face of the dam, Anderson ordered
wastes released through a spillway to prevent an uncontrolled release of up to 20
million gallons. The controlled release was stopped on March 7, but restarted on
March 10 when the dam began to give way. It was stopped again on March 11, when
the danger of collapse had passed.
As Insurers point out, in one obvious sense the 1978 discharges were not
accidental: the wastes were intentionally released at Anderson’s direction. But
Anderson ordered the release only to prevent a larger, uncontrolled discharge of wastes
if, as threatened, the dam broke, which the State maintains would have been an
accidental discharge. Liability policies have been held to cover damages resulting from
an act undertaken to prevent a covered source of injury from coming into action, even
if that act would otherwise not be covered. (Globe Indem. Co. v. State of California
(1974) 43 Cal.App.3d 745, 750-753 (Globe Indemnity) [statutory liability for fire
suppression costs, incurred after the insured negligently started a fire that spread to
neighboring property, held covered even under a policy limited to liability for bodily
injury and property damage]; Goodyear Rubber & Supply v. Great Am. Ins. Co. (9th
Cir. 1976) 545 F.2d 95, 96 (Goodyear Rubber) [decided under Or. law: liability for
salvage costs covered under property damage liability policy, where salvager had acted
to prevent further damage from fire, a covered source of damage]; see also AIU Ins. Co.
v. Superior Ct. (1990) 51 Cal.3d 807, 833 [citing Globe Indemnity and Goodyear
Rubber as support for holding that government response costs designed to prevent
environmental damage from spreading constitute “damages” under liability policy].)
17
This rule makes sense as a matter of causation, for just as “[d]anger invites
rescue” (Wagner v. International Ry. Co. (N.Y. 1921) 133 N.E. 437), so the evident
threat of property damage (arising by hypothesis from a covered cause) leads naturally
to acts, whether by the insured or others, to prevent or mitigate the damage. (See
Globe Indemnity, supra, 43 Cal.App.3d at p. 751 [“since all of the fire suppression
costs in question were expended to prevent further damage to tangible property, it can
be said that the insureds became legally obligated to pay these fire suppression costs
because of damage to tangible property”]; Goodyear Rubber, supra, 545 F.2d at p. 96
[“the peril insured against, the damage caused by the occurrence of explosion and fire,
set the salvage operation in motion”].)
The rule fits, as well, with the principle that insurance policies are to be read in
accord with the parties’ reasonable expectations; when an insured takes out a policy
providing coverage for property damage liability, “[i]t would seem strangely
incongruous to him, as it does to us, that his policy would cover him for damages to
tangible property destroyed through his negligence in allowing a fire to escape but not
for the sums incurred in mitigating such damages by suppressing the fire.” (Globe
Indemnity, supra, 43 Cal.App.3d at p. 751; see AIU Ins. Co. v. Superior Ct., supra, 51
Cal.3d at p. 833 [“A contrary result would fail to fulfill the reasonable expectations of
the parties”].)
Finally, according coverage in this situation “encourages a most salutary course
of conduct,” that is, the taking of measures to mitigate or prevent damage. (Globe
Indemnity, supra, 43 Cal.App.3d at p. 752.) And Insurers are not harmed by such
measures, since they would be responsible for greater liability were the measures not
taken. “It would be a strange kind of justice, and a stranger kind of logic, that would
hold the defendant to be liable for as much as $450,000 if the barge and its contents had
been consumed by fire, but free of liability for a much lesser amount because of the
fortuity of rescue.” (Goodyear Rubber, supra, 545 F.2d at p. 96.) This policy has been
18
codified as to first party insurance in Insurance Code section 531, subdivision (b),
which provides for coverage “[i]f a loss is caused by efforts to rescue the thing insured
from a peril insured against.”
For these reasons, we conclude that to the extent the conditions in March 1978
threatened a “sudden and accidental” release of wastes from the Stringfellow site, the
qualified pollution exclusion does not bar coverage for liability arising from the State’s
intentional releases performed to prevent such a greater accidental release.5 We turn to
the question of whether the overflow and dam break threatened in 1978 would in fact
have been “accidental.” Insurers were entitled to summary adjudication on this point
only if the record demonstrates, as an undisputed fact, that the State knew or believed a
discharge was highly likely to occur because of flooding. (Shell Oil Co., supra, 12
Cal.App.4th at p. 746.) Unlike the Court of Appeal, we find a triable issue of fact on
this point.
After the extraordinary rainfalls of 1969, which statistically would be expected
to occur no more than once every 50 years, the State took measures to prevent future
flooding: it improved the runoff diversion system and removed a large amount of
waste from the ponds. The facility was reopened only after the county flood control
agency reviewed the drainage system and found it sufficient. When new flooding hit in
January and February of 1978 — due to rainfall so intense as to provoke a government
declaration of emergency and designation of the county as a disaster area — the State
attempted to alleviate the flooding emergency by topping the dam with sandbags and
digging new storage ponds into which waste could be pumped. The State official in
charge hoped the rain would abate and these measures would be sufficient. But the rain

5
On similar grounds, the State also argues the absolute watercourse exclusion
does not apply to the March 1978 release. We express no opinion on this issue, which
is not within the scope of our grant of review.
19


continued, a pump broke, and the dam began to crack. The State’s preventive measures
had proved inadequate.
These facts do not demonstrate the State expected rains so heavy they would
overwhelm the improved drainage, defeat emergency measures, and threaten the dam;
they show only that the State was aware of a flooding risk and took what proved to be
inadequate measures against it. Being aware of a risk of a particular event is not
equivalent to knowing or believing the event is highly likely to occur.
The Court of Appeal considered the risk of flooding, after 1969, so great as to
compel a finding the State expected it: “Here, though there was a theoretical chance
that after 1969 it would never again rain heavily enough to cause any discharge, if that
were enough to make a discharge ‘accidental,’ the term would cease to have any
practical meaning.” To be sure, the evidence in a given case might show the insured
was aware of a risk so great that no reasonable person could find the insured did not
expect the event. But the evidence here did not establish that level of probability. The
special master found only that the State was aware in 1973 of a “danger” of overflow,
and the undisputed fact as framed in the Insurers’ statement was only that Franks, the
State’s geologist, recognized a “potential for overflow during a heavy storm.” The
State took measures to prevent and control flooding; the rains that led to both the 1969
and 1978 discharges were no everyday events, but extraordinary, unpredictable
phenomena; and the ultimate release was caused partly by mechanical failure of a
pump and partly by structural failure of the site dam. On this evidence, a trier of fact
could reasonably find the State did not expect this set of events.
The State failed to take a measure — covering the site with an impermeable cap
— that was suggested to it and that would have prevented the release. Even assuming
this failure was unreasonable, however, the State’s omission demonstrates only
negligence, against which the policy insured. As the State argues: “Many accidents
occur when a policyholder negligently delays taking steps to eliminate a remote risk of
20
harm, such as when an auto driver negligently delays replacing his tires, resulting in an
auto accident, or a homeowner puts off cutting down an aging tree which he knows
could be blown over and cause damage in an extraordinarily . . . heavy windstorm
. . . .” Evidence the State should have known flooding was likely, and should have
taken additional measures against it, is insufficient to prove, as an undisputed fact, that
a waste discharge due to flooding was expected and therefore nonaccidental. (Shell Oil
Co., supra, 12 Cal.App.4th at p. 746.)
IV. Whether the State Must Prove the Amount of Property Damage
Caused by “Sudden and Accidental” Discharges
During discovery, the State admitted it could not differentiate the property
damage caused by the 1969 and 1978 releases from that caused by the gradual leakage
of wastes from the ponds.6 The State also admitted it could not differentiate the “work
performed to date” to remedy the property damage caused by the various sets of
releases. In light of these admissions, the trial court ruled, the State could recover
nothing because it could not prove how much of the property damage was caused by
sudden and accidental releases. Insurers, relying on Golden Eagle Refinery Co. v.
Associated Internat. Ins. Co. (2001) 85 Cal.App.4th 1300 (Golden Eagle), argue the
same position here. The State, in contrast, contends it is entitled to indemnity for all
the damages it was held liable for in the underlying federal court action. The Court of
Appeal agreed, finding Golden Eagle inconsistent with this court’s decision in State
Farm Mut. Auto. Ins. Co. v. Partridge, supra, 10 Cal.3d 94 (Partridge).

6
In qualification of the admission, the State noted “the obvious differentiations
that each respective property damage originated at separate times and locations at the
Site, was caused by separate contaminants of separate amounts or volumes and has a
separate existence.” For the same reason, the State denied a request to admit the
property damage caused by one occurrence was “indivisible” from damage caused by
another.
21


We agree with the State and the Court of Appeal, at least as to the result on
summary judgment. To the extent the State can show “sudden and accidental” releases
proximately caused the damage for which it was held liable, it is contractually entitled
to indemnity for that liability. The summary judgment record reflects at least a triable
issue of fact as to whether the 1969 and 1978 discharges were substantial factors in
causing contamination of soils and groundwater downgradient from the Stringfellow
site — the property damage for which the State was held liable. The record also
reflects a triable issue as to whether that property damage, or the cost of repairing it,
can be quantitatively divided among the various causes of contamination. As we will
explain, although Partridge arose on very different facts, our conclusion in that case
that liability coverage exists “whenever an insured risk constitutes a proximate cause of
an accident, even if an excluded risk is a concurrent proximate cause” (Partridge,
supra, 10 Cal.3d at p. 105, fn. 11) applies equally in the present circumstances.
As relevant, the coverage clause of each Insurer’s policy obligated the company
to “pay on behalf of the Insured all sums which the Insured shall become obligated to
pay by reason of liability imposed by law . . . for damages, including consequential
damages, because of direct damage to or destruction of tangible property . . . which
results in an Occurrence during the policy period.” The policies defined an
“Occurrence” as “an accident, event or happening including continuous or repeated
exposure to conditions which results, during the policy period, in . . . Property Damage
neither expected nor intended from the standpoint of the Insured.”7 As previously

7
This once-standard phrasing of the coverage clause, together with the definition
of an occurrence, created an apparent circularity. The insurer agreed to indemnify for
liability from property damage that “results in” an occurrence, and an occurrence was
defined as an event, etc., that “results . . . in” property damage. The most reasonable
reading of the coverage clause is that the covered property damage results from (is
caused by) an occurrence, a formulation later adopted in the standard comprehensive

(footnote continued on next page)
22


explained, however, each policy then excluded “Property Damage arising out of”
pollution to land or air, unless the discharge of pollutants was sudden and accidental.
In sum, under the policies at issue, liability for property damage caused by an
accident was covered, while that caused by gradual or nonaccidental release of
pollutants was excluded. What, then, of property damage caused by a set of pollutant
discharges, some sudden and accidental, and some gradual or nonaccidental?
We faced an analogous question in Partridge. There, the policyholder
negligently filed the trigger mechanism of his pistol to lighten the trigger pull. Later,
as he and two friends drove through the countryside shooting jackrabbits, the insured’s
truck hit a bump and the gun fired, wounding one of the passengers. (Partridge, supra,
10 Cal.3d at pp. 97-98.) Before us on appeal was the question whether the insured’s
homeowner’s policy, which generally covered his personal liability for negligence but
excluded injuries arising out of the use of a motor vehicle, afforded coverage for
liability for the passenger’s injury. (Id. at pp. 98-99.)
We framed and answered the coverage question as follows: “[T]he crucial
question presented is whether a liability insurance policy provides coverage for an
accident caused jointly by an insured risk (the negligent filing of the trigger
mechanism) and by an excluded risk (the negligent driving). Defendants correctly
contend that when two such risks constitute concurrent proximate causes of an
accident, the insurer is liable so long as one of the causes is covered by the policy.”
(Partridge, supra, 10 Cal.3d at p. 102.) We reasoned that the insured’s negligent filing
of the trigger subjected him to liability for the injury regardless of whether use of a

(footnote continued from previous page)
general liability insuring clause used in California. (See Croskey et al., Cal. Practice
Guide: Insurance Litigation (The Rutter Group 2008) ¶ 7:16, p. 7A-6.) Insurers
apparently agree; they paraphrase the policies here as covering liability for damages
because of property damage “from an occurrence.”
23


vehicle was involved. The insured would have been liable and covered for his liability,
that is, “if the gun had accidentally fired while the insured was walking down the street
or running through the woods” (id. at p. 103), and in this sense “the insured’s negligent
modification of the gun suffices, in itself, to render him fully liable for the resulting
injuries” (ibid.). Damages for the passenger’s injury were therefore covered as “ ‘sums
which the Insured . . . [became] legally obligated to pay’ ” because of his
nonautomobile related negligence. (Ibid.)
To further explain our conclusion in Partridge, we hypothesized a case in which
the covered and excluded causes were attributable to different actors: “If, after
negligently modifying the gun, Partridge had lent it to a friend who had then driven his
own insured car negligently, resulting in the firing of the gun and injuring of a
passenger, both Partridge and his friend under traditional joint tortfeasor principles
would be liable for the injury. In such circumstances, Partridge’s personal liability
would surely be covered by his homeowner’s policy, and his friend’s liability would be
covered by automobile insurance.” (Partridge, supra, 10 Cal.3d at p. 103.) The
insurer’s contractual obligation, we further reasoned, was not lessened by the
coincidence that Partridge was responsible for both of the causes contributing to the
injury. (Ibid.)
Partridge addressed the problem of multiple causes by looking to the rules
governing the insured’s underlying liability. This follows from the nature of third party
liability insurance, as we later explained in Garvey v. State Farm Fire & Casualty Co.
(1989) 48 Cal.3d 395, 407: “[T]he right to coverage in the third party liability
insurance context draws on traditional tort concepts of fault, proximate cause and duty.
This liability analysis differs substantially from the coverage analysis in the [first party]
property insurance context, which draws on the relationship between perils that are
either covered or excluded in the contract. In liability insurance, by insuring for
personal liability, and agreeing to cover the insured for his own negligence, the insurer
24
agrees to cover the insured for a broader spectrum of risks.” (Accord, Montrose
Chemical Corp. v. Admiral Ins. Co., supra, 10 Cal.4th at p. 664.) While coverage
under both first and third party insurance is a matter of contract, the contractual scope
of third party liability insurance coverage, as reflected in the policy language, depends
on the tort law source of the insured’s liability.
Under Partridge, then, we look to whether a covered act or event subjected the
insured to liability for the disputed property damage or injury under the law of torts.
We ask, in the standard insuring language used here, whether the disputed amounts are
“sums which the Insured . . . [became] obligated to pay . . . for damages . . . because
of” property damage that is not excluded under the policy. (See Partridge, supra, 10
Cal.3d at p. 99, fn. 5 [substantially the same language].) If the insured’s nonexcluded
negligence “suffices, in itself, to render him fully liable for the resulting injuries” or
property damage (id. at p. 103), the insurer is obligated to indemnify the policyholder
even if other, excluded causes contributed to the injury or property damage.
Applying the Partridge approach here leads to the conclusion summary
judgment was not appropriate for Insurers on this ground. The 1969 and 1978 releases
would have rendered the State fully liable for the contamination of soils and
groundwater below the Stringfellow site, without consideration of the subsurface
leakage, if they were substantial factors in causing the contamination. (Rutherford v.
Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 968-969; Mitchell v. Gonzales (1991) 54
Cal.3d 1041, 1048-1054; see also Lockheed Martin Corp. v. Continental Ins. Co.
(2005) 134 Cal.App.4th 187, 194 [insured must show an “appreciable amount” of the
damage for which it was held liable resulted from accidental discharges]; Travelers
Casualty & Surety Co. v. Superior Court (1998) 63 Cal.App.4th 1440, 1460 [same].)
25
The summary judgment record demonstrates, at the least, a triable issue on this point.8
That subsurface leakage from the site, an excluded cause of property damage, also
contributed to the contamination is insufficient to defeat coverage under Partridge’s
holding that liability coverage exists “whenever an insured risk constitutes a proximate
cause of an accident, even if an excluded risk is a concurrent proximate cause.”
(Partridge, supra, 10 Cal.3d at p. 105, fn. 11.)
As in Partridge, our reasoning can be elucidated with a hypothetical in which
responsibility for the covered and excluded causes of damage is divided. Suppose the
State had shared design and management of the Stringfellow site with a private
operator, with the State taking responsibility for design and maintenance of flood
control systems and the private operator being responsible for preventing subsurface
leakage. The State’s negligence in failing to take adequate measures to prevent
overflow of the ponds in heavy rains would, under long-standing principles of joint and
several liability, subject it to full liability for remediation of the downgradient
contamination even if subsurface leakage also contributed to that property damage.
(See American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 586-589.)
Whatever claims for contribution or indemnity might exist between the joint tortfeasors
in such a case, each of them would be liable to the plaintiffs for the entirety of the

8
As noted earlier, water samples taken after the 1969 flood showed
contamination below the site dam as well as farther downslope at Pyrite Street and
Mission Boulevard. The 1980 interagency report noted that after the 1969 event, “a
marked change . . . in the quality of the groundwater” was detected in monitoring wells
and that during and after the 1978 release, in which hundreds of thousands of gallons of
diluted waste were discharged, polluted runoff was found as far as six miles
downstream of the site. In his 2004 report, the State’s expert opined that downslope
soil and groundwater contamination found in post-1978 testing was attributable to both
the 1969 and 1978 releases, though in a deposition he declined to estimate the amount
of contamination caused by either source.
26


property damage. In those circumstances, the full damages assessed in the federal
action would be “sums which the Insured . . . [became] obligated to pay . . . for
damages . . . because of” property damage, and hence within Insurers’ contractual
indemnity obligation. Nothing in the policies indicates Insurers are relieved of that
obligation because, in reality, the State was also responsible for an excluded cause of
the property damage.
Insurers argue that while Partridge involved a single injury (the shooting of the
insured’s passenger), here each source of contamination (the two overflow events and
the various subsurface leakage pathways) caused damage of its own; they assert
contamination from leakage occurred, for example, before and after the 1969 discharge.
The distinction is valid as far as it goes: one can differentiate in theory between
hazardous chemicals that entered the surrounding environment in the 1969 and 1978
overflows and those that leaked gradually from the site over the entire period of its
operation. But the summary judgment record fails to establish that the cost of
remediating the contamination can be divided in this manner; indeed, the State’s
pertinent admission was that it could not divide the “work performed to date”
according to the event causing contamination. Thus the damages for which the State is
liable appear, at least on this record, to be indivisible.
Under California tort law, a set of injuries for which the damages are indivisible
is treated the same as a single injury: the tortfeasor is liable for the entirety of the
damages. (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 60 (Bertero).)
Bertero involved damages for malicious prosecution. In the original, underlying
lawsuit, the defendants had not only answered Bertero’s complaint but had also
cross-complained against him. That case was resolved in favor of Bertero, who then
brought and won a suit against the original defendants for malicious prosecution of the
cross-complaint. (Id. at pp. 48-50.) We held Bertero could maintain an action for
malicious prosecution of a cross-complaint, even though that pleading had been closely
27
related to defense of Bertero’s original complaint. (Id. at pp. 50-53.) This led to the
question of whether Bertero could recover the ordinary measure of malicious
prosecution damages for a cross-complaint that was “premised upon the same theories
as was a privileged affirmative defense.” (Id. at p. 60.)
We held the full measure of damages applicable. It was, we observed, “difficult
if not impossible” to apportion the malicious prosecution damages between those
attributable to defending the cross-action and those attributable to overcoming the
affirmative defense. (Bertero, supra, 13 Cal.3d at p. 60.) In such circumstances, we
held, “the burden of proving such an apportionment must rest with the party whose
malicious conduct created the problem. To place the burden on the injured party rather
than upon the wrongdoer would, in effect, clothe the transgressor with immunity when,
because of the interrelationship of the defense and cross-action, the injured party could
not apportion his damages.” (Ibid.) Just as California tort law requires “that a
defendant prove what portion of the totality of damages his negligence has caused
when the evidence establishes that he has contributed substantially to the total
damages” (ibid.), so the defendant in Bertero bore the burden of showing, if it could be
shown, what portion of the proven damages was attributable to its privileged assertion
of a defense. (Cf. Rest.3d Torts, Apportionment of Liability, § 26 [where damages for
an injury cannot be divided causally among multiple tortfeasors, each is liable for the
indivisible amount to the extent provided by the applicable rules of joint and several
liability and comparative fault].)
Bertero’s holding applies here. If, in the underlying federal action, the State had
not been liable for damage from subsurface leakage (whether because of a defense or
immunity, or because leakage was the fault of another party), then the burden of
proving what part of the remediation cost was attributable to leakage would have rested
with the State, not with the federal court plaintiffs. If the remediation cost could not be
so apportioned — as the State’s discovery response suggests — the State would have
28
been liable to the federal court plaintiffs for all the remediation costs. As in Partridge,
supra, 10 Cal.3d 94, where a single injury was caused by covered and excluded acts, so
too here, where the damages caused by covered and excluded events appear indivisible,
the entirety of the federal court damages are, in the policies’ terms, “sums which the
Insured . . . [became] obligated to pay . . . for damages . . . because of” nonexcluded
property damage.
Applicability of the Partridge approach here is necessarily premised on the
indivisibility of the remediation costs awarded as damages in the federal action. If, to
the contrary, only a provably distinct amount of the remediation costs were attributable
to “sudden and accidental” discharges of pollutants, only that amount would constitute
“sums which the Insured . . . [became] obligated to pay . . . for damages . . . because
of” property damage from “sudden and accidental” discharges. The Court of Appeal
thus correctly observed that at trial “the State would have to prove its damages were
indivisible to claim coverage under Partridge,” while Insurers could offer evidence the
damages were not indivisible. As already noted, however, the summary judgment
record — particularly the State’s admission it could not allocate amounts already spent
on remediation among the various sources of contamination — establishes at least a
triable issue as to whether the damages are divisible.9
As noted, Insurers rely primarily on Golden Eagle, supra, 85 Cal.App.4th 1300.
The insured in Golden Eagle, a petroleum refiner, had polluted its refinery site by
discharging petroleum hydrocarbon constituents on and into the ground. The insured

9
We express no opinion as to whether it will ultimately prove possible to
approximately allocate damages according to the amounts and types of pollutants
released at various times. Amicus curiae Aerojet-General Corporation points out that
cleanup costs are not necessarily directly proportional to the volume of pollutants from
various sources, in part because the fixed costs of conducting any significant cleanup
may account for the bulk of the total cost.
29


sought indemnity for its government-ordered remediation costs. (Id. at p. 1304.) The
insurers sought summary judgment based on qualified pollution exclusions, presenting
evidence of “routine, repeated and intentional” discharges by the insured having caused
the contamination (id. at p. 1308) and the insured’s admission that it could not assign
any particular portion of the property damage to any particular event (id. at p. 1310).
The appellate court held the insurers had established their entitlement to
summary judgment by showing that, because the property damage was indivisible,
Golden Eagle Refinery Co., the insured, “could not reasonably be expected to prove
what proportion, if any, of the millions of dollars of alleged damages were under the
coverage of which of the various policies issued by respondents, failing which, Golden
Eagle could not recover anything.” (Golden Eagle, supra, 85 Cal.App.4th at p. 1311.)
The policyholder, relying on Travelers Casualty & Surety Co. v. Superior Court, supra,
63 Cal.App.4th at page 1460, argued coverage depended only on a showing that “an
appreciable amount” of the environmental damage was caused by sudden and
accidental events, over and above that caused by routine, intentional dumping. The
Golden Eagle court rejected this approach: “Golden Eagle’s argument that it need only
prove that a sudden and accidental event caused an appreciable amount of the
contamination is wrong because it is essentially a tort approach. Golden Eagle’s claim
is for indemnity and sounds in contract. To prove a claim for breach of contract, more
is required than evidence that a covered cause was a ‘substantial contributing cause’ of
its damage. ‘Substantial cause’ may be sufficient to make a prima facie case in a tort
action in order to support a joint and several judgment, but in the context of a coverage
dispute relating only to the duty to indemnify, the tort threshold is not sufficient.”
(Golden Eagle, at p. 1316.) Because the insured could not quantify the damages
resulting from sudden and accidental discharges, it could recover nothing. (Id. at pp.
1316-1317.)
30
The quoted passage reveals the fundamental flaw in Golden Eagle’s reasoning. In
analyzing coverage under a liability policy, a “tort approach” (Golden Eagle, supra, 85
Cal.App.4th at p. 1316) to causation of damages is precisely what is called for, as we
demonstrated in Partridge, supra, 10 Cal.3d 94, and explained in Garvey v. State Farm
Fire & Casualty Co., supra, 48 Cal.3d 395. When the insurer has promised to
indemnify the insured for all “sums which the Insured shall become obligated to pay
. . . for damages . . . because of” nonexcluded property damage, or similar language,
coverage necessarily turns on whether the damages for which the insured became liable
resulted — under tort law — from covered causes. Thus, “the right to coverage in the
third party liability insurance context draws on traditional tort concepts of fault,
proximate cause and duty.” (Id. at p. 407.)10
Contrary to Golden Eagle’s reasoning, the fact that “ ‘[s]ubstantial cause’ may
be sufficient to make a prima facie case in a tort action in order to support a joint and
several judgment” (Golden Eagle, supra, 85 Cal.App.4th at p. 1316) does imply that
such tort law (substantial factor) causation is sufficient to create coverage under a
liability policy when covered and excluded acts or events have concurred in causing
injury or property damage. That was the holding of Partridge (a decision Golden
Eagle did not address), which concluded that when multiple acts or events “constitute
concurrent proximate causes of an accident, the insurer is liable so long as one of the
causes is covered by the policy.” (Partridge, supra, 10 Cal.3d at p. 102.) Indeed, to
explain our holding in Partridge we hypothesized the application of “traditional joint

10
Golden Eagle does not quote the language of the disputed policies’ indemnity
clauses, an omission making thorough analysis of the insurers’ contractual indemnity
duties in that case difficult. The policies are described, however, as “third party
general liability policies” issued between 1976 and 1985 (Golden Eagle, supra, 85
Cal.App.4th at p. 1304), suggesting they probably used standard language similar to
that in Partridge and this case.
31


tortfeasor principles” (id. at p. 103), as we have also done earlier in this opinion. And
as also demonstrated in this opinion, when the damages cannot be apportioned between
two tortfeasors or between tortious and nontortious causes, a tortfeasor whose acts have
been a substantial factor in causing the damages is legally responsible for the whole.
(Bertero, supra, 13 Cal.3d at p. 60.) We therefore disapprove Golden Eagle Refinery
Co. v. Associated Internat. Ins. Co., supra, 85 Cal.App.4th 1300, insofar as it holds an
insured must not only show a covered cause contributed substantially to the damages
for which the insured was held liable, but must also show how much of an indivisible
amount of damages resulted from covered causes. (See id. at pp. 1316-1317.)11
The insured under a third party liability policy has the burden of proving a
covered act or event was a substantial cause of the injury or property damage for which
the insured is liable, and this burden extends to showing the causal act or event was
within an exception to a policy exclusion when the insurer has shown the exclusion
applicable. (Aydin Corp. v. First State Ins. Co., supra, 18 Cal.4th at p. 1194.) In
addition, when the damages for which the insured is liable relate to distinct, divisible
injuries or items of property damage, the insured has the burden of proving which of
those are attributable to causes within the exclusion’s exception, for only the
corresponding portion of the damages constitutes “sums which the Insured shall
become obligated to pay . . . for damages . . . because of” nonexcluded property
damage.12 But if the insured proves that multiple acts or events have concurred in

11
We also disapprove Lockheed Martin Corp. v. Continental Ins. Co., supra, 134
Cal.App.4th 187, to the same extent. (See id. at p. 209, fn. 8.)
12
If, for example, the insured had contaminated land on a third party’s parcel A by
a covered (sudden and accidental) polluting event and had contaminated the same
owner’s parcel B by an excluded polluting event, only the cost of remediating the
damage to parcel A would be subject to indemnity (assuming the remediation costs
could be so divided). The insured would bear the burden of proof on this allocation.
32


causing a single injury (as in Partridge) or an indivisible amount of property damage
(as may be shown at trial here), such that one or more of the covered causes would
have rendered the insured liable in tort for the entirety of the damages, the insured’s
inability to allocate the damages by cause does not excuse the insurer from its duty to
indemnify. The insurer, of course, may counter the insured’s evidence of indivisibility
with its own evidence that the damages are divisible and that only a limited portion of
them resulted from covered events.13
Our holding does not extend indemnity to situations where the policyholder can
do no more than speculate that some polluting events may have occurred suddenly and
accidentally, or where sudden and accidental events have contributed only trivially to
the property damage from pollution. Cases have properly held against indemnity
where the insured can make only “unsubstantiated claims of sudden and accidental
discharges in the face of repeated, continuous discharges in the course of business.”
(SMDA v. American Ins. Co., supra, 572 N.W.2d at p. 705; see Travelers Casualty &
Surety Co. v. Superior Court, supra, 63 Cal.App.4th at p. 1460 [insured “must do more
than point to possible” sudden and accidental events; it must show such events caused
“appreciable amount of environmental damage”]; Highlands Ins. Co. v. Aerovox Inc.
(Mass. 1997) 676 N.E.2d 801, 806 [insured must show sudden and accidental event
caused “more than a de minimis amount of the damages for which it is now liable”];
Home Indem. Co. v. Hoechst Celanese Corp. (N.C.Ct.App. 1998) 494 S.E.2d 774, 784

13
We do not speak here of cases in which it is determined in the third party action
that the insured’s covered actions subject the insured to liability for the whole of the
damages. This might happen, for example, where multiple tortfeasors, including the
insured, are held jointly and severally liable for the entirety of damages and the
insured’s only tortious act was one covered by the policy. The liability insurer in that
situation must indemnify its insured for liability imposed by law, but may have a
remedy through subrogation of the insured’s partial equitable indemnity claim against
the other tortfeasors. (See Musser v. Provencher (2002) 28 Cal.4th 274, 279-280, 285.)
33


[same].) Only if the insured can identify particular sudden and accidental events and
prove they contributed substantially to causing indivisible property damage for which
the insured bore liability is the insurer obliged to indemnify its insured for the entirety
of the damages.
The summary judgment record showed the existence of triable issues of fact as
to whether the 1969 and 1978 events occurred suddenly and accidentally, whether they
contributed substantially to the downslope contamination of soil and groundwater for
which the State was held liable in damages, and whether those damages were incapable
of division according to causal event. Summary judgment for Insurers based on the
policies’ qualified pollution exclusions was therefore improper.
DISPOSITION
The judgment of the Court of Appeal is reversed insofar as the court directed the
superior court to grant Insurers’ alternative motion for summary adjudication
establishing that the 1978 discharge was excluded by the qualified pollution exclusion.
The judgment is otherwise affirmed, and the cause is remanded to the Court of Appeal
for further proceedings consistent with this opinion.
WERDEGAR, J.

WE CONCUR:
GEORGE, C. J.
KENNARD, J.
BAXTER, J.
MORENO, J.
CORRIGAN, J.
MOSK, J.∗

Associate Justice of the Court of Appeal, Second Appellate District, Division
Five, assigned by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.
34


See last page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion State of California v. Allstate Insurance Company
__________________________________________________________________________________

Unpublished Opinion


Original Appeal
Original Proceeding
Review Granted
XXX 146 Cal.App.4th 851
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S149988
Date Filed: March 9, 2009
__________________________________________________________________________________

Court:

Superior
County: Riverside
Judge: Erik Michael Kaiser

__________________________________________________________________________________

Attorneys for Appellant:

Bill Lockyer and Edmund G. Brown, Jr., Attorneys General, Gordon B. Burns, Deputy State Solicitor General,
Darryl L. Doke and Jill Scally, Deputy Attorneys General; Cotkin, Collins & Ginsburg, Cotkin & Collins, Roger
W. Simpson, David W. Johnson, Jr.; Law Offices of Daniel J. Schultz, Daniel J. Schultz; Anderso nmn Kill &
Olick, Robert M. Horkovich and Edward J. Stein for Plaintiff and Appellant.

Morgan, Lewis & Bokius, Michael Y. Horton, Jason K. Komorsky and David S. Cox for League of California
Cities as Amicus Curiae on behalf of Plaintiff and Appellant.

Winston & Straw, Scott P. DeVries and Yelitza V. Dunham for Aerojet-General Corporation as Amicus Curiae
on behalf of Plaintiff and Appellant.

Gauntlett & Associates, David A. Gauntlett and Eric R. Little for United Policyholders, Consumer Federation of
America and Center for Community Action & Environment as Amici Curiae on behalf of Plaintiff and Appellant.

__________________________________________________________________________________

Attorneys for Respondent:

Nixon Peabody, Bruce E. Copeland and Alan S. Feiler for Defendant and Respondent Allstate Insurance
Company.

Berkes Crane Robinson & Seal, Steven M. Crane and Barbara S. Hodous for Defendant and Respondent
Columbia Casualty Company.

Berman & Aiwasian, Deborah Aiwasian, Alan S. Berman and Steven P. Haskell for Defendant and Respondent
Century Indemnity Company.

Riedl, McCloskey & Waring and Andrew McCloskey for Defendant and Respondent Westport Insurance
Company.


Page 2 – S149988 – counsel continued

Attorneys for Respondent:

Wiley Rein & Fielding, Wiley Rein, Laura A. Foggan, John C. Yang; Sinnott, Dito, Moura & Puebla, Randolph
P. Sinnott and John J. Moura for Complex Insurance Claims Litigation Association as Amici Curiae on behalf of
Defendants and Respondents.

Duane Morris, William J. Baron and Joleen C. Lenihan for Certain London Market Insurers and Great American
Insurance Company as Amici Curiae on behalf of Defendants and Respondents.

Horvitz & Levy, Barry R. Levy and Peter Abrahams for TIG Insurance Company as Amicus Curiae on behalf of
Defendants and Respondents.


Counsel who argued in Supreme Court (not intended for publication with opinion):

Roger W. Simpson
Cotkin & Collins
300 South Grand Avenue, 24th Floor
Los Angeles, CA 90071-3134
(213) 688-9350

Steven M. Crane
Berkes Crane Robinson & Seal
515 South Figueroa, Suite 1500
Los Angeles, CA 90071
(213) 955-1150


Document Outline

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Petition for review after the Court of Appeal reversed the judgment in a civil action. This case includes the following issues: (1) Does application of the pollution exclusion clause of the comprehensive general liability excess insurance policies at issue in this case turn on when waste material was discharged from the Stringfellow Acid Pits waste disposal site or when the waste was initially deposited into the site? (2) If pollution is caused by both uncovered intentional actions and covered accidents, does the insured have the burden at trial to prove that all of the damages it seeks to recover were caused by a covered event, or is there a duty to indemnify when two concurrent causes are responsible for an injury even if one of the causes is an uncovered act?

Opinion Information
Date:Citation:Docket Number:Category:Status:
Mon, 03/09/200945 Cal. 4th 1008, 201 P.3d 1147, 90 Cal. Rptr. 3d 1S149988Review - Civil Appealclosed; remittitur issued

Parties
1State Of California (Plaintiff)
Represented by Roger W. Simpson
Cotkin Collins & Ginsburg
300 S. Grand Avenue, 24th Floor
Los Angeles, CA

2State Of California (Plaintiff)
Represented by Darryl L. Doke
Office of the Attorney General
P. O. Box 944255
Sacramento, CA

3State Of California (Plaintiff)
Represented by Jill Elaine Scally
Office of the Attorney General
P. O. Box 944255
Sacramento, CA

4State Of California (Plaintiff)
Represented by Daniel James Schultz
Law Offices of Daniel J. Schultz
7399 S. Hazelton Lane
Tempe, CA

5Underwriters At Lloyds London (Defendant)
6Allstate Insurance Company (Defendant and Respondent)
Represented by Bruce Everett Copeland
Nixon Peabody, LLP
One Embarcadero Center, 18th Floor
San Francisco, CA

7Allstate Insurance Company (Defendant and Respondent)
Represented by Alan Scott Feiler
Nixon Peabody, LLP
One Embarcadero Center, 18th Floor
San Francisco, CA

8Westport Insurance Corporation (Defendant and Respondent)
Represented by Andrew Richard Mccloskey
Riedl, McCloskey & Waring, LLP
550 West "C" Street, Suite 500
San Diego, CA

9Century Indemnity Company (Defendant and Respondent)
Represented by Deborah A. Aiwasian
Berman & Aiwasian
725 S. Figueroa Street, Suite 1050
Los Angeles, CA

10Century Indemnity Company (Defendant and Respondent)
Represented by Alan Scott Feiler
Nixon Peabody, LLP
One Embarcadero Center, 18th Floor
San Francisco, CA

11Century Indemnity Company (Defendant and Respondent)
Represented by Steven Morgan Haskell
Berman & Aiwasian
725 S. Figueroa Street, Suite 1050
Los Angeles, CA

12Beacon America Insurance Company (Pub/Depublication Requestor)
Represented by Jeffrey Craig Segal
Selman Breitman & Burgess
11766 Wilshire Boulevard, 6th Floor
Los Angeles, CA

13Great American Insurance Company (Amicus curiae)
Represented by William J. Baron
Duane & Morris, LLP
1 Market Street, Spear Tower, Suite 2000
San Francisco, CA

14Columbia Casualty Company (Defendant and Respondent)
Represented by Steven M. Crane
Berkes Crane Robinson & Seal, LLP
515 S. Figueroa Street, Suite 1500
Los Angeles, CA

15Complex Insurance Claims Litigation Association (Amicus curiae)
Represented by Randolph P. Sinnott
Sinnott Dito Moura & Puebla
707 Wilshire Boulevard, Suite 3200
Los Angeles, CA

16Tig Insurance Company (Amicus curiae)
Represented by Peter Abrahams
Horvitz & Levy
15760 Ventura Boulevard, 18th Floor
Encino, CA

17Aerojet-General Corporation (Amicus curiae)
Represented by Scott Phillip Devries
Winston & Strawn
101 California Street, 39th Floor
San Francisco, CA

18Certain London Market Insurers (Amicus curiae)
Represented by William J. Baron
Duane & Morris, LLP
1 Market Street, Spear Tower, Suite 2000
San Francisco, CA

19Consumer Federation Of America (Amicus curiae)
Represented by David A. Gauntlett
Gauntlett & Associates
18400 Von Karman Avenue, Suite 300
Irvine, CA

20United Policyholders (Amicus curiae)
Represented by David A. Gauntlett
Gauntlett & Associates
18400 Von Karman Avenue, Suite 300
Irvine, CA

21League Of California Cities (Amicus curiae)
Represented by Michel Y. Horton
Morgan Lewis & Bockius, LLP
300 S. Grand Avenue, 22nd Floor
Los Angeles, CA


Opinion Authors
OpinionJustice Kathryn M. Werdegar

Disposition
Mar 9 2009Opinion: Affirmed in part/reversed in part

Dockets
Feb 2 2007Petition for review filed
  Respondents Columbia Casulaty Company, Century Indemnity Company & Westport Insurance Corporation Attorneys Steven M. Crane, Steven M. Haskell & Andrew McCloskey
Feb 5 2007Joinder to petition filed
  Allstate Insurance Company, defendant and respondent by Bruce E. Copeland, counsel
Feb 6 2007Joinder to petition filed
  joinder to petition of respondent Allstate Insurance Company Respondents Century Indemnity Company & Westport Insurance Corporation Attorneys Steven M. Haskell and Andrew McCloskey
Feb 6 2007Request for depublication (petition for review pending)
  Respondents; Columbia Casualty Company, Century Indemnity Co., Allstate Ins.,Co., and Westport Ins. Corp Attorney Steven M. Crane
Feb 6 2007Request for depublication filed (another request pending)
  Allstate Insurance Company, Century Indemnity Company, and Westport Insurance Corporation, publication requestor by Alan S. Feiler, counsel
Feb 15 20072nd record request
 
Feb 16 2007Opposition filed
  United Policyholders, non party by Amy Bach
Feb 16 2007Opposition filed
  Appellant The State of California Attorney Roger W. Simpson
Feb 21 2007Request for depublication filed (another request pending)
  One Beacon America Insurance Company, publication requestor by Jeffrey C. Segal
Feb 22 20072nd record request
 
Feb 22 2007Answer to petition for review filed
  Appellant State of California Attorney Roger W. Simpson
Feb 23 2007Received:
  word count to answer Appellant State of California Attorney Roger W. Simpson
Feb 26 2007Request for depublication filed (another request pending)
  Great American Insurance Company, non party by William J. Baron, counsel
Feb 27 2007Received Court of Appeal record
  two full boxes
Mar 5 2007Reply to answer to petition filed
  Respondents Columbia Casualty, Century Indemnity, Westport Insurance & Allstate Insurance Companies Attorneys Steven M. Crane, Steven M. Haskel, Andrew McCloskey & Bruce E. Copeland
Mar 22 2007Time extended to grant or deny review
  the time for granting or denying review in the above-entitled matter is hereby extended to and including May 3, 2007, or the date uponn which review is either granted or denied.
Mar 27 2007Change of contact information filed for:
  for counsel William J. Baron
Apr 2 2007Change of contact information filed for:
  change of firm name and e-mail address Attorney Roger W. Simpson
Apr 18 2007Petition for review granted (civil case)
  George, C.J., was absent and did not participate. Chin, J., was recused and did not participate. Votes: Moreno, ACJ., Kennard, Baxter, Werdegar and Corrigan, JJ.
Apr 18 2007Letter sent to:
  to counsel, re certification to interested parties or persons
Apr 23 2007Change of contact information filed for:
  Law Firm of Nixon Peabody ( for Petitioner Allstate ) - change of address.
Apr 25 2007Certification of interested entities or persons filed
  by counsel for respondent, Allstate Insurance Company, et al.
Apr 27 2007Certification of interested entities or persons filed
  by counsel for Plaintiff, State of California.
May 2 2007Certification of interested entities or persons filed
  by counsel for respondent, Century Indemnity Company.
May 17 2007Opening brief on the merits filed
  Respondents Columbia Casualty, Century Indemnity, & Westport Insurance Attorneys Steven M. Crane, Steven M. Haskel & Andrew McCloskey
May 18 2007Opening brief on the merits filed
  Allstate Insurance Company, et al, respondent by Bruce E. Copeland, Counsel
May 18 2007Joinder to brief on the merits filed
  Joinder to Respondent Allstate Insurance Company's Opening Brief/Merits Respondents Century Indemnity Company and Westport Insurance Corporation Attorneys Deborah A. Aiwasian and Andrew McCloskey
May 24 2007Certification of interested entities or persons filed
  Respondent Columbia Casualty Insurance Attorney Steven M. Crane
Jun 7 2007Request for extension of time filed
  answer brief/merits to 7-17-07 Appellant State of California
Jun 12 2007Extension of time granted
  to July 17, 2007 to file respondent's answer brief on the merits. by Roger W. Simpson, counsel
Jun 26 2007Request for extension of time filed
  Allstate Insurance Company et al., Defendants and Respondents requesting add'l 20 days (August 27) to file its reply brief on the merits. (to court for permission)
Jul 5 2007Extension of time granted
  to August 27, 2007 to file respondent ( Columbia Casualty Company) reply brief on the merits.
Jul 17 2007Received:
  oversized Answer Brief/Merits Appellant State of California Attorneys Roger W. Simpson, etal
Jul 17 2007Application to file over-length brief filed
  Appellant State of California Attorneys Roger W. Simpson, etal
Jul 18 2007Answer brief on the merits filed
  State of California, plaintiff and appellant by Roger W. Simpson with permission to file brief in excess words
Aug 27 2007Received:
  Joinder by Respondents Century Indemnity and Westport Insurance [to Respondent's Allstate Insurance Company's Reply Brief/Merits] Attorneys Steven M. Haskell and Andrew McCloskey
Aug 27 2007Received:
  Respondents, Allstate Insurance Company et al., joinder in reply brief on the merits and answer brief of insurers to additional issue for review raised by the State and Reply.
Aug 27 2007Application to file over-length brief filed
  Reply brief on the merits (15,732 wds) Respondents Columbia Casualty, Century Indemnity & Westport Insurance Attorneys Steven M. Crane, Steven M. Haskel & Andrew McCloskey
Aug 27 2007Received:
  oversize Reply Brief on the Merits Respondents Columbia Casualty, Century Indemnity & Westport Insurance Attorneys Steven M. Crane, Steven M. Haskel & Andrew McCloskey
Aug 30 2007Filed:
  Joinder in reply brief on the merits and answer brief on insurers to additional issue for review raised by the state and reply.
Aug 30 2007Joinder to brief on the merits filed
  Century Indemnity Company, respondents to reply brief filed by respondent Allstate Insurance Company.
Sep 4 2007Reply brief filed (case fully briefed)
  Columbia Casualty Company, Westport Insurance, Century Indemnity Company, respondents by Steven M. Crane, Andrew McCloskey, Deborah Aiwasian, counsels filed with permission
Sep 26 2007Received application to file Amicus Curiae Brief
  Complex Insurance Claims Litigation Association Attorneys John J. Moura, etal
Sep 26 2007Received application to file Amicus Curiae Brief
  Complex Insurance Claims Litigation Association in support of defendants. by Randolph P. Sinnott, counsel
Oct 4 2007Received application to file Amicus Curiae Brief
  Consumer Federation of America and United Policyholders, in support of plaintiff State of California. by David Gauntlett, counsel
Oct 4 2007Received application to file Amicus Curiae Brief
  Tig Insurance Company in support of respondents. by Peter Abrahams, counsel
Oct 4 2007Received application to file Amicus Curiae Brief
  League of California Cities [in support of appellant State of California] Attorneys Michel Y. Horton and David Cox
Oct 4 2007Received application to file Amicus Curiae Brief
  Aerojet-General Corporation in support of plaintiff. by Scott P. DeVries, counsel
Oct 4 2007Received application to file Amicus Curiae Brief
  Certain London Market Insurers and Great American Insurance Company in suppport of defendant. by William J. Baron, counsel
Oct 19 2007Permission to file amicus curiae brief granted
  Complex Insurance Litigation Association. by Randolph P. Sinnot, counsel
Oct 19 2007Amicus curiae brief filed
  The application of Complex INsurance Litigation Associaiton for permission to file an amicus curiae brief in support of defendants is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Oct 19 2007Permission to file amicus curiae brief granted
  Consumer Federation of America and United Policyholders. by David Gauntlett, counsel crc.8.25(b)
Oct 19 2007Amicus curiae brief filed
  The application of Consumer Federation of America and United Policyholders for permission to file an amicus curie brief in support of plaintiff is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Oct 19 2007Permission to file amicus curiae brief granted
  Tig Insurance Company in support of respondent. by Peter Abrahams, counsel
Oct 19 2007Amicus curiae brief filed
  The application of Tig Insurance Company for permission to file an amicus curiae brief in support of respondents is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Oct 19 2007Permission to file amicus curiae brief granted
  League of California Cities in support of plaintiff. by Michel H. Horton, counsel
Oct 19 2007Amicus curiae brief filed
  The application of League of California Cities for permission to file an amicus curiae brief in support of plaintiff is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Oct 19 2007Permission to file amicus curiae brief granted
  Aerojet-General Corporation in support of plaintiff. by Scott P. DeVries, counsel
Oct 19 2007Amicus curiae brief filed
  The application of Aerojet-General Corporaiton for permission to file an amicus curiae brief in support of plaintiff is hereby granted. An answer thereto may be sesrved and filed by any party within twenty days of the filing of the brief.
Oct 19 2007Permission to file amicus curiae brief granted
  Certain London Market Insurers and Great American Isurance Company in support of respondents. by William J. Baron, counsel
Oct 19 2007Amicus curiae brief filed
  The application of Certain London Market Insurers and Great American Insurance Company for permission to file an amicus curiae brief in support of defendant ( Insurers Columbia Casualty, et al.) is hereby granted. An ansewr thereto may be served and filed by any party within twenty days of the filing of the brief.
Oct 19 2007Received:
  amended proof of service from Amicus Curiae , Aerojet-General Corporation by Scott P. DeVries, counsel
Nov 7 2007Response to amicus curiae brief filed
  Respondents (Insurers) combined response to AC briefs Attorneys Steven M. Crane, Andrew McCloskey, Steven M. Haskell and Bruce E. Copeland
Nov 8 2007Response to amicus curiae brief filed
  Appellant State of California combined response to AC briefs Attorneys Roger W. Simpson, Daniel J. Schultz, Deputy Attorneys General Darryl Doke and Jill Scally and Deputy Solicitor General Burns
Jun 23 2008Change of contact information filed for:
  change to telephone and fax numbers Attorneys Deborah A. Aiwasian and Steven M. Haskell Respondent Century Indemnity Company
Nov 19 2008Justice pro tempore assigned
 
Dec 10 2008Case ordered on calendar
  to be argued on Thursday, January 8, 2009, at 9:00 a.m., in San Francisco
Dec 23 2008Note: Mail returned (unable to forward)
  Alan Scott Feiler
Jan 8 2009Cause argued and submitted
 
Mar 5 2009Order filed
  The above entitled matter is retitled as follows: STATE OF CALIFORNIA, Plaintiff and Appellant, v. ALLSTATE INSURANCE COMPANY et al., Defendants and Respondents. STATE OF CALIFORNIA, Plaintiff, v. UNDERWRITERS AT LLOYD'S LONDON et al., Defendants.
Mar 6 2009Notice of forthcoming opinion posted
 
Mar 9 2009Opinion filed: Affirmed in part, reversed in part
  The judgment of the Court of Appeal is reversed insofar as the court directed the superior court to grant Insurers' alternative motion for summary adjudication establishing that the 1978 discharge was excluded by the qualified pollution exclusion. The judgment is otherwise affirmed, and the cause is remanded to the Court of Appeal for further proceedings consistent with this opinion. Opinion by Werdegar, J. -----joined by George, C.J., Kennard, J., Baxter, J., Moreno, J., Corrigan & Mosk, JJ*
Apr 8 2009Remittitur issued
 
Apr 10 2009Note: Mail returned (unable to forward)
  Alan Scott Feiler, counsel
Apr 20 2009Received:
  Receipt for Remittitur from Court of Appeal - Fourth Appellate District, Division Two.

Briefs
May 17 2007Opening brief on the merits filed
 
May 18 2007Opening brief on the merits filed
 
Jul 18 2007Answer brief on the merits filed
 
Sep 4 2007Reply brief filed (case fully briefed)
 
Oct 19 2007Amicus curiae brief filed
 
Oct 19 2007Amicus curiae brief filed
 
Oct 19 2007Amicus curiae brief filed
 
Oct 19 2007Amicus curiae brief filed
 
Oct 19 2007Amicus curiae brief filed
 
Oct 19 2007Amicus curiae brief filed
 
Nov 7 2007Response to amicus curiae brief filed
 
Nov 8 2007Response to amicus curiae brief filed
 
If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website
May 27, 2010
Annotated by gledeen

Facts: The State selected the location, designed, and directed the construction of a hazardous waste disposal site. The State directed the construction of “open, unlined evaporation ponds to contain the hazardous waste, channels to divert rainwater around the site, and a barrier dam at the bottom of the site.” Eventually over 30 million gallons of liquid industrial waste were dumped in the Stringfellow ponds. The site was closed in 1972 after it was discovered that chemicals were leaking out and contaminating groundwater. In addition, in 1969 major rainstorms caused the ponds to overflow, resulting in the release of polluted water from the site. In 1978 heavy rains again caused the ponds to overflow and threatened to cause the retention dam to fail. The State released about one million gallons of liquid waste in order to prevent the dam from failing.

State of California and the United States sued companies that had disposed of waste at the Stringfellow Acid Pits. Those companies counterclaimed against the State. “In 1998, the federal district court held the State 100 percent liable for claims under California law, and 65 percent liable for claims under federal law, for past and future costs of remediating contamination of land and groundwater.” The State anticipated over $500 million in remediation costs. The State sought coverage from their insurers, who denied coverage on the basis of pollution exclusions in their general liability policies. State of California brought action against insurance companies for declaratory relief, breach of contract, and bad faith denial of coverage.

The general liability policies contained coverage exclusions for liability resulting from environmental pollution, unless the release of pollutants was sudden and accidental, in which case coverage would be reinstated. Three of the four policies had an additional coverage exception denying coverage for personal injury or property damage arising from discharges of pollutants “into or upon any watercourse or body of water.” The fourth policy made no separate distinction for pollution of watercourses and bodies of water, applying same exception for sudden and accidental discharges.

Procedural Posture: Trial court granted summary judgment to Insurers because of the coverage exclusions in their policies for liability resulting from environmental pollution. The Court of Appeal reversed, holding that “the focus in applying the pollution exclusion was properly on release of pollutants from containment on the Stringfellow site (not the initial waste deposit there), that triable issues of fact exist as to whether the 1969 overflow of waste was ‘sudden and accidental’ and whether it discharged pollutants onto land as well as into a watercourse, but that the undisputed facts show the 1978 release was not ‘accidental’ because the State had been warned, after the 1969 events, that it needed to cover the ponds to avoid a reoccurrence.” Insurers appealed to the California Supreme Court, and the State’s answer raised the issue of whether the Court of Appeal had properly held that the 1978 release was not accidental as a matter of law.

Conclusions: “(1) Because the State’s liability for property damage was founded on its negligence in allowing pollutants to escape from the Stringfellow evaporation ponds into the surrounding groundwater and land, the proper focus of analysis here is on discharges from the ponds, rather than deposits to them. (2) A triable issue exists whether the entirety of the 1969 overflow discharge was limited to a watercourse. (3) A triable issue exists whether the 1978 release was ‘accidental.’ (4) Because a triable issue of fact exists as to whether sudden and accidental discharges were a substantial factor in causing indivisible property damage for which the State was found liable, the trial court erred in granting summary judgment on the ground that the State cannot prove how much of its liability is traceable to those discharges.”

Discussion

Issue 1. What is the appropriate pollutant discharge event for the court to evaluate under the liability policy?

Court contrasts the situation in this case with that in Standun. In the “sudden and accidental” exception, “accidental” refers to the discharge not the damage. When pollutants are deposited without an attempt to contain, the discharge refers to the initial deposit and not any subsequent movement of pollutants. In contrast, when pollutants are initially deposited in a containment facility, the initial deposit is not considered a discharge within the meaning of the exclusion. Therefore the court must look at any subsequent discharge or release of pollutants to determine if it was accidental and sudden.

Furthermore, the State was not liable for dumping waste at the site, it was liable for the negligence that led to the release of waste that caused the subsequent damage. Therefore, the State’s liability was based on the release of waste from the site, which is the release that is relevant for the Court’s analysis of the pollution exclusion. Depositing pollutants into a containment structure is not considered the act of pollution or discharge of pollutants into the environment.

Finally, a reasonable insured would not think that the exclusion for release of pollutants would apply to depositing waste into a containment facility. The subsequent escape of those chemicals from the facility is a release or discharge of pollutants into the environment, so those are liability-causing events, not just aspects of the property damage.

Issue 2. Whether the 1969 overflow was “into or upon any watercourse” within the meaning of the absolute pollution exclusion for watercourses contained in three of the four policies.

Court decides that there are triable issues of fact on this issue.

Defines “watercourse” as “the channel through which the water of a particular district or watershed usually or periodically flows.”

Burden of proof is on insurers to show that the exclusion does apply in this situation. “Insurers must show by undisputed evidence the 1969 overflow was confined to the regular channel of the stream draining the canyon where the Stringfellow site was located, Pyrite Creek, though they need not show the creek was flowing at the time. Evidence the contaminants flowed onto land drained by Pyrite Creek, by itself, is insufficient.” Court finds that the insurers fail to show by undisputed evidence that the contaminated flood waters flowed directly from the site into the watercourse of Pyrite Creek, rather than onto the surrounding land.

Issue 3. Whether the experience of the 1969 overflow and resulting recommendations to prevent another incident makes the 1978 release/discharge of pollutants non-accidental as a matter of law.

On summary judgment the court only asks whether the record reflects that there is a triable issue of fact on the question at hand.

Court concludes that there is a triable issue of fact on this issue.

Court defines an “accidental” discharge as “one the insured neither intended nor expected to happen.” Only if the insured subjectively knew or believed a discharge was highly likely to occur would it be “expected.”

(a) Since the State official ordered the controlled release of some waste and since the State had experienced the 1969 overflow and had not followed certain recommendations to prevent accidental overflows such as this, the insurers argued that this could not be considered accidental. With regard to the controlled release, the California Supreme Court found that “liability policies have been held to cover damages resulting from an act undertaken to prevent a covered source of injury from coming into action, even if that act would otherwise not be covered.” In this case, the waste was released to prevent the barrier dam from collapsing and releasing an uncontrolled discharge of waste. The Court supported this position by pointing to the tort principle that “danger invites rescue,” by arguing that the reasonable expectations of the parties would be that the policy covered efforts to mitigate damages caused by insured’s negligence, and by arguing that this policy encourages efforts to mitigate or prevent damage.

Therefore, the Court held that “to the extent the conditions in March 1978 threatened a “sudden and accidental” release of wastes from the Stringfellow site, the qualified pollution exclusion does not bar coverage for liability arising from the State’s intentional releases performed to prevent such a greater accidental release.”

(b) So would the overflow and threatened dam break of 1978 be considered accidental? In order for the insurers to win on summary judgment on this issue, the record must demonstrate that the State knew or believed that a discharge was highly likely to occur because of flooding. The Court found an issue of triable fact on this point, and reversed the Court of Appeal, finding that the record only shows that “the State was aware of a flooding risk and took what proved to be inadequate measures against it.” The State did take action after 1969 to reduce the amount of waste in the ponds and to strengthen the facility, but did not implement all of the recommendations that were made to ensure a waste discharge would never reoccur. The Court found that this omission (specifically to cover the site with an impermeable cap) “demonstrates only negligence, against which the policy insured.”

Issue 4. Whether the State must prove the amount of property damage caused by the sudden and accidental damage in order to receive coverage by insurers.

The Court holds that “to the extent the State can show ‘sudden and accidental’ releases proximately caused the damage for which it was held liable, it is contractually entitled to indemnity for that liability.” According to the Court, the record shows that there is “a triable issue of fact as to whether the 1969 and 1978 discharges were substantial factors in causing contamination of soils and groundwater downgradient from the Stringfellow site – the property damage for which the State was held liable. The record also reflects a triable issue as to whether that property damage, or the cost of repairing it, can be quantitatively divided among the various causes of contamination.” As the underlying basis for this holding, the Court cites its decision in Partridge, where it concluded that “liability coverage exists whenever an insured risk constitutes a proximate cause of an accident, even if an excluded risk is a concurrent proximate cause.” So it is irrelevant that there was leakage from the site that contaminated the groundwater as long as there was another nonexcluded risk/event that constituted a proximate cause of the damage. “If the insured’s nonexcluded negligence suffices, in itself, to render him fully liable for the resulting injuries or property damage, the insurer is obligated to indemnify the policyholder even if other, excluded causes contributed to the injury or property damage.” Applied in this case, “the 1969 and 1978 releases would have rendered the State fully liable for the contamination of soils and groundwater below the Stringfellow site, without consideration of the subsurface leakage, if they were substantial factors in causing the contamination.” The issue of whether they were substantial factors is a triable record according to the record, so summary judgment is inappropriate.

Damages appear to be indivisible in this case. “Under California tort law, a set of injuries for which the damages are indivisible is treated the same as a single injury: the tortfeasor is liable for the entirety of the damages.” The State was obligated to pay for total damages where the damages caused by covered and excluded events appear indivisible. If only a portion of damages were caused by accidental and sudden discharge, then only that portion would be covered by the policy. The State must prove indivisible damages, and the insurers may present evidence to the contrary. The record shows that it is at least a triable issue, so summary judgment would be inappropriate.

The Court overturns Golden Eagle Refinery Co. v. Associated Internat. Ins. Co. 85 Cal. App. 4th 1300 (2001). “Contrary to Golden Eagle’s reasoning, the fact that substantial cause may be sufficient to make a prima facie case in a tort action in order to support a joint and several judgment does imply that such tort law (substantial factor) causation is sufficient to create coverage under a liability policy when covered and excluded acts or events have concurred in causing injury or property damage.” “[W]hen the damages cannot be apportioned between two tortfeasors or between tortious and nontortious causes, a tortfeasor whose acts have been a substantial factor in causing the damages is legally responsible for the whole. We therefore disapprove Golden Eagle Refinery Co. v. Associated Internat. Ins. Co. insofar as it holds an insured must not only show a covered cause contributed substantially to the damages for which the insured was held liable, but must also show how much of an indivisible amount of damages resulted from covered causes.” The Court also disapproves Lockheed Martin Corp. v. Continental Ins. Co. to the same extent.

The result is that the insured must carry the burden of proving that a covered act or event was at least a substantial cause of the damage for which he is liable. Furthermore, the insured must prove that this act or event falls within any exception to an exclusion whenever such an exclusion is shown to be applicable by the insurer. If it is possible given the nature of the damages, the insured has the burden of proving which injuries or damages are attributable to causes within the exclusion’s exception. However, if the insured successfully proves that there were multiple causes of a single injury, or that the damage is indivisible and one or more of the covered causes would confer tort liability in full on the insured, then “the insured’s inability to allocate the damages by cause does not excuse the insurer from its duty to indemnify.”

Conclusion: “Only if the insured can identify particular sudden and accidental events and prove they contributed substantially to causing indivisible property damage for which the insured bore liability is the insurer obliged to indemnify its insured for the entirety of the damages.”

The Court finds that the record supports the existence of triable issues of fact of whether the discharge events of 1969 and 1978 were sudden and accidental, whether those events contributed substantially to the contamination complained of in the underlying federal suit, and whether the damages were indivisible according to causal event. Therefore, the Court found summary judgment to be improper and remanded the case to the Court of Appeal.

Gabriel Ledeen
Tags: excess insurers, hazardous waste, indivisible damages, insurance, pollution, pollution exclusion, Stringfellow, tort, waste disposal, negligence, liability, liability coverage exclusion, exclusion exception, summary judgment, triable issue