STONELIGHT TILE, INC., v. CALIFORNIA INSURANCE GUARANTEE ASSOCIATION

Filed 3/29/07; pub. order 4/24/07 (see end of opn.)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

Story continued from Part I .

We begin by reviewing the undisputed facts that bear on this issue. Although the record suggests Plaintiffs began experiencing problems due to the dust from Diversifieds recycling operations prior to 1991, plaintiffs claims for property damage, nuisance and trespass were limited by the statute of limitations to damages occurring after July 11, 1991 and Ansons personal injury claims were limited to events occurring after July 11, 1993. Diversified ceased tub grinding activities on July 23, 1991,[1] and ceased operations altogether on June 1, 1994. Thus, tub grinding took place only during the first 13 days of the approximately 2 year 11 month period at issue in the underlying action.

Plaintiffs contend Superior Nationals scope of coverage was different from that of the other insurers because it included damages from tub grinding and that the damages from tub grinding differed from the damages due to Diversifieds other operations, which included the transfer of wood debris.[2] The tub grinder generated a fine, light brown wood dust and ejected metal projectiles. Diversifieds transfer operations, which included the bulldozing, trampling and crunching of wood debris, generated a dark brown dust. The dust from the transfer operations was present both during and after the time the tub grinder was in operation.

The record contains copies of 36 inspections reports by Air Quality in 1991, 1992, 1993 and 1994. Eight of those reports involve conditions on dates before tub grinding stopped. The remaining 28 reports involve conditions on dates after tub grinding stopped. On July 15, 1991 (before tub grinding ceased), Anson complained to Air Quality that very large amounts of dust had floated onto his property that were not due to tub grinding. On July 26 and July 27, 1991 (a few days after tub grinding ceased), Anson complained that Diversified was generating as much wood dust as ever even though it had removed the tub grinder. On July 31, 1991, Anson complained to Air Quality that even though the tub grinding had ceased, the dust problem still existed due to Diversifieds transfer operations. Anson continued to complain to Air Quality for two years and eight months after the tub grinding ceased. Both Diversifieds tub grinding and transfer operations created dust that permeated Plaintiffs property. There was no evidence of damages to Plaintiffs tile operations that were distinct because of the metal projectiles related to tub grinding. Nothing in the record suggests the damage to the tiles, the glaze, or the equipment was different from one type of dust than the other. Although the dust may have been different in color and source, the offending substance was still dust.

We note also that all five of the insurance policies at issue in this case used the standard 1988 Insurance Services Offices (ISO) commercial general liability coverage form (ISO form No. CG 00 01 11 88). Each of those policies defined an occurrence as an accident, including continuous exposure or repeated exposure to substantially the same general harmful conditions. Given the facts set forth above, we conclude that Plaintiffs exposure to dust from Diversifieds operations met the policy definition of an occurrence because they involved a continuous exposure or repeated exposure to substantially the same general harmful conditions. For these reasons, we are not persuaded that Superior Nationals scope of coverage was different from that of the other insurers based on the color and source of the dust or on the language of the insurance policies at issue.

D. Continuous Injury Trigger of Coverage

A key inquiry under an occurrence-based policy is what fact or event triggers an insurers duty to defend and/or indemnify its insured. (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2006) 7:161, p. 7A-66.) The word trigger is not found in the insurance policy or defined in the Insurance Code. (Ibid.) It describes what must happen during the policy period to activate the insurers duties to defend and indemnify. (Ibid., citing Montrose, supra, 10 Cal.4th 645, 655.) The trigger of coverage usually determines which insurance policy or policies may provide coverage. (Croskey et al., supra, at 7:162-, p. 7A-67.)

[T]he proper resolution of a trigger of coverage issue in any given case may turn on whether the court is addressing underlying facts involving a single event resulting in immediate injury (e.g., an explosion causing instantaneous bodily injuries and destruction of property), a single event resulting in delayed or progressively deteriorating injury (e.g., a chemical spill), or a continuing event (referred to in [comprehensive general liability (CGL)] policies as continuous or repeated exposure to conditions) resulting in single or multiple injuries (e.g., exposure to toxic wastes or asbestos over time). (Montrose, supra, 10 Cal.4th at p. 666.) Based on the facts set forth above, we conclude the trial court did not err when it held that Plaintiffs suffered from continuously triggered injury.

Where . . . successive CGL policy periods are implicated, bodily injury and property damage which is continuous or progressively deteriorating throughout several policy periods is potentially covered by all policies in effect during those periods. (Montrose, supra, 10 Cal.4th at p. 689.) The timing of the accident, event, or conditions causing the bodily injury or property damage, e.g., an insureds negligent act, is largely immaterial to establishing coverage; it can occur before or during the policy period. Neither is the date of discovery of the damage or injury controlling: it might or might not be contemporaneous with the causal event. It is only the effectthe occurrence of bodily injury or property damage during the policy period, resulting from a sudden accidental event or the continuous or repeated exposure to conditionsthat triggers potential liability coverage. (Id. at p. 675.)

Where damages continue throughout successive policy periods, as was the case here, all insurance policies in effect during those periods are triggered. Coverage is not limited to the policy in effect at the time of the precipitating event or condition and is not cut off once the injury or damage begins or becomes manifest. (Montrose, supra, 10 Cal.4th at p. 677, fn. 17, 685-689.) Moreover, once a policy is triggered, the policy obligates the insurer to pay all sums which the insured shall become liable to pay as damages for bodily injury or property damage. The insurer is responsible for the full extent of the insureds liability . . . not just for the part of the [injury or] damage that occurred during the policy period. (Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co. (1996) 45 Cal.App.4th 1, 105 (Armstrong).) The continuous injury trigger has been applied in cases such as this where the policy obligates insurers to pay those sums that the insured shall become legally obligated to pay. (Century Indemnity Co. v. Hearrean (2002) 98 Cal.App.4th 734, 738, 743.)  [W]here successive . . . policies have been purchased, bodily injury and property damage that is continuing or progressively deteriorating throughout more than one policy period is potentially covered by all policies in effect during those periods. [Citation.] The successive insurers are not jointly and severally liable. [Citation.] Rather, [a]llocation of the cost of indemnification among such insurers requires application of principles of contract law to the express terms and limitations of the various policies . . .  and, in their absence, equitable considerations . . . . (Aerojet-General Corp. v. Transport Indemnity Co. (1997) 17 Cal.4th 38, 57, fn. 10, citing Montrose, supra, at pp. 681, fn. 19, 686-687.)

When a continuous loss is covered by multiple policies, the insured may elect to seek indemnity under a single policy with adequate policy limits. If that policy covers all sums for which the insured is liable, as most CGL policies do, that insurer may be held liable for the entire loss. (Montrose, supra, 10 Cal.4th at p. 665; Armstrong, supra, 45 Cal.App.4th at pp. 49-50.) The insurer called upon to pay the loss may seek contribution from the other insurers on the risk. (Croskey et al., Cal. Practice Guide: Insurance Litigation, supra, 7:177.7, p. 7A-72.3.)

However, a claim for contribution would not lie against CIGA, since such claims are statutorily barred under section 1063.1, subdivision (c)(5), which provides: Covered claims does not include any obligations to insurers, insurance pools, or underwriting associations, nor their claims for contribution, indemnity, or subrogation, equitable or otherwise, except as otherwise provided in this chapter. In creating CIGA, . . . it was the Legislatures intent to protect the public, not to confer a benefit upon an insurance company. (Liemsakul, supra, 193 Cal.App.3d 433, 440-441.)

Applying these rules, each of the Solvent Insurers was responsible for the full amount of the loss, up to its policy limits. Plaintiffs entered into separate settlement agreements with each of the Solvent Insurers. The record does not disclose the amounts the Solvent Insurers paid to settle the case. Nor do we know the total amount of the settlements with the three Solvent Insurers or the amount of the insurance policy limits that remain after settlement. However, the parties stipulated facts in support of the motion for summary judgment included stipulations that each of the settlements neither exhausted [each Solvent Insurers] policy limits nor fully satisfied the underlying judgment of $990,000 and $200,000. Since each of the Solvent Insurers was potentially liable for the full amount of its policy limits and that potential coverage was not exhausted in the settlements, we conclude there was other insurance available to Plaintiffs. Since there was other insurance available to cover this loss, it was not a covered claim within the meaning of the Guarantee Act. (  1063.1, subd. (c)(9).) We therefore conclude that the trial court did not err when it granted CIGA summary judgment on this basis.

Months before Plaintiffs settled with the Solvent Insurers, CIGA sent Plaintiffs a letter advising them that claims covered by other insurance are excluded and that they should exhaust the Solvent Insurers policy limits before seeking payment from CIGA. Plaintiffs settled with the Solvent Insurers for less than policy limits with full knowledge of CIGAs position. Plaintiffs cannot bootstrap [their] claim against CIGA by releasing [their] right to recover under an available policy and claiming that as a result there is no other coverage. (Parkwoods Community Assn. v. California Ins. Guarantee Assn. (2006) 141 Cal.App.4th 1362, 1368.) Plaintiffs chose to accept the risk of pursuing the claim against CIGA as part of their settlement with the Solvent Insurers. Their tactical choice cannot be used to increase the extent of CIGAs statutory liability. (Ibid.)

IV. CIGAs Liability for Trespass & Nuisance Claims

Plaintiffs argue the court erred in granting summary judgment because there is no other insurance for their trespass and nuisance claims. They contend the continuous injury trigger of coverage, which provides that each policy triggered by a continuing or progressive loss claim has an independent obligation to respond to the loss in full, does not apply to their trespass and nuisance claims. Plaintiffs contend that because their trespass and nuisance claims are covered under the personal injury liability coverage, the policy was triggered at the time of the offense and not the loss or damages. They argue that CIGA is uniquely responsible for all trespass and nuisance offenses that occurred during Superior Nationals policy period and contend that because a different trigger of coverage applies, the Solvent Insurers cannot be held liable for nuisance and trespass damages occurring during Superior Nationals policy period. They also contend there are triable issues of fact regarding which offenses occurred during Superior Nationals policy period.

Plaintiffs are not precise about the language they use to describe these contentions. For this discussion, it is important to distinguish between personal injury tort claims that are payable under the bodily injury coverage of the CGL policy and claims (in this case nuisance and trespass claims) that may be payable under the personal injury liability coverage of the CGL policy. In their brief, Plaintiffs confuse the two concepts, using the phrases personal injury . . .  claims and personal injury . . . damages to refer to claims that may be covered under the personal injury liability coverage of the CGL policy. For the purpose of our analysis, we shall assume all such references are to the personal injury liability coverage.

Personal injury liability is a term of art that covers certain enumerated offenses. (Croskey et al., Cal. Practice Guide: Insurance Litigation, supra, 7:2034.5, p. 7H-24.) Unlike liability coverage for property damage or bodily injury, personal injury coverage is not based on an accidental occurrence. (General Accident Ins. Co. v. West American Ins. Co. (1996) 42 Cal.App.4th 95, 103 (General Accident).) Instead, personal injury coverage is triggered by one of the offenses listed in the policy, not the injury or damages that a plaintiff suffers. (Ibid.; Martin Marietta Corp. v. Insurance Co. of North America (1995) 40 Cal.App.4th 1113, 1124-1125.) The Superior National ISO form policy defines bodily injury in relevant part as bodily injury, sickness or disease sustained by a person, . . . The policy defines personal injury in relevant part as injury, other than bodily injury, arising out of one or more of the following offenses: []. . . [] c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies . . .[3] Generally, California courts have construed wrongful entry or eviction as applying to tort claims arising out of the interference with an interest in real property, such as trespass, nuisance, and noninvasive interferences with the use and enjoyment of property. (General Accident, supra, at pp. 103-104.)

We are not persuaded that we need to reach Plaintiffs issues relating to the personal injury liability coverage, since we have already concluded that there is other insurance available to cover the judgment under the bodily injury and property damage liability coverages. The other insurance is available regardless of whether a portion of the judgment may be attributable to the nuisance or trespass causes of action. Plaintiffs obtained a general verdict that does not allocate damages between Plaintiffs negligence, nuisance, trespass, battery, and negligent or intentional infliction of emotional distress causes of action. By their nature, the damages Plaintiffs sought are awardable under a variety of theories and it is not clear from the verdict whether the amounts awarded were awarded under the negligence, nuisance, trespass or some other theory. Thus, we do not know which theory or theories the jury relied on in awarding Stonelight $990,000 and Anson $200,000.

Citing Henderson v. Harnischfeger Corp. (1974) 12 Cal.3d 663, 673 and Bresnahan v. Chrysler Corp. (1998) 65 Cal.App.4th 1149, 1153 (Bresnahan), Plaintiffs argue when a case submitted on multiple causes of action results in a general verdict for the plaintiff, it is presumed that the plaintiff prevailed on each cause of the causes of action. Plaintiffs state the rule from these cases incorrectly. As the court explained in Bresnahan, Where several counts or issues are tried, a general verdict will not be disturbed by an appellate court if a single one of such counts or issues is supported by substantial evidence and is unaffected by error, although another is also submitted to the jury without any evidence to support it and with instructions inviting a verdict upon it.  (Ibid.) Thus, on review of the underlying judgment, the general verdict will be upheld if sufficient as to any one of the causes of action alleged. Application of this rule of appellate review does not mean the jury found for Plaintiffs on each of their causes of action below.

Moreover, with regard to Stonelights claim, the court in Mirpad, LLC v. California Ins. Guarantee Assn. (2005) 132 Cal.App.4th 1058, 1070-1074 (Mirpad), construing a personal injury liability coverage provision that is identical to the provision in the Superior National policy, held that coverage afforded under personal injury liability for wrongful eviction or wrongful entry only applies to claims by natural persons and is not available to a business organization like Stonelight. The Mirpad court interpreted the meaning of the word person under subdivision (c) of the personal liability coverage of the policy, which as noted above, defined personal injury as injury arising out of the wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of . . . a room; . . . a dwelling; or . . . premises; . . . that aperson occupies . . . . (Id. at p. 1070.) The court explained that the policy language must be read in the context of the entire policy. (Id. at pp. 1063, 1070.) The court stated that while a layperson would most likely think the word person refers to a natural person, in law the word can also mean a corporation or other legal entity. (Id. at p. 1074, fn. 14.) The court observed that the word person was consistently used throughout the policy to refer only to natural persons and that other types of legal entities, including corporations like Stonelight, were referred to in the policy as organizations. The court concluded that because the policy used the words person and organization separately and distinctly, those words had to be accorded their separate and distinct meanings and held that the word person as used in the context of the wrongful eviction offense refers only to natural persons. (Id. at pp.  1070-1071.) Consequently, Stonelights nuisance and trespass claims would not be covered under the personal injury liability portion of the policy.

With regard to Ansons claim, as we observed in the appeal of the underlying action, although the judgment in favor of Anson could be sustained on the nuisance or trespass theories, the parties seemed to assume that Ansons case went to the jury on his causes of action for negligent or intentional infliction of emotional distress. Ansons emotional distress claims were limited by the statute of limitations in the underlying action to damages occurring after July 11, 1993, a period that begins after the Superior National policy expired. (See also Code Civ. Proc.,  340, former subd. (3); 3 Witkin, Cal. Procedure (4th ed. 1996) Actions,  530, p. 665.) Thus, even if we were to adopt Plaintiffs reasoning with regard to the trigger of coverage for the nuisance and trespass claims, CIGA would not be responsible for Ansons emotional distress damages since they were limited to periods outside Superior Nationals coverage period.

Furthermore, personal injury liability for wrongful eviction or entry does not cover pollution damage to real property. (Legarra v. Federated Mutual Ins. Co. (1995) 35 Cal.App.4th 1472, 1483-1486.)

For these reasons, we conclude that there is no merit to Plaintiffs second contention that there is no other insurance for the trespass and nuisance claims because they are subject to a different trigger of coverage. In light of our conclusions, we shall not reach CIGAs contention that the continuous injury trigger of coverage applies to the personal injury liability coverage in this case, since the trespass and nuisance offenses were continuing in nature.

Disposition

The judgment is affirmed.

____________________________________________

McAdams, J.

WE CONCUR:

________________________________

Bamattre-Manoukian, Acting P.J.

________________________________

Duffy, J.

Filed 4/24/07

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

BY THE COURT:

Pursuant to California Rules of Court, rule 8.1105(b), the request for publication is hereby granted. It is ordered that the opinion in this matter, filed on March 29, 2007, shall be certified for publication.

Date: __________________________

McAdams, J.

___________________________ __________________________

Bamattre-Manoukian, Acting P.J. Duffy, J.

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Property line Lawyers.

[1] Plaintiffs argue there is a triable issue of fact regarding the dates tub grinding occurred, which precludes summary judgment. We find no merit to this contention, since it was undisputed that tub grinding ceased on July 23, 1991. Plaintiffs also argue there is a triable issue of fact whether Diversified paid the Solvent Insurers premiums for light brown wood dust coverage. Plaintiffs did not submit any argument or evidence related to this issue in the trial court and have therefore forfeited that claim on appeal. We note also that this claim is related to the issue of when tub grinding occurred, over which there is no dispute.

[2] In their brief on appeal, Plaintiffs refer to evidence of events that occurred in June 1991, that were outside the time period at issue in the underlying litigation. They also refer to depositions and exhibits from the trial in the underlying action that are not part of the record on appeal and do not appear to have been part of the evidentiary record in the coverage case. On appeal, we disregard documents and facts that were not presented to the trial court in the action below and that are not part of the record on appeal. (Pulver v. Avco Financial Services (1986) 182 Cal.App.3d 622, 632.)

[3] Other offenses enumerated in the policy that may trigger personal injury liability coverage include false arrest, detention, or imprisonment; malicious prosecution; and publications that are libelous or slanderous, that disparage goods, products or services, or that violate a persons right of privacy.