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County of San Diego v. Ace Property & Casualty Insurance Co.2/19/2003
CERTIFIED FOR PUBLICATION
In this insurance coverage action, cross-complainant County of San Diego (the County) appeals a judgment entered against it after the trial court granted the summary adjudication and summary judgment motions of cross-defendant Ace Property & Casualty Insurance Company (ACE). The County contends the trial court misinterpreted ACE's nonstandard third party liability policy as not providing coverage for the County's settlements of nonlitigated claims, including an administrative order to remediate groundwater contamination and third party property damage claims arising from the contamination. Specifically, the County asserts (1) the court erred by applying Certain Underwriters at Lloyd's of London v. Superior Court (2001) 24 Cal.4th 945 (Powerine I), in which our Supreme Court held the term damages in the insuring clause of a standard comprehensive general liability (CGL) policy is limited to sums ordered by a court, and alternatively, (2) the County raised triable issues of fact regarding whether ACE's reservation of rights to deny coverage or other allegedly wrongful conduct allowed the County to protect its interests by settling the claims without ACE's consent and then obtain reimbursement for the settlements. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
ACE issued a nonstandard third party liability policy to the County that was effective between 1974 and 1977. The policy requires ACE to indemnify the County "for all sums which the insured is obligated to pay by reason of liability imposed by law or assumed under contract or agreement," arising from "damages" caused by personal injuries or the destruction or loss of use of tangible property.
In 1969 the County began operating a solid waste facility known as the Ramona Landfill. The Ramona Landfill overlies potable groundwater, and in 1970 the Regional Water Quality Control Board (the Board) imposed operational requirements on the County.
In March 1997 the Board issued a cleanup and abatement order (CAO 97-17) to the County, which required it to investigate, monitor and remediate groundwater contamination caused by the Ramona Landfill. The County waived a hearing before the Board to challenge imposition of CAO 97-17.
In June 1997 the owners of property (the Sossamans) near the Ramona Landfill complained to the County that groundwater contamination would affect the property's marketability and their physical and mental health. The Sossamans requested that the County purchase their property without the necessity of litigation. The County believed it more likely than not that the Sossamans' property was contaminated. It had the property appraised "and preliminary negotiations including the preparation of necessary transfer documentation was initiated." The Atkinsons, also property owners near the Ramona Landfill, filed a similar claim in 1997.
In November 1997 the County settled the Sossamans' claims by paying them $318,000 for the acquisition of their property and relocation benefits. In December 1998 the County settled the Atkinsons' claims by paying them $259,500 for the acquisition of their property and relocation benefits.
In May 1997 the County began seeking indemnification from ACE for costs of complying with CAO 97-17. ACE reserved its right to deny coverage on numerous grounds, including the absence of a third party lawsuit. In September 1997 the County began seeking indemnification from ACE for the Sossaman and Atkinson claims. Regarding these claims, none of the correspondence between the County and ACE is included in the appellate record. In any event, ACE never indemnified the County for any of the settl
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