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Foster-Gardner Inc. v. National Union Fire Insurance Co.8/3/1998
No. BC110056
Ct. App. 2/2 B099340
In this case we determine whether environmental agency activity prior to the filing of a complaint, in this case an order notifying the insured that it is a responsible party for pollution and requiring remediation, is a "suit" triggering the insurer's duty to defend under a comprehensive general liability insurance (CGL) policy. Two Courts of Appeal have ruled on the issue reaching opposite Conclusions. We granted review in both cases, holding Fireman's Fund Ins. Co. v. Superior Court (1997) 57 Cal.App.4th 1252, review granted Dec. 23, 1997 (S065447) for resolution of the issue in this case. The Court of Appeal here concluded that the order constituted a "suit." We disagree, and therefore reverse its judgment.
I. Facts and Procedural Background
Since 1959, plaintiff Foster-Gardner, Inc. (Foster-Gardner) has operated a wholesale pesticide and fertilizer business in Coachella, California (Site). In August 1992, Foster-Gardner received an "Imminent and Substantial Endangerment Order and Remedial Action Order" (Order) from the Department of Toxic Substances Control (DTSC) of the California Environmental Protection Agency. DTSC issued the Order pursuant to the Carpenter-Presley-Tanner Hazardous Substance Account Act (HSAA), California's "Superfund" law. (Health & Safety Code section 25300 et seq.)
The Order stated the following: As a finding of fact Foster-Gardner was "the owner and operator of the Site, a responsible party, and has incurred liability for cleaning up the Site." As a Conclusion of law, Foster-Gardner was a "responsible party" or "liable person" within the meaning of sections 25319, 25323.5, subdivision (a), and 25385.1(g).
In recounting the Site history, the Order stated that " rior to the banning of . . . DDT in 1972, Foster-Gardner handled DDT at the Site." In addition, Foster-Gardner stored anhydrous ammonia in tanks at the Site. The Coachella Fire Department had responded to leaks in the tanks. In 1990, the Riverside County Superior Court ordered Foster-Gardner to cease storing anhydrous ammonia. Foster-Gardner continues to handle other chemical products at the Site.
In June 1988, the Riverside County Health Department (RCHD) sampled surface soil at the Site. That investigation revealed extensive contamination with toxaphene, DDT (dichloro-diphenyl-trichloro-ethane) and its products of degradation, DDD (dichloro-diphenyl-dichloro-ethane) and DDE (dichlorodiphenyldichloroethylene). RCHD required Foster-Gardner to conduct a site assessment. Consultants for Foster-Gardner performed a "Preliminary Assessment of DDT in Soil" in January 1990, and "Additional Assessment of DDT in Soil" in March 1990. These studies concluded that the Site was contaminated within and beyond the property boundaries.
Sometime between February and May 1990, Foster-Gardner installed an asphalt cap over high traffic areas of the Site, and treated some Site areas with a dust suppressant. In March 1991, surface soil sampling conducted by consultants at the request of the City of Coachella revealed excessive concentrations of DDT, DDD, DDE, and toxaphene in the combined residential and industrial streets, and lots adjacent to the Site.
In an unrelated investigation of groundwater contamination at the Coachella City Yard from May to September 1989, consultants discovered excessive concentrations of 1, 2-dichloropropane, 1, 2-dichloroethane and ethylene dibromide in the shallow aquifer. A report prepared by consultants for the Colorado River Basin Regional Water Quality Control Board (RWQCB) stated that the source of these contaminants was in all likelihood the Site.
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