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Foster-Gardner Inc. v. National Union Fire Insurance Co.8/3/1998
claims.' " (Id. at p. 827.) "Although we agree that a layperson might reasonably define `damages' in such broad terms, it is unlikely that he would do so in the context of the coverage provision at issue here, taken as a whole." (Ibid.) Instead, we noted that "the statutory and dictionary definitions of `damages' share several basic concepts. Each requires there to be `compensation,' in `money,' `recovered' by a party for `loss' or `detriment' it has suffered through the acts of another." (Id. at p. 826.)
In determining whether reimbursement of government response costs constituted "damages," we concluded that the first element of the statutory and dictionary definitions of "damages" was fulfilled. (AIU, supra, 51 Cal.3d at p. 828.) The "agencies suffer `loss' or `detriment' in two separate ways when they incur response costs under CERCLA and similar statutes. First, release of hazardous waste into groundwater and surface water constitutes actual harm to property in which the state and federal governments have an ownership interest; this harm is `detriment' in statutory terms. [Citations.] Second, the agencies' out-of-pocket expenses of investigating and removing the waste as required by statute is `loss' incurred as a direct result of harm allegedly created through the unlawful act or omission of FMC." (Id. at pp. 828-829.)
We also concluded that the second element of statutory and dictionary definitions of "damages" was fulfilled. "FMC's reimbursement of government response costs is monetary `compensation' for the loss suffered by the agencies when they proceed with environmental cleanups." (AIU, supra, 51 Cal.3d at p. 829.)
We rejected the insurers' argument that CERCLA intended that reimbursement of response costs be treated as conceptually distinct from recovery of "damages." (AIU, supra, 51 Cal.3d at pp. 830-831.) We stated, "our ultimate Conclusion as to whether reimbursement of response costs is `damages' for insurance purposes is, as noted above, predominantly a question of how, under state law, insurance policies should be interpreted. [Citations.] We are not bound by distinctions or definitions contained in CERCLA itself, if such distinctions do not reflect the intent of the parties to the CGL policies at the time of their formation. For this reason, even to the extent that CERCLA distinguishes between response costs and damages, this fact seems immaterial to the interpretation question at issue in this case. The parties' intent in entering the CGL policies could not possibly have been influenced by the niceties of statutory language adopted many years after the policies were drafted." (Id. at p. 831, original italics.)
We also noted that while reimbursement of response costs was essentially a form of restitution, both restitution and compensatory damages fell within the meaning of "damages" in the policies. (AIU, supra, 51 Cal.3d at p. 836.) We observed that "the relief sought in the underlying suits at issue here is not punitive," and distinguished it from those forms of restitution that as a matter of public policy cannot be covered by insurance. (Id. at pp. 836-837.)
We next considered whether "any or all of the costs of complying with injunctions issued under CERCLA and similar statutes are `damages' under the CGL policies." (AIU, supra, 51 Cal.3d at p. 838.) We noted that "The statutes on which the third party suits are based provide that, in lieu of remedying contamination and seeking reimbursement, the agencies may obtain injunctions compelling responsible parties to both cease discharging hazardous waste and clean up damage already present. [Citation.] As courts and commentators have recognized, government cleanup efforts are generally c
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