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Foster-Gardner Inc. v. National Union Fire Insurance Co.8/3/1998
onsiderably more expensive than cleanups performed by the responsible party. [Citations.] For this reason, federal and state governments generally seek voluntary and involuntary cleanup by the responsible party (pursuant to injunction if necessary) before performing it themselves and seeking reimbursement under CERCLA." (Id. at pp. 837-838.)
We noted, "The costs of injunctive relief . . . do not readily satisfy the statutory or dictionary definitions of `damages.' Because such costs are paid to employees or independent contractors rather than aggrieved parties, they do not directly `compensate' aggrieved persons for `loss' or `detriment.' " (AIU, supra, 51 Cal.3d at p. 838.) We concluded, however, that it was unlikely "that the parties to CGL policies intended to cover reimbursement of response costs but not the costs of injunctive relief, at least where the latter costs are incurred -- generally at a lower total cost -- for exactly the same purposes addressed through governmental expenditure of response costs." (Ibid.) In this respect, we noted that unlike traditional injunctive relief, which is generally only available when legal remedies such as monetary compensation are inadequate, "injunctive relief may be available [under CERCLA], even though legal or restitutive remedies are adequate." (Id. at pp. 838, 840.) In addition, the mere fact that the agencies sought an injunction did not indicate an absence of cognizable property damage or personal injury . Moreover, "in its remedial aspects, the injunction results in exactly the type of expenditures involved in reimbursement of response costs, whether or not the agencies have an adequate remedy in the form of reimbursement." (Id. at p. 840.) " njunctive relief is an equivalent substitute for the goal of government remedial action." (Ibid.) "For these reasons, it would exalt form over substance to interpret CGL policies to cover one remedy but not the other. Given the practical similarity of remedies available under the environmental statutes at issue here, we believe a reasonable insured would expect both remedies to fall within coverage as `damages.' " (Ibid.)
We observed that CERCLA and the HSAA "authorize alternative remedies -- injunction and reimbursement -- that are relatively interchangeable in a way perhaps not foreseen by the parties at the time they entered the CGL policies. . . . he policies necessarily present some ambiguity in light of statutory schemes that by their very operation tend to eliminate the formal distinction between compensation paid to an aggrieved party and sums expended by the insured under compulsion of injunction. [Citation.] For this reason, although we take the statutory and dictionary definitions . . . to be the `ordinary and popular' definition of `damages' for interpretation purposes, we will not apply this definition inflexibly. To the extent that policy language is ambiguous in light of the way environmental statutes authorize relief, our goal remains to protect the objectively reasonable expectations of the insured." (AIU, supra, 51 Cal.3d at p. 828.)
Finally, we observed that "some costs required under environmental injunctions are prophylactic in nature," and stated "these costs are not incurred `because of property damage,' and therefore are not covered by CGL policies." (AIU, supra, 51 Cal.3d at p. 841.) "Until such damage has occurred, whether on the waste site itself or elsewhere, there can be no coverage under CGL policies." (Id. at p. 843.)
B. Analysis
Under the policies, the insurers are required to defend a "suit," but have discretion to investigate and settle a "claim." The parties each assert that the word "suit" is clear and unambiguous, but differ on wh
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