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Aerojet-General Corp. v. Transport Indemnity Co.5/28/1996
HANING, J.:
This declaratory judgment action was instituted by Aerojet-General Corporation and Cordova Chemical Company (collectively Aerojet) to secure a determination of the rights and obligations of the parties under Comprehensive General Liability Insurance (CGL) policies that over 50 insurers (insurers) issued to Aerojet from 1956 to 1984. Aerojet sought insurance coverage for losses resulting from contamination of groundwater with toxic chemicals from unlined ponds and trenches where Aerojet's chemical wastes had been deposited at its industrial facility near Sacramento. Judgment was rendered for insurers after a jury determined they were not obligated to indemnify Aerojet for any of the policy years at issue.
Aerojet's appeal questions the court's construction of CGL policy provisions, especially policy exclusions. Aerojet challenges numerous evidentiary and procedural rulings, and raises several issues involving reimbursement of defense costs. We affirm in part and reverse in part.
BACKGROUND
The salient facts are largely undisputed. In 1951 Aerojet established an 8,500 acre facility 15 miles east of Sacramento, California, for the purpose of developing, testing and building rocket systems. Aerojet's Sacramento facility was devoted primarily to the development and production of missile and rocket motors for the Air Force, Navy, Army and National Aeronautics and Space Administration. Examples of the contract programs performed at Aerojet's site during the 1950's through 1970's include Gemini, Apollo, Delta, Titan, Polaris, Minuteman, Hawk, Genie, Tartar, Standard Missile and Harpoon. By 1961 the Aerojet site consisted of nearly 800 buildings staffed by approximately 17,000 engineers, technicians, security, service and administrative personnel in the shops, laboratories, offices and test areas.
Aerojet used various chemicals in the performance of its work, which were primarily disposed of on-site and included trichloroethylene (TCE), a hazardous chemical solvent used by Aerojet primarily for metal and equipment cleaning operations. TCE was described by Aerojet's counsel as "the very life blood of Aerojet's operation." It was brought onto the Aerojet site in 10,000 gallon railroad tank cars, and by 1972 Aerojet had used 4 to 5 million gallons of TCE in its operations. Chemical wastes resulting from Aerojet's operations, some of which contained TCE, were discharged into large earthen pits and trenches which were excavated and designed specifically for this purpose.
In 1979 the presence of hazardous chemicals, including TCE, was discovered in the groundwater beneath the site and other nearby property. Further investigation determined that contaminants from Aerojet's earthen pits and trenches were seeping into the soil and polluting the groundwater, ultimately reaching the American River.
The presence of these chemicals in the groundwater and soil resulted in legal action against Aerojet by both the United States and the State of California, as well as numerous private litigants. The state initially sued Aerojet in state court, primarily under the Porter-Cologne Water Quality Control Act (Porter-Cologne Act) (Wat. Code, § 13000 et seq.), and subsequently filed a parallel action along with the United States in the federal district court under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C.S. § 9601 et seq.). The state and federal actions sought reimbursement for the cost of remediation of the contamination, and ultimately resulted in a partial consent decree under which Aerojet agreed to undertake the cleanup. The actions by the private parties sought money damages for person
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