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Eott Energy Corp. v. Storebrand Internat. Ins. Co.5/16/1996
CROSKEY, J.
This case presents the question of whether an insured, having suffered a $1.5 million loss as the result of over 650 thefts of the petroleum products which it markets, will be entitled to recover for such loss under its "all risk" property insurance policy when the value of the property taken in any single theft did not exceed the $100,000 deductible provided for in the policy. The issue which we are required to resolve is whether, under the facts of this case, there was but one "occurrence" or over 650 of them.
The insured appellant, EOTT Energy Corp. (EOTT), claims that the multiple thefts were in reality an integral part of a long-standing, organized conspiracy which resulted in a systematic theft of its oil products and thus amounted to only one occurrence to which a single deductible should be applied. Because we conclude that (1) a planned and orchestrated theft of EOTT's products (if that is in fact what happened) would amount to one loss to which a single deductible should apply and (2) EOTT raised triable issues of fact as to whether such a conspiracy existed, we reverse the summary judgment granted in favor of the respondent insurer, Storebrand International Insurance Co. A/S (Storebrand).
FACTUAL AND PROCEDURAL BACKGROUND
Pursuant to a processing agreement entered into in February 1991, Paramount Petroleum Corporation (Paramount) processed crude oil and manufactured petroleum products, including diesel fuel, for EOTT at Paramount's plant in Paramount, California. Under the terms of the agreement, EOTT had title to all of the crude oil delivered to Paramount as well as to all of the oil products produced therefrom.
EOTT was an additional insured under the two relevant "all risk" policies issued to Paramount by Storebrand for the successive annual periods of July 1, 1990, to July 1, 1991, and July 1, 1991, to July 1, 1992. These policies insured EOTT against "all risks of direct physical loss or damage occurring during the [policy period] from any external cause [except as specifically excluded]." While this coverage extended to losses due to theft, it was not intended to be a blanket fidelity bond; thus, there was an exclusion which provided that: "THIS POLICY DOES NOT INSURE: . . . misappropriation, secretion, infidelity or dishonesty of the Insured or any of his employees; nor loss or damage resulting from the Insured voluntarily parting with title or possession of any property if induced to do so by any fraudulent scheme, trick, device or false pretense; nor any unexplained loss, mysterious disappearance or loss or shortage disclosed on taking inventory."
Finally, the policy provided for a $100,000 deductible for each "occurrence." Specifically, the policy stated, "As respects Real and Personal Property, all claims for loss, damage or expense arising out of any one occurrence . . . shall be adjusted as one claim, and from the amount of each such adjusted claim there shall be deducted the sum of USD 100,000 for Property Physical Damage . . . ." Unfortunately, the property loss portion of the policy did not define "occurrence."
During the 11-month period from February 1991 through January 1992, EOTT suffered the loss of approximately 2,500,000 gallons of its diesel fuel. EOTT had issued access cards to several tanker trucking companies which enabled their drivers to gain access to the Paramount loading rack and automatic pumping facilities. An authorized driver was permitted to pull his truck up to the pumping facility and, by use of the access card, start pumping fuel. The amount of fuel pumped was measured by attached meters which recorded that amount for later billing. The drivers had 24-hour ac
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