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Aetna Insurance Co. v. Aaron12/4/1996
excludes claims for sums which the insured is obligated to pay for 'property damage to . . . property owned . . . by . . . the insured.' Claims arising out of injury to property of others for which the insured is responsible are covered by the terms of the policies even if the insured's damages are measured in part by the cost of remedial work which has to be performed on the insured's own property.
There is no novelty to the proposition that in a conventional tort action, once some present injury has been proved, the plaintiff's damages may include the cost of measures intended to prevent future injury.
Id. at 12, 554 A.2d at 1348 (emphasis added).
The case of AIU Ins. Co. v. F.M.C. Corp., 51 Cal. 3d 807, 799 P.2d 1253, 274 Cal. Rptr. 820 (1990), is also instructive. There, the court construed the phrase "because of property damage," and concluded that all costs arising from the environmental contamination in issue occurred "because of" property damage, without regard to whether the clean-up occurred on property of the insured or on property of third parties. While the court determined that an insurer is not obligated to pay for prophylactic "measures taken in advance of any release of hazardous waste," id. at 843, 779 P.2d at 1279, the court said: "The provisions at issue here do not specify that coverage hinges on the nature or location of property damage. We therefore construe them to encompass damages because of property damage in general, regardless of by whom it is suffered." Id. at 843, 799 P.2d at 1279 (emphasis added).
We are also guided by the court's analysis in City of Edgerton, 172 Wis. 2d 518, 493 N.W.2d 768, which concerned the federal Environmental Protection Agency's investigation of hazardous substances at a landfill. The court adopted a "common sense approach" with respect to whether remediation costs constitute damages. Id. at 542, 493 N.W.2d at 778. Quoting Upjohn Co. v. Aetna Cas. and Sur. Co., 768 F. Supp. 1186, 1199-1200 (W.D. Mich. 1990), the court said:
Once property damage is found as a result of environmental contamination, cleanup costs should be recoverable as sums that the insured was liable to pay as the result of property damage. . . . The insured ought to be able to rely on the common sense expectation that property damage within the meaning of the policy includes a claim which results in causing him to pay sums of money because his acts or omissions affected adversely third parties. While such claims might be characterized as seeking 'equitable relief' the [cleanup] costs are essentially compensatory damages for injury to common property and for that reason the [insurer] has a duty to defend. . . . The short answer is that from the standpoint of the insured damages are being sought for injury to property. It is that contractual understanding rather than some artificial and highly technical meaning of damages which ought to control.
Edgerton, 172 Wis. 2d at 543, 493 N.W.2d at 778 (citations omitted).
Nor is it of any moment that the Council, rather than Ms. St. Clair, instituted suit against Aaron, or that the Council, rather than Aaron, actually made the repairs. In Anderson Dev. Co., 49 F.3d 1128, for example, the insured instituted a declaratory judgment action against its insurer to obtain coverage for defense costs and indemnification as a result of a government mandated clean-up. What the court said is apt here:
It is merely fortuitous from the standpoint of either plaintiff or defendant that the state has chosen to have plaintiff remedy the contamination problem, rather than choosing to incur the cost of clean-up itself and then suing plaintiff to recover those costs. Th
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