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Timestamp: 2019-04-24 23:11:56+00:00

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MONTROSE CHEMICAL CORPORATION OF CALIFORNIA, Plaintiff and Respondent, v. ADMIRAL INSURANCE COMPANY, Defendant and Appellant.
Latham & Watkins, David L. Mulliken, Mark E. Newell, Richard A. Conn, Jr., Kristine L. Wilkes, L. Susan Odell and Dorn G. Bishop, Washington, DC, for plaintiff and respondent. Hill, Wynne, Troop & Meisinger, David W. Steuber, Kirk A. Pasich, Martin D. Katz, Los Angeles, Heller, Ehrman, White & McAuliffe, Barry S. Levin, Stephen N. Goldberg, Robert D. Fram, Wondie Russell, David B. Goodwin, San Francisco, Sharon C. Corda, Los Angeles, Martha Churchill, Chicago, IL, Thomas & Porrazzo, Michael H. Porrazzo, San Jose, Anderson, Kill, Olick & Oshinsky, Eugene R. Anderson, Jerold Oshinsky, Jordan S. Stanzler, Scott P. DeVries, Paul L. Friman, New York City, Burke, Williams & Sorensen, Harold A. Bridges, Virginia R. Pesola, Rufus C. Young, Jr., Timothy V.P. Gallagher, Los Angeles, Sinsheimer, Schiebelhut & Baggett, Martin P. Moroski, Steven J. Adamski, San Luis Obispo, Paul, Hastings, Janofsky & Walker, David M. Roberts, Keith A. Meyer, Munger, Tolles & Olson, Cary B. Lerman, Los Angeles, Covington & Burling, Robert N. Sayler, Marc S. Mayerson, William F. Greaney, William P. Skinner, Jones, Day, Reavis & Pogue, John W. Cochrane, Timothy B. Dyk, Stephen C. Jones, Edwin L. Fountain, Washington, DC, Brobeck, Phleger & Harrison, William R. Irwin, Donald W. Brown, Tom M. Freeman, David R. McDonald, Thomas M. Peterson, Carol B. Sharp, San Francisco, Eric R. Carleson, Sacramento, Nossaman, Guthner, Knox & Elliott, Kurt W. Melchior, San Francisco, Duke, Gerstel, Shearer & Bregante, Alan R. Johnston, San Diego and Roger Simpson, Los Angeles, as amici curiae, on behalf of plaintiff and respondent. Wilson, Kenna & Borys, Lawrence Borys, Jeffrey Burt, Los Angeles, Horvitz & Levy, Peter Abrahams and Mitchell C. Tilner, Encino, for defendant and appellant. Gibson, Dunn & Crutcher, Fred F. Gregory, Deborah A. Aiwasian, Los Angeles, Peterson & Ross, Richard L. Blatt, Robert W. Hammersphar, Bruce M. Engel, Chicago, IL, Crosby, Heafey, Roach & May, Raoul D. Kennedy, Peter W. Davis, James C. Martin, Oakland, Coudert Brothers, Pamela G. Ostrager, Seth A. Ribner, Edward T. Schorr, Julie N. Mack, New York City, Hufstedler, Kaus & Ettinger, John P. Olson, Margot A. Metzner, Thomas J. Ready, Los Angeles, Wiley, Rein & Fielding, Thomas W. Brunner, Laura A. Foggan, James M. Johnstone, James P. Anasiewicz, Washington, DC, Mindlin, Tigerman & Holtzman, Michael Holtzman, Los Angeles, Drinker, Biddle & Reath, John Chesney, S. Elizabeth Dorn, Lawrence A. Nathanson, Paul H. Saint–Antoine, Philadelphia, PA, Kincaid, Gianunzio, Caudle & Hubert, Patrick J. Hagan, Andrew A. Goode, Oakland, O'Melveny & Myers, Ralph W. Dau, Martin S. Checov, Abigail A. Jones, Katherine W. Pownell, Los Angeles, Gray, York, Duffy, Rattet & Mavridis, John J. Duffy, James B. Sanborn, Encino, Haight, Brown & Bonesteel, Roy G. Weatherup, Rita Gunasekaran, Santa Monica, Kaufman & Logan, Jeffrey Kaufman, San Francisco, Selman, Breitman & Burgess, Neil H. Selman, Los Angeles, Buchalter, Nemer, Fields & Younger, Richard de Saint Phalle, Blaise S. Curet, San Francisco, Orrick, Herrington & Sutcliffe, Robert E. Freitas, Jon B. Streeter, Carl W. Chamberlin, William W. Oxley, Gloria P. Flores, Los Angeles, Carroll, Burdick & McDonough and Donald T. Ramsey, San Francisco, as amici curiae, on behalf of defendant and appellant.
In this case we address the issue reserved in Prudential–LMI. Specifically, we must determine whether four comprehensive general liability (CGL) policies issued by defendant and respondent Admiral Insurance Company (Admiral) to plaintiff and appellant Montrose Chemical Corporation of California (Montrose) obligate Admiral to defend Montrose in lawsuits seeking damages for continuous or progressively deteriorating bodily injury and property damage that occurred during the successive policy periods. These losses, it is alleged, were caused by Montrose's disposal of hazardous wastes at times predating the commencement of Admiral's policy periods.
As explained below, we conclude that the standard CGL policy language, such as was incorporated into Admiral's policies in issue in this case, provides coverage for bodily injury and property damage that occurs during the policy period. In the case of successive policies,1 bodily injury and property damage that is continuous or progressively deteriorating throughout several policy periods is potentially covered by all policies in effect during those periods. Stated in the insurance industry's parlance, we conclude the “continuous injury” trigger of coverage should be adopted for third party liability insurance cases involving continuous or progressively deteriorating losses.2 In this case, because the potential of coverage arose under Admiral's policies, so too did its duty to defend Montrose in the underlying lawsuits.
As will further be explained, we also conclude, with respect to the “loss-in-progress” rule codified in Insurance Code 3 sections 22 and 250, that in the context of continuous or progressively deteriorating property or bodily injury losses insurable under a third party CGL policy, as long as there remains uncertainty about damage or injury that may occur during the policy period and the imposition of liability upon the insured, and no legal obligation to pay third party claims has been established, there is an insurable risk within the meaning of sections 22 and 250 for which coverage may be sought under such a policy.
We shall therefore affirm the judgment of the Court of Appeal reversing the summary judgment granted in favor of Admiral.
From 1947 until 1982, Montrose manufactured the pesticide dichloro-diphenyl-trichlorethane (DDT) at its plant in Torrance, California. In 1972, the federal government prohibited all domestic use of DDT. Montrose continued to manufacture the chemical for export at the Torrance facility until the plant closed in 1982.
The broad issue before the trial court was whether any of the seven CGL carriers, including Admiral, were obligated to defend Montrose in five actions pending against it in connection with Montrose's disposal of toxic or hazardous wastes at several locations in California. Admiral joined in an interim defense agreement to provisionally fund Montrose's defense (to this date the parties apparently still disagree as to whether such agreement was entered into subject to a complete reservation of rights, a matter of no direct concern in this appeal). When Montrose filed its declaratory relief action, Admiral moved for summary judgment on the issue of its duty to defend given the effective dates and terms of coverage of its policies. The trial court found there was no potential for coverage under Admiral's policies, and thus that Admiral had no duty to defend the liability actions. We next briefly summarize the facts of the underlying actions as established by the evidence submitted in support of, and in opposition to, Admiral's summary judgment motion.
In an action initiated in 1983—United States of America, et al. v. J.B. Stringfellow, Jr., et al. (Civ. No. 83–2501 (HLH) C.D.Cal.)—the United States and the State of California sued Montrose and numerous other businesses under the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.; hereafter CERCLA), as well as various state environmental law provisions, seeking reimbursement for response costs incurred pursuant to the investigation, removal, and remediation of toxic waste contamination at and near the state-licensed class I hazardous waste disposal site known as the Stringfellow acid pits in Riverside County. The government also seeks damages for injury to natural resources, abatement of conditions, and clean-up at and near the Stringfellow site. The basis for the federal law claim against Montrose is strict liability under CERCLA for generating toxic waste shipped to the site.
The Stringfellow waste disposal site opened in 1956 and closed in 1972. Chemical wastes generated by Montrose were deposited there between 1968 and 1972, when Montrose paid a hauling company to transport byproducts of its DDT manufacturing process to the state-approved and licensed disposal facility. As early as 1970, toxic wastes were detected seeping from the site, and in 1975 the Santa Ana Regional Water Quality Control Board declared the site a public nuisance. It is noteworthy that the Stringfellow site was selected and designed as a hazardous waste disposal facility by the State of California, and that the site was used for that purpose by many defense contractors. In 1989, the State of California was found jointly and severally liable for the cleanup, both on strict liability and various fault-based common law grounds, due to its actions in designing, licensing and supervising the facility.
According to the allegations of the CERCLA complaint, the property damage commenced in 1956 and continued throughout the periods when Admiral's CGL policies issued to Montrose were in effect. No bodily injury is alleged in the CERCLA action.
In a second lawsuit, a consolidated private party toxic tort action—Newman, et al. v. J.B. Stringfellow, Jr., et al. (Super.Ct.Riverside County, No. 165994MF) 5 —numerous plaintiffs seek damages from Montrose and other defendants for bodily injury and property damage alleged to have resulted from the release of contaminants at the Stringfellow site. Plaintiffs allege that the bodily injury and property damage occurred on a continuous basis, commencing in 1956 and extending to the present. Specifically, plaintiffs allege that 27 wrongful deaths occurred between 1982 and 1986 (the period Admiral's policies were in effect), and that property damage was continuous throughout that same period.
2. The Levin Metals Cases.
The three remaining actions—Parr–Richmond Terminal Co., et al. v. Levin Metals Corp., et al. (No. C 85–4776 SC, N.D.Cal.), Levin Metals Corp., et al. v. Parr–Richmond Terminal Co., et al. (Nos. C 84–6273 SC and 84–6324 SC, N.D.Cal.), and Levin Metals Corp. v. Parr–Richmond Terminal Co., et al. (Super.Ct. Contra Costa County, No. 255836)—are all interrelated. Each arises out of a state court action brought by Levin Metals against Parr–Richmond, alleging that real property sold by Parr–Richmond to Levin Metals in Contra Costa County in 1981 was contaminated by hazardous waste.8 The suits allege both on-site and off-site contamination of soil, groundwater, and surface water, and seek damages for fraud based on Parr–Richmond's failure to disclose the alleged contamination. All chemical processing at the Parr–Richmond Terminal site ceased in 1964 or 1965; the basis of Montrose's alleged CERCLA liability is that it shipped chemicals to the site prior to that time, which chemicals were then formulated into chemical products by an independent company, and that the formulator's disposal of chemical waste byproducts in turn caused or contributed to the contamination. According to the plaintiffs in the Levin Metals cases, the environmental contamination at the Parr–Richmond site was discovered by them no later than August 1982. After the lawsuits were filed, Parr–Richmond cross-complained against Montrose and others for contribution and indemnity.
Although the Levin Metals cases were further complicated by Parr–Richmond's efforts to avoid CERCLA liability and other related federal actions, for purposes of this appeal we need focus only on the lawsuits filed against Montrose for indemnity and contribution for allegedly contaminating the property in question in Contra Costa County during a period beginning in 1947, and continuing through the effective dates of Admiral's policy periods.
3. Proceedings on Summary Judgment.
Montrose tendered defense of these actions to its seven CGL insurers, including Admiral. In 1986, Montrose sued the carriers in a declaratory relief action, seeking a declaration that the insurers had a duty to both defend and indemnify Montrose in all five underlying actions.9 All the carriers except Admiral agreed to defend subject to a reservation of rights. In 1989, Admiral moved for summary judgment and summary adjudication of issues, urging the trial court to find (i) that it had no duty to defend or indemnify Montrose in the Levin Metals cases because the circumstances which trigger coverage, within the meaning of the coverage clauses and definitions in its policies, did not occur during the policy periods, and (ii) that it had no duty to defend or indemnify Montrose in the Stringfellow cases because the contamination alleged in those actions was an uninsurable loss-in-progress prior to the effective date of the first policy issued by Admiral (October 13, 1982).
The trial court granted summary judgment in favor of Admiral on each ground. First, with respect to the Levin Metals cases, the court held that coverage for third party claims of progressive property damage under a CGL policy is “triggered” when the damage is first discovered; in essence, an application of the “manifestation” or “manifestation of loss” rule we later adopted in Prudential–LMI, supra, 51 Cal.3d 674, 274 Cal.Rptr. 387, 798 P.2d 1230, for progressive losses in first party property insurance cases. The trial court reasoned there was no possibility of coverage under Admiral's policies because the third party Levins Metal claimants (although not Montrose, the insured) allegedly discovered contamination at the Parr–Richmond site no later than August 1982, before the start of Admiral's first policy term.
1. Preliminary considerations: distinguishing third party liability insurance from first party property insurance.
To properly analyze the trigger of coverage issues presented in this case, it is necessary to first clearly distinguish between third party liability insurance, the type of coverage here at issue, and coverage under a first party property insurance policy, such as the standardized homeowners policy in issue in Prudential–LMI, supra, 51 Cal.3d 674, 274 Cal.Rptr. 387, 798 P.2d 1230.
Unfortunately, some courts have failed to draw these critical distinctions when discussing coverage issues under first and third party insurance policies. In the third party liability insurance context, some reported cases have muddied the waters by seemingly failing to distinguish between disputes arising between an insured and insurer, and actions among several CGL carriers that seek a judicial declaration allocating a loss already paid out to the insured under one or more such policies. In suits between an insured and an insurer to determine coverage, interpretation of the policy language and, in the case of ambiguous policy language, the expectations of the parties, will typically take precedence. The existence of excess or “secondary insurance” policies, “other insurance” clauses, or similar policy language decreeing the manner of apportionment of liability under multiple policies may also factor into the coverage analysis.
In contrast, where two or more CGL carriers turn to the courts to allocate the cost of indemnity for a paid loss, different contractual and policy considerations may come into play in the effort to apportion such costs among the insurers. The task may require allocation of contribution amongst all insurers on the risk in proportion to their respective policies' liability limits (such as deductibles and ceilings) or the time periods covered under each such policy. Reported cases whose analyses fail to take these distinctions into account, although purporting to clarify or settle an underlying “trigger of coverage” issue, may shed more darkness than light on the matter.
The proper analysis and resolution of a trigger of coverage issue may also depend on whether the CGL policy in issue insures against liability to third parties for bodily injury, property damage, or both. As will be shown, the coverage clauses in Admiral's policies do not distinguish between the nature of the underlying harm (bodily injury or property damage) that triggers the insured's liability coverage. Accordingly, Montrose and Admiral appear to agree that under a plain reading of that unambiguous aspect of the policy language, whatever be the circumstances (or timing of the circumstances) that will potentially trigger liability coverage under the policies, coverage will apply uniformly under such circumstances whether the claims be for bodily injury, or property damage, alleged in the underlying third party lawsuits.
Finally, the proper resolution of a trigger of coverage issue in any given case may turn on whether the court is addressing underlying facts involving a single event resulting in immediate injury (e.g., an explosion causing instantaneous bodily injuries and destruction of property), a single event resulting in delayed or progressively deteriorating injury (e.g., a chemical spill), or a continuing event (referred to in CGL policies as “continuous or repeated exposure to conditions”) resulting in single or multiple injuries (e.g., exposure to toxic wastes or asbestos over time). Significantly, in the present case we are dealing both with claims of continuous or progressively deteriorating bodily injury (the Newman v. Stringfellow lawsuit), and progressively deteriorating property damage (the Stringfellow and Levin Metals cases), all arising from continuous or repeated exposure to hazardous waste contamination over time, allegedly including the periods when Admiral's policies were in effect.
With these considerations in mind, we turn next to the express language of the contracts of insurance here in issue, looking first to the relevant principles of insurance policy interpretation that must govern our construction of the contested provisions.
2. Admiral's policy language and the applicable rules of interpretation.
Is the language of Admiral's contracts of insurance here in issue “clear and explicit,” and thus controlling (Civ.Code, §§ 1638, 1644)—or is it ambiguous, requiring us to interpret the coverage clauses broadly in order to protect the objectively reasonable expectations of Montrose, the insured? Some courts, including the Court of Appeal below, have concluded that the varying judicial constructions placed on the definition of occurrence in the standard form CGL policy themselves attest to the inherent ambiguity in that definition. (See California Union Ins. Co. v. Landmark Ins. Co. (1983) 145 Cal.App.3d 462, 472, 193 Cal.Rptr. 461.) One commentator has gone so far as to suggest that “[t]he word ‘occurrence’ itself is ambiguous because the injury process is not a definite, discrete event.” (Note, Developments in the Law—Toxic Waste Litigation (1986) 99 Harv.L.Rev. 1458, 1579.) Although any such ambiguity would ultimately have to be resolved in favor of the reasonable expectations of the insured (Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1265, 10 Cal.Rptr.2d 538, 833 P.2d 545; AIU, supra, 51 Cal.3d at p. 822, 274 Cal.Rptr. 820, 799 P.2d 1253; Garvey, supra, 48 Cal.3d at p. 406, 257 Cal.Rptr. 292, 770 P.2d 704), we find that the express language of Admiral's policies of insurance, when read as a whole, unambiguously provides potential coverage for the continuous and progressively deteriorating bodily injury and property damage alleged to have occurred during Admiral's policy periods.
Turning to the express policy language, Admiral contracted with Montrose to “pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ․ bodily injury, or ․ property damage to which this insurance applies, caused by an occurrence․” (Italics added.) “[P]roperty damage to which this insurance applies” is defined in Admiral's policies as “(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom․” (Italics added.) 12 “Bodily injury” to which the insurance applies is defined as “bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.” (Italics added.) We find no ambiguity in this language; it clearly and explicitly provides that the occurrence of bodily injury or property damage during the policy period is the operative event that triggers coverage.
Furthermore, “occurrence” is defined in Admiral's policies as “an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.” (Italics added.) When read together with the aforementioned clauses defining covered bodily injury and property damage, this policy language unambiguously distinguishes between the causative event—an accident or “continuous and repeated exposure to conditions”—and the resulting “bodily injury or property damage.” It is the latter injury or damage that must “occur” during the policy period, and “which results” from the accident or “continuous and repeated exposure to conditions.” In this case, it is the third party litigants' bodily injuries and property damage, which are alleged to have been continuous or progressively deteriorating throughout Admiral's policy periods, and which allegedly resulted from the continuous and repeated exposure to toxic chemicals for which the insured, Montrose, is an allegedly responsible party, that triggers potential coverage under the policies in question.
3. Settled case law, and the drafting history of the standardized CGL policy language, confirm that coverage is triggered by damage or injury occurring during the policy period.
Admiral contends that to read its CGL policies as providing that coverage is triggered when damage or injury occurs within the policy periods as a result of an “occurrence” is to “ignore[ ] the policy language and confuse[ ] the consequences of the occurrence with the occurrence itself, i.e., the event that ‘resulted’ in damage.” (Ante, at p. 332 of 42 Cal.Rptr.2d, p. 886 of 913 P.2d.) Admiral in essence urges that coverage under a CGL policy is established at the time the “occurrence” (i.e., the precipitating act or event) first gives rise to appreciable damage or injury, and that policies that commence after an “occurrence” and some consequent appreciable damage or injury cannot be on the risk for progressive damage or injury that occur during such subsequent policy periods.
Although the Court of Appeal concluded that potential coverage was triggered under Admiral's policies by damage or injury occurring during the policy periods, the court did not trace this longstanding interpretation of how liability coverage is triggered under a CGL policy to the rule formulated in Remmer. Instead, the court independently looked to the drafting history of the standard CGL policy language for support for its conclusion that no reasonable construction, other than that described above, could be placed on the insurance industry's use of such policy language.
Admiral contends that evidence of the drafting history of the standardized CGL policy provisions and definitions, and available interpretative materials, are irrelevant and should not have been considered by the Court of Appeal in construing the language of its CGL policies issued to Montrose. Most courts and commentators have recognized, however, that the presence of standardized industry provisions and the availability of interpretative literature are of considerable assistance in determining coverage issues. (See, e.g., Maryland Casualty Co. v. Reeder (1990) 221 Cal.App.3d 961, 968, 270 Cal.Rptr. 719.) Such interpretative materials have been widely cited and relied on in the relevant case law and authorities construing standardized insurance policy language. As one court has suggested, “where two insurers dispute the meaning of identical standard form policy language—the meaning attached to the provisions by the insurance industry is, at minimum, relevant.” (Fireman's Fund Ins. Co. v. Aetna Casualty & Surety Co. (1990) 223 Cal.App.3d 1621, 1629, 273 Cal.Rptr. 431.) On the other hand, as another court has observed, “[w]hile insurance industry publications are helpful in understanding the scope of coverage insurers are trying to delineate in any given policy, they are by no means dispositive.” (American Star Ins. Co. v. Insurance Co. of the West (1991) 232 Cal.App.3d 1320, 1330, 284 Cal.Rptr. 45, italics in original.) In this case, we find the drafting history relevant in evaluating Admiral's argument that, from a public policy standpoint, the insurance industry will be harmed by the adoption of a continuous injury trigger that the industry assertedly never anticipated would be applied to these policies.
Standard CGL policy language was revised by insurance industry drafters in several important respects starting in 1966. Prior to that year, third party general liability policies covered bodily injuries and damages caused by “accidents.” (American Home Prods. v. Liberty Mut. Ins. Co. (S.D.N.Y.1983) 565 F.Supp. 1485, 1501, affd. as mod. (2d Cir.1984) 748 F.2d 760.) In 1966, the National Bureau of Casualty Underwriters and the Mutual Insurance Rating Board, the predecessor organizations to the Insurance Services Office (ISO),13 changed the standard form policy from an “accident-based” to an “occurrence-based” format. (Ibid., see also New Castle County v. Hartford Acc. and Indem. Co., supra, 933 F.2d at p. 1181; Pasich, Insurance Coverage for Environmental Claims (Jan.1989) L.A.Law., p. 23, fn. 12; 3 Cal. Insurance Law & Practice, Property and Liability Insurance, supra, § 49.04, at p. 49–10.) It is reasonable to infer that the insurance industry knew precisely what the change entailed.
We have shown how the clear and explicit language of Admiral's policies supports the conclusion that potential coverage is triggered by the occurrence of bodily injury or property damage during the policy periods, as a result of an accident or the “continuous or repeated exposure to conditions.” We next review the relevant reported decisions, from California, the federal courts, and other state courts, that have sought to construe the industry-standardized CGL policy language to determine how continuous injury or damage triggers potential coverage under such policies. As will be seen, the weight of authority, consistent with our own interpretation of Admiral's express policy language, is that bodily injury and property damage that is continuous or progressively deteriorating throughout successive CGL policy periods, is potentially covered by all policies in effect during those periods.
4. Survey of case law and authorities discussing triggering of coverage under CGL policies where injury or damage is continuous over successive policy periods.
The issue of trigger of coverage in continuous injury or damage cases has been explored by many courts. (See Annot. (1993) 14 A.L.R. 5th 695.) Courts have recognized several “triggers” as a means of identifying the nature and timing of damage or injury that will give rise to liability coverage under an occurrence-based CGL policy. The courts have generally viewed the timing of damage or injury under occurrence-based CGL policies in four ways: at the date of exposure to the injurious or damage-causing event or conditions; at the date of the first occurrence of “injury in fact”; at the date of manifestation or discovery of the damage or injury; and over the continuous period from exposure through manifestation and beyond, where the damage or injury is ongoing, continuous, or progressively deteriorating throughout a policy period or successive policy periods. At this point it will be helpful to briefly outline the various trigger theories formulated by the courts.
The exposure (or continuous exposure) trigger. This trigger of coverage theory, first applied in cases involving asbestos-related bodily injuries, focuses on the date on which the injury-producing agent first contacts the body. The exposure theory apportions the cost of indemnity among those insurers whose policies were in effect from that point in time onward. In effect, under this theory, damage or injury is deemed to commence from the first contact of the injury-producing agent with the injured party. The leading case espousing this trigger of coverage analysis is the Sixth Circuit's decision in Ins. Co. of North America v. Forty–Eight Insulations (6th Cir.1980) 633 F.2d 1212, clarified (1981) 657 F.2d 814, cert. den. (1981) 454 U.S. 1109, 102 S.Ct. 686, 70 L.Ed.2d 650 (Forty–Eight Insulations.) The court in Forty–Eight Insulations found that the covered occurrence of injury commenced with the immediate contact of an asbestos fiber with the lungs, even though the progressive disease typically took some 20 years to develop. (633 F.2d at pp. 1215, 1218–1220.) The court reasoned that because of the cumulative and progressively deteriorating nature of the disease, it had to be distinguished from the ordinary accident or injury situation, and further, that because the injury is a continuing one, the insurers who furnished comprehensive general liability policies would expect the scope of their policies' coverage to parallel the applicable theory of liability.
The continuous injury (or multiple) trigger. Under this trigger of coverage theory, bodily injuries and property damage that are continuous or progressively deteriorating throughout successive policy periods are covered by all policies in effect during those periods. The timing of the accident, event, or conditions causing the bodily injury or property damage, e.g., an insured's negligent act, is largely immaterial to establishing coverage; it can occur before or during the policy period. Neither is the date of discovery of the damage or injury controlling: it might or might not be contemporaneous with the causal event. It is only the effect—the occurrence of bodily injury or property damage during the policy period, resulting from a sudden accidental event or the “continuous or repeated exposure to conditions”—that triggers potential liability coverage. The appellate cases in which this trigger of coverage was developed are discussed in greater detail below.
As already indicated, in the case before us, Montrose urges our adoption of a continuous injury trigger of coverage. Admiral in turn, in its briefs, urges us to apply a manifestation trigger of coverage. At oral argument, however, counsel for Admiral appeared to deviate from this position, arguing instead that an injury-in-fact trigger, and not a manifestation trigger, should be applied.17 We shall give Admiral the benefit of the doubt and consider which, if any, of the recognized trigger of coverage theories should be applied here. The precise question, of course, is what result follows under the language of the policies of insurance to which the parties agreed, including the standardized definitions that were incorporated into those policies. As will be seen, most courts that have analyzed the issue have found the continuous injury trigger of coverage applicable to the standard occurrence-based CGL policy.
One of the first cases to apply a continuing injury theory of loss allocation in the context of progressive property damage was Gruol Construction Co. v. Insurance Co. of North America (1974) 11 Wash.App. 632 [524 P.2d 427] (Gruol ). In that case, a contractor prevailed in an action against his insurer who had failed to defend him under his general liability policy in a third party construction defect suit for recovery of dry rot damage to a building. The contractor's improper piling of dirt against the building had caused the dry rot. The court held that the injury was a continuous process which began at the time of the negligent construction and continued through the manifestation of the dry rot damage, “ ‘even though there [was] a lapse of time between the initial negligent act and the occurrence of the ultimate damage․’ ” (Id. at p. 636 [524 P.2d at p. 430].) Thus the holding of Gruol was that, when warranted by the facts, property damage should be deemed to occur over the entire process of the continuing injury. An insurer would become liable at any point in the process for the entire loss up to the policy limits, even though the continuing injury or progressively deteriorating damage may extend over several policy periods.
The Fireman's Fund court failed to engage in any meaningful discussion of what factors set first party property insurance policies apart from third party comprehensive liability insurance policies. Nor did the court set forth in its opinion, or make any attempt to analyze, the standard definition of “occurrence” found in the standard form CGL policy.21 Finally, apparently satisfied with its earlier observation in Home that, “[b]y its terms, section 22 [the codified loss-in-progress rule] applies to both first-party [property insurance] and third-party [liability insurance] cases” (Home, supra, 205 Cal.App.3d at p. 1395, 253 Cal.Rptr. 277, fn. 4), the Fireman's Fund court made no further effort to analyze how application of the loss-in-progress rule might differ in the third party liability insurance context.
Most recently, the Fourth District Court of Appeal decided Zurich Ins. Co. v. Transamerica Ins. Co. (Cal.App.) (1995), 34 Cal.Rptr.2d 913) (Zurich ). Zurich involved a declaratory relief action, brought by one of four liability insurers who provided successive periods of coverage to a construction company, to determine the respective defense and indemnity obligations of each insurer with regard to three underlying construction defect actions against the company pertaining to a condominium project.
Accordingly, to the extent the decisions in Fireman's Fund, supra, 223 Cal.App.3d 1621, 273 Cal.Rptr. 431, and Pines of La Jolla Homeowners Assn. v. Industrial Indemnity, supra, 5 Cal.App.4th 714, 7 Cal.Rptr.2d 53, are inconsistent with the principles discussed herein, those decisions are hereby disapproved.
5. Various practical and policy considerations further support adoption of the continuous injury trigger of coverage for the third party claims of continuous or progressively deteriorating damage or injury brought under the CGL policies in this case.
Our foregoing review of the standard CGL policy language, as incorporated into Admiral's policies, as well as the relevant cases and authorities that have construed that language, leads us to conclude that the continuous injury trigger of coverage should be adopted for claims of continuous or progressively deteriorating damage or injury under the third party CGL policies in issue in this case.
We have shown why Admiral's express policy language supports application of the continuous injury trigger of coverage. We have explained that, contrary to Admiral's arguments in its briefs, it has long been understood that the standard form CGL policy provides liability coverage for damage or injury occurring during the policy period which results from an accident, or from continuous or repeated exposure to injurious conditions. There is no requirement that the sudden, accidental damage-causing act or event, or the conditions giving rise to the damage or injury, themselves occur within the policy period in order for potential liability coverage to arise. We have also explained how retention of the term “accident” within the standard definition of occurrence in the “occurrence-based” policies drafted after 1966 was intended to serve the one-occurrence rule, and was never intended to impose a requirement that the damage-causing accident, event, or conditions occur within the policy period. We have noted the settled rule that an insurer on the risk when continuous or progressively deteriorating damage or injury first manifests itself remains obligated to indemnify the insured for the entirety of the ensuing damage or injury. And we have reviewed the rationale of California Union, supra, 145 Cal.App.3d 462, 193 Cal.Rptr. 461, and the decisions cited and relied on therein, which, together with the weight of more recent authorities,22 conclude that where successive CGL policies have been purchased, bodily injury and property damage that is continuing or progressively deteriorating throughout more than one policy period is potentially covered by all policies in effect during those periods.
Lastly, we have explained how first party insurance differs from third party liability insurance in many fundamental respects, and why the rationale of our holding in Prudential–LMI, supra, 51 Cal.3d 674, 274 Cal.Rptr. 387, 798 P.2d 1230, adopting the manifestation trigger of coverage for first party cases, would be inapposite if applied in the context of third party liability insurance coverage.
Our conclusion that the continuous injury trigger of coverage should be applied to the third party CGL policies in this case is also in conformity with several important policy considerations. In Prudential–LMI, supra, 51 Cal.3d at page 699, 274 Cal.Rptr. 387, 798 P.2d 1230, we observed, as one policy reason favoring adoption of the manifestation trigger of coverage in first party property insurance cases, that “the underwriting practices of the insurer can be made predictable because the insurer is not liable for a loss once its contract with the insured ends unless the manifestation of loss occurred during its contract term.” Admiral here suggests that the general policy favoring the predictability of underwriting practices and reserves will be negatively affected by adoption of a continuous injury trigger in the third party CGL insurance context. We disagree. A number of factors undercut Admiral's concerns.
We therefore conclude that the continuous injury trigger of coverage should be applied to the underlying third party claims of continuous or progressively deteriorating damage or injury alleged to have occurred during Admiral's policy periods. Where, as here, successive CGL policy periods are implicated, bodily injury and property damage which is continuous or progressively deteriorating throughout several policy periods is potentially covered by all policies in effect during those periods.
Relying on the loss-in-progress rule (sometimes also referred to as the “known loss” rule), Admiral contends there was no potential liability coverage for, and consequently no duty to defend Montrose, in the Stringfellow cases. We disagree.
Moreover, since Admiral's policies did not purport to cover damage or injury that occurred prior to the time those policies went into effect, and only covered those bodily injuries and damages (or continuing bodily injuries and damages resulting from “continuous or repeated exposure to conditions”) that might occur in the future during the policy periods, the existence and extent of such prospective injuries were clearly unknown and contingent, from Montrose's standpoint, at the time Montrose first purchased its policies from Admiral.
In the Court of Appeal, Admiral relied on Advanced Micro Devices, Inc. v. Great American Surplus Lines Ins. Co. (1988) 199 Cal.App.3d 791, 245 Cal.Rptr. 44 in support of its contention that if the insured knows or should have known that there was a problem, the loss is known and there is no insurable risk. Advanced Micro Devices, Inc. is inapposite. That case involved interpretation of an express exclusionary clause disavowing coverage of losses arising from “ ‘any known pre-existing conditions.’ ” (Id. at p. 794, 245 Cal.Rptr. 44.) Although Admiral's policies define “occurrence” as an accident resulting in bodily injury or property damage “neither expected nor intended from the standpoint of the insured,” this language is part of the coverage clauses and not an express exclusionary clause as was the policy provision at issue in Advanced Micro Devices, Inc.. As an integral part of the occurrence-based coverage clause, we must interpret it broadly, in order to protect the objectively reasonable expectations of the insured (Garvey, supra, 48 Cal.3d at p. 406, 257 Cal.Rptr. 292, 770 P.2d 704), and consistent with the rule announced by this court in Sabella.
We therefore hold that, in the context of continuous or progressively deteriorating property damage or bodily injury insurable under a third party CGL policy, as long as there remains uncertainty about damage or injury that may occur during the policy period and the imposition of liability upon the insured, and no legal obligation to pay third party claims has been established, there is a potentially insurable risk within the meaning of sections 22 and 250 for which coverage may be sought. Stated differently, the loss-in-progress rule will not defeat coverage for a claimed loss where it had yet to be established, at the time the insurer entered into the contract of insurance with the policyholder, that the insured had a legal obligation to pay damages to a third party in connection with a loss.
Montrose's receipt of the PRP letter prior to its purchase of Admiral's policies did not establish any legal obligation to pay damages or cleanup costs in connection with the contamination at the Stringfellow site, such as would implicate the loss-in-progress rule and preclude Montrose from seeking to obtain the liability coverage sought. The PRP letter did no more than formally place Montrose on notice of the government's asserted position and initiate proceedings that could result in subsequent findings and orders. (See Spangler Const. v. Indus. Crankshaft (1990) 326 N.C. 133, 388 S.E.2d 557, 559.) Moreover, the PRP letter referred only to the CERCLA cleanup of the Stringfellow site—it did not refer in any way to the injuries, wrongful deaths, or property damage alleged to have occurred off-site by the plaintiffs in Newman v. Stringfellow.
Accordingly, we conclude that, at least on the facts heretofore alleged in this declaratory relief action, the loss-in-progress rule does not bar potential coverage, or relieve Admiral of its duty to defend, under the policies issued by Admiral to Montrose.
Although we have determined that the continuous injury trigger of coverage should be applied in this case, and that the loss-in-progress rule does not serve to defeat the potential for coverage or Admiral's duty to defend, we hasten to add that resolution of these issues in Montrose's favor would appear not to mark the end of the coverage-related inquiries in this complex litigation.
We do not herein purport to reach the merits of whether coverage under Admiral's policies for the injury and damage alleged in the five underlying lawsuits against Montrose can ultimately be established. (See ante, at p. 326, fn. 2 of 42 Cal.Rptr.2d, p. 880, fn. 2 of 913 P.2d.) Whether the damages and injuries alleged were in fact “continuous” is itself a matter for final determination by the trier of fact. (See, e.g., Carey Canada, Inc. v. California Union Ins. Co. (D.D.C.1990) 748 F.Supp. 8; Triangle Publications v. Liberty Mutual Ins. Co. (E.D.Pa.1989) 703 F.Supp. 367, 371.) Nor do we determine the effect, if any, of any exclusions contained in Admiral's policies on the duty to defend or the ultimate issue of coverage, or reach the merits of any affirmative defenses to coverage that might be available to Admiral.
As conceded by Montrose, factual questions remain surrounding the circumstance of Montrose's receipt of the PRP letter and its alleged failure to advise Admiral of the same. An insured must make all required disclosures at the time it applies for coverage; the fact that the loss-in-progress rule does not defeat coverage does not itself obviate the possibility of a finding of fraudulent concealment. (§ 331 [“Concealment, whether intentional or unintentional, entitles the injured party to rescind insurance”]; §§ 332–337; § 338 [“An intentional and fraudulent omission, on the part of one insured, to communicate information of matters proving or tending to prove the falsity of a warranty, entitles the insurer to rescind”].) We do not express any view concerning what, if anything, ought to have been disclosed by Montrose to Admiral at the time of purchase of the initial policy, and thereafter upon each renewal, nor do we consider the validity or effect, the ultimate question of the existence of coverage, for determination in the appropriate forum below. (Prudential–LMI, supra, 51 Cal.3d at p. 680, fn. 3, 274 Cal.Rptr. 387, 798 P.2d 1230; Garvey, supra, 48 Cal.3d at p. 406, 257 Cal.Rptr. 292, 770 P.2d 704).
The judgment of the Court of Appeal is affirmed, and the matter remanded for further proceedings consistent with the views expressed herein.
As an abstract proposition, I might question the majority's claims that the purchaser of CGL insurance, unlike the buyer of first party casualty insurance, may reasonably expect multiple-policy coverage for progressive harm arising from a single source. (Cf. Prudential–LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674, 693–699, 274 Cal.Rptr. 387, 798 P.2d 1230 (Prudential–LMI ).) However, the particular circumstances which produced the current standard CGL coverage language persuade me that such an expectation is not unreasonable.
As the majority explain, the standard-form coverage language in Admiral's policies was developed in the 1960s after an intense debate within the insurance industry about how to provide fair coverage for long-term “exposure” injuries. This debate provided no explicit solution for all the attendant problems. But two themes of importance to the issue before us did emerge from the drafting process.
This being so, I cannot conclude that the majority exceed the objectively reasonable expectations of either insurer or insured by interpreting the ambiguous policy language to mean that “continuous injury” from exposure triggers coverage by all policies in effect while the harm progressed. I therefore feel compelled to accept that construction.
I also agree that the statutory “loss-in-progress” rule (Ins.Code, §§ 22, 250) does not conclusively eliminate Admiral's duty to help defend the various contamination-injury suits against Montrose. But the majority appear to offer two separate reasons for this conclusion, and I find only one of them persuasive.
The majority first suggest that because a CGL policy insures against the risk of legal liability to another, insurance of this kind may be purchased for any such legal liability which then remains “contingent” or “unknown.” If I understand the majority correctly, a literal application of this theory would allow the purchase of liability insurance for a completed tort up to the moment a final damage judgment is imposed upon the tortfeasor.
But the plain words of the loss-in-progress statutes suggest otherwise. Insurance Code section 22 provides that “[i]nsurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.” (Italics added.) Insurance Code section 250 provides that, with irrelevant exceptions, “any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against him, may be insured against․” (Italics added.) As both statutes make clear, it is the event or events which produce liability, not merely the liability itself, which must remain “contingent or unknown” at the time the insurance contract is created.
The majority cite no California case on point, and I see no sound reason to depart from the clear statutory language. Consistent with my understanding of insurance, the loss-in-progress statutes imply that the “contingent or unknown” risk insured against is real-world accidents, events, or hazards which produce insurable loss or damage. In the first party context, the relevant risk is direct casualty damage, injury, or loss to the insured person or property. In the third party context, the relevant risk is the insured's act or omission, and the resulting damage, injury, or loss to another, which together form the basis of legal liability against the insured.
Thus, for purposes of liability insurance, once both the act or omission and the resulting legally compensable damage are no longer “contingent or unknown,” no insurable risk remains. As the statutes suggest, it would contravene public policy, and the nature of the insurance contract, to allow a tortfeasor to wait until he has already knowingly caused compensable damage before purchasing protection against his resulting liability.
However, I agree with the majority that the loss-in-progress rule does not preclude liability coverage for future or unknown harm from a past act or omission, even if the insured does know that some harm may already have arisen from his conduct. The insured cannot be held liable for his act or omission except to the extent it causes compensable harm. Thus, so long as any increment of compensable damage or injury has not yet happened, or is unknown to the insured, it remains a “contingent or unknown event ․ which may ․ create a liability against him.” (Ins.Code, § 250.) As such, it is a properly insurable risk.
The various lawsuits against Montrose each allege that new or progressive injury to persons or property occurred during the period of the Admiral policies, and Admiral's motion for summary judgment did not negate the possibility that such new harm had occurred after its coverage began. I therefore concur in the conclusion that the loss-in-progress rule does not bar Admiral's potential coverage of these new injuries nor relieve Admiral of its duty to defend Montrose against these suits.
1. Throughout this opinion, any reference to “successive” policies is intended to also include policies or policy periods which are temporally separated from one another by gaps or lapses in the coverage periods.
2. Throughout this opinion, we will refer to the term “trigger of coverage.” In the third party liability insurance context, “trigger of coverage” has been used by insureds and insurers alike to denote the circumstances that activate the insurer's defense and indemnity obligations under the policy. The term “trigger of coverage” should not be misunderstood as a doctrine to be automatically invoked by a court to conclusively establish coverage in certain categories of cases, or under certain types of policies. The word “trigger” is not found in the CGL policies themselves, nor does the Insurance Code enumerate or define “trigger of coverage.” Instead, “trigger of coverage” is a term of convenience used to describe that which, under the specific terms of an insurance policy, must happen in the policy period in order for the potential of coverage to arise. The issue is largely one of timing—what must take place within the policy's effective dates for the potential of coverage to be “triggered”? Whether coverage is ultimately established in any given case may depend on the consideration of many additional factors, including the existence of express conditions or exclusions in the particular contract of insurance under scrutiny, the availability of certain defenses that might defeat coverage, and a determination of whether the facts of the case will support a finding of coverage.
FN3. All further statutory references are to the Insurance Code unless otherwise indicated.. FN3. All further statutory references are to the Insurance Code unless otherwise indicated.
4. The other CGL carriers and dates of coverage are: Insurance Company of North America (January 1, 1960, to January 1, 1969, and January 15, 1981, to January 15, 1986); American Motorists Insurance Company (January 1, 1969, to March 1, 1971); the Travelers Indemnity Company (March 1, 1971, to July 1, 1977); National Union Fire Insurance Company (July 1, 1977, to January 15, 1981); Canadian Universal Insurance Company, Ltd. (March 20, 1980, to March 20, 1982); and Centaur Insurance Company (March 20, 1982, to October 13, 1982).
5. When it is necessary to distinguish between these two actions involving the Stringfellow site, we will refer to them as U.S. v. Stringfellow and Newman v. Stringfellow. References to the “Stringfellow cases” are intended to apply to both actions.
6. Progressive property damage, or progressively deteriorating damage, are terms that refer to damage that occurs over an extended period of time, often during the effective periods of several successive insurance policies. In the property damage context, “progressive” or “progressively deteriorating” damage typically might involve continuing damage caused by, or resulting from, natural causes such as soil subsidence or dry rot, or man-made causes such as the disposal of industrial pollutants or toxic wastes that leach through or onto property adjoining the insured's land, or into the underlying water table.
7. For reasons not clear from the record, sometime prior to October 13, 1982, Stauffer Chemical Company, which at the time owned 50 percent of the stock of Montrose, notified all of Montrose's CGL carriers except Admiral of the PRP letter. Montrose first advised Admiral about the Stringfellow allegations at the time Montrose submitted its application for a renewed policy of insurance dated February 15, 1985. Of course it is also true that Admiral thereafter renewed the CGL policy for 1985–1986.
8. We shall refer to these cases collectively as the Levin Metals cases.
10. This court's recent opinion in Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 24 Cal.Rptr.2d 467, 861 P.2d 1153, decided during the pendency of this appeal, is to be distinguished from the instant case. That appeal involved a separate CERCLA action brought against Montrose in 1990 by the United States and the State of California alleging that Montrose's operation of its Torrance facility caused environmental contamination that damaged land, water, and wildlife in the Los Angeles harbor basin and neighboring waters (United States, et al. v. Montrose Chemical Corporation of California, et al. (U.S.Dist.Ct.C.D.Cal.) 1990, No. CV 90–3122–AAH (Jrx)), and a related cross-complaint filed against Montrose by the Los Angeles County Sanitation District. (Montrose Chemical Corp. v. Superior Court, supra, 6 Cal.4th at p. 292, 24 Cal.Rptr.2d 467, 861 P.2d 1153.)In Montrose Chemical Corp. v. Superior Court, supra, 6 Cal.4th 287, 24 Cal.Rptr.2d 467, 861 P.2d 1153, Montrose's tender of defense was rejected and it brought a declaratory relief action against its various CGL insurers, seeking a declaration that each owed a duty to defend in the federal action and cross-complaint proceedings. The insurers denied they owed a duty to defend and asserted a number of affirmative defenses, including, as in this proceeding, several based on exclusion-of-coverage language contained in the various policies. Montrose moved for summary adjudication on the issue of the insurers' duty to defend, arguing it was entitled as a matter of law to have its insurers defend it in the underlying CERCLA action because the allegations of the complaint, along with the terms of the CGL policies, created a potential for coverage, thereby triggering the defense duty. The insurers countered that Montrose had failed to establish it was entitled to summary adjudication, and that extrinsic evidence revealed a triable issue of fact regarding whether a potential for coverage existed, undercutting the basis for Montrose's motion. (Montrose Chemical Corp. v. Superior Court, supra, 6 Cal.4th at p. 293, 24 Cal.Rptr.2d 467, 861 P.2d 1153.) The trial court denied Montrose's motion, concluding it had failed to make a prima facie showing that the CERCLA action created a potential for coverage because the allegations of the third party's complaint, upon which Montrose was relying, were “neutral” regarding whether the alleged contamination was caused by an “occurrence” within the meaning of the policies, or by Montrose's regular business practices (which the trial court evidently viewed as outside the concept of “occurrence”). (Ibid.) The trial court also found that the insurers had adduced sufficient extrinsic evidence to create a triable issue of fact as to whether the CERCLA complaint alleged acts within the policies' terms of coverage. (Id. at pp. 293–294, 24 Cal.Rptr.2d 467, 861 P.2d 1153.)On Montrose's petition for a writ of mandate, the Court of Appeal directed the trial court to reconsider and grant the motion, finding Montrose had made a prima facie showing of potential coverage under the policies there in issue. We granted review and ultimately affirmed the judgment of the Court of Appeal, concluding Montrose had made a prima facie showing of potential coverage sufficient to trigger the insurers' duty to defend. (Montrose Chemical Corp. v. Superior Court, supra, 6 Cal.4th at pp. 291, 294, 24 Cal.Rptr.2d 467, 861 P.2d 1153.) We explained that “the fact that toxic discharges occurred over a lengthy period during which Montrose operated its Torrance facility does not, without more, establish that Montrose expected or intended the property damage that allegedly resulted. [Citations.]” (Id. at p. 304, 24 Cal.Rptr.2d 467, 861 P.2d 1153.) And we found the insured's allegations sufficient to raise the possibility that it would be liable for property damage covered by the policies, concluding further that “[e]xtrinsic evidence adduced by the insurers did not eliminate that possibility, but merely placed in dispute whether Montrose's actions would eventually be determined not to constitute an occurrence or to fall within one or more of the exclusions contained in the policies.” (Ibid.) We did not, however, have occasion to address the trigger-of-coverage issues presented herein, because the timing of the circumstances giving rise to coverage in relation to the relevant CGL policy periods was not directly at issue in that appeal.
11. It should be noted that Admiral did not advance the loss-in-progress theory as applicable to the Levin Metals Cases; Admiral has not contended that Montrose (as opposed to the third party claimants in the Levin Metals litigation) had knowledge of the contamination at the Parr–Richmond site prior to the commencement of Admiral's policy periods.
12. The policy definition of “property damage to which this insurance applies ” also includes “loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.” Since the “loss of use” clause pertains only to property “which has not been physically injured or destroyed,” the sustaining of damage or injury to such property during the policy period by definition cannot be what triggers coverage for such losses. Because the parties have not directed us to any “loss of use ” issue in this case, we have no occasion to decide whether coverage, under such a policy, for loss of use of tangible property which has not been physically injured or destroyed is dependent upon whether the loss of use of the property occurs during the policy period, or whether the occurrence which results in the loss of use occurs during the policy period.
14. The 1973 standard form CGL policy language, which was incorporated in Admiral's policies, was revised in a number of respects by ISO, but the insuring agreement and coverage-related definitions were substantially unaltered.
15. We are aware of only one appellate court decision that has adopted the manifestation trigger of coverage for bodily injuries in the context of third party liability insurance. In Eagle–Picher Industries v. Liberty Mut. Ins. Co. (1st Cir.1982) 682 F.2d 12, the United States Court of Appeals for the First Circuit concluded on the evidence before it that the injury resulting from inhalation of asbestos fibers did not “occur” until the symptoms of the disease asbestosis had manifested themselves. The asbestos manufacturer had no insurance prior to 1968, the period when most of the exposure took place. The manufacturer's CGL insurance coverage began when the number of claims began accelerating. As was the case in Forty–Eight Insulations, supra, 633 F.2d 1212, the court in Eagle–Picher, in adopting the manifestation trigger, made clear its intention to interpret the policies in a manner that would afford and maximize coverage on the particular facts of that case. (682 F.2d at p. 23.) The Eagle–Picher case therefore stands as somewhat of an aberration.
16. The injury-in-fact trigger has been applied in actions involving asbestos-related disease because symptoms of the disease often will not manifest themselves until decades after actual inhalation of asbestos fibers. Like the manifestation and continuous injury theories, the injury-in-fact theory assumes as a predicate that mere exposure to asbestos during the policy period is not enough to trigger coverage: “The plain language of the definition of ‘occurrence ’ used in the CGL policy requires exposure that ‘results, during the policy period, in bodily injury’ in order for an insurer to be obligated to indemnify the insured. The unambiguous meaning of these words is that an injury—and not mere exposure—must result during the policy period. The CGL policies expressly distinguish exposure from injury; to equate the two ․ is to ignore this distinction. Any argument that mere exposure—without injury—triggers liability is simply unsound linguistically.” (Abex Corp. v. Maryland Cas. Co., supra, 790 F.2d at p. 127, italics in original; see also American Home Products Corp. v. Liberty Mut. Ins. Co., supra, 748 F.2d at p. 764.)Unlike the manifestation trigger, however, the injury-in-fact trigger acknowledges that actual injury may “occur” before it has become manifest or been discovered. Under the injury-in-fact approach, coverage is triggered by “ ‘a real but undiscovered injury, proved in retrospect to have existed at the relevant time ․ irrespective of the time the injury became [diagnosable].’ ” (American Home Products Corp. v. Liberty Mut. Ins. Co., supra, 748 F.2d at p. 766.) That is, after an injury has been diagnosed, it may be inferred, from evidence establishing the “gestation period” and the stage to which the illness has advanced, that the harm or “injury-in-fact” actually began sometime earlier. (Id. at p. 765.) The injury-in-fact trigger therefore affords coverage for any ensuing continuing or progressively deteriorating injury that can be shown to have occurred during a successive policy period, regardless of whether such injury manifested itself or was discovered during that period.In Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co. (Cal.App.) (rev. granted Jan. 27, 1994, S023768, briefing deferred) (Armstrong ), the First District Court of Appeal affirmed a trial court's decision applying a “continuous injury” trigger to asbestos claims for which coverage was being sought under various CGL policies. The Armstrong court observed, however, that “[t]he trial court's continuous trigger decision ․ [was] based upon factual findings that for asbestos claimants an injury-in-fact took place during each triggered policy period, even though the injury was not diagnosable and compensable during the policy period.” (Italics added.) Indeed, the Armstrong court carefully noted that the trial court had “relied upon medical evidence to make factual findings on the physiological processes that actually occur upon inhalation of asbestos fibers and continue until death․” in determining to apply a “continuous injury” trigger in that case.Although the Armstrong court's trigger of coverage discussion appears largely consistent with our analysis of the applicable principles of third party CGL coverage in the present case, because we do not here face the unique facts of asbestos-related bodily injury claims, we deem it appropriate that trigger of coverage questions specifically involving asbestos claims be left for decision, in the first instance, on an appropriate record in a case in which they are squarely presented.
17. Counsel for Admiral argued: “The occurrence in this case is when the dumping of toxic waste resulted in appreciable damage. Whether it was discoverable or not is not the issue. The issue is when it resulted in appreciable damage. And regardless of when that happened, it certainly happened a long time before the Admiral policies incepted․ When it occurred, which may or may not be the date of manifestation. It's all going to depend on the facts of the particular case.”On close scrutiny, it can be seen that Admiral is not advancing a true injury-in-fact trigger of coverage theory in lieu of a manifestation theory. As explained, under the injury-in-fact theory, continuing injury occasioned during the policy period which occurs subsequent to the point in time at which the injury-in-fact can first be pinpointed is subject to coverage. It is the period from initial exposure to the point at which the injury-in-fact is retrospectively first established for which no coverage is afforded. Admiral, in contrast, appears to be arguing that once an injury-in-fact is established, even retrospectively, all potential coverage is cut off from that point onward, and only the insurer on the risk at the time the injury-in-fact first “occurs” is liable to indemnify the insured, regardless of whether the injury-in-fact ever manifested itself.
20. Although postdating Gruol Construction Co. v. Insurance Co. of North America, supra, 11 Wash.App. 632 [524 P.2d 427], Keene has generally been regarded as one of the first cases to adopt a continuous injury trigger of coverage analysis, at least in the context of claims of progressively deteriorating bodily injury in asbestos cases. (See, e.g., Aspinwall, The Applicability of General Liability Insurance to Hazardous Waste Disposal (1984) 57 So.Cal.L.Rev. 745, 755.) As the court in California Union recognized, although Keene was an asbestos case, the basic rationale of that decision is instructive on the question of what trigger of potential coverage should be applied in the context of continuous or progressively deteriorating property damage.
21. The Fireman's Fund opinion does set forth the standard CGL policy “insuring clause,” which provides that: “The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘occurrence.’ ” (Fireman's Fund, supra, 223 Cal.App.3d at p. 1628, 273 Cal.Rptr. 431.) Citation to this portion of the standard policy language hardly serves to support the Fireman's Fund court's analysis.
22. Decisions of the highest courts of other states which are consistent with the conclusions we reach today—rejecting a manifestation trigger and adopting the continuous injury trigger of coverage for claims of continuing or progressively deteriorating bodily injury or property damage arising under third party CGL policies—include Owens–Illinois, Inc. v. United Ins. Co. (1994) 138 N.J. 437, 650 A.2d 974, 990, 995 [New Jersey Supreme Court unanimously adopts continuous injury trigger in a case involving CGL coverage for asbestos claims relating to both bodily injury and property damage]; Trustees of Tufts Univ. v. Commercial Union Ins. Co. (1993) 415 Mass. 844, 616 N.E.2d 68, 74 [Massachusetts Supreme Judicial Court unanimously rejects manifestation trigger in environmental property damage case involving claims under occurrence-based CGL policies, explaining, “Nothing in the language of the policies requires that the claimed property damage be discovered or manifested during the policy period. The inquiry instead is whether property damage, as defined in the policies, ‘occurred’ within the policy period and within the meaning of the word ‘occurrence.’ [Citation.] Indeed, the very nature of an ‘occurrence’ as opposed to a ‘claims-made’ policy is to provide coverage for property damage that occurred during the policy period whenever that liability is imposed.”]; J.H. France Refractories Co. v. Allstate Ins. Co. (1993) 534 Pa. 29, 626 A.2d 502, 507 [Pennsylvania Supreme Court unanimously adopts continuous injury or “multiple” trigger for asbestos-related bodily injury claims brought under CGL policies, noting, “Rather than selecting one or another of the phases [exposure, manifestation, discovery, etc.] as the exclusive trigger of liability, it seems more accurate to regard all stages of the disease process as bodily injury sufficient to trigger the insurers' obligation to indemnify, as all phases independently meet the policy definition of bodily injury.”]; Harford County v. Harford Mutual Ins. Co. (1992) 327 Md. 418, 610 A.2d 286, 294–295 [Maryland Court of Appeals rejects manifestation trigger in environmental pollution case]; see also Sentinel Ins. Co. v. First Ins. Co. (1994) 76 Hawai‘i 277, 875 P.2d 894, 917 [Hawaii Supreme Court unanimously adopts injury-in-fact trigger in construction defect case alleging claims for property losses under CGL policies, but explains that “where injury-in-fact occurs continuously over a period covered by different insurers or policies, and actual apportionment of the injury is difficult or impossible to determine, the continuous injury trigger may be employed to equitably apportion liability among insurers.”].Other courts which have recently applied a continuous injury trigger in environmental property damage cases for which coverage was claimed under standardized occurrence-based CGL policies include the Oregon Court of Appeals (St. Paul Fire & Marine Ins. Co. v. McCormick & Baxter Creosoting Co. (1994) 126 Or.App. 689, 870 P.2d 260, 264–265), and the United States District Court for the District of Delaware (Harleysville Mut. Ins. Co. v. Sussex County (D.Del.1993) 831 F.Supp. 1111, 1124 [applying Delaware law] ).
24. “Claims made” policies beneficially permit insurers more accurately to predict the limits of their exposure and the premium needed to accommodate the risk undertaken, resulting in lower premiums than are charged for an occurrence-based policy. (See, e.g., Pacific Employers Ins. Co. v. Superior Court (1990) 221 Cal.App.3d 1348, 1359–1360, 270 Cal.Rptr. 779.) Another name for a “claims made” policy is a “discovery” policy. (VTN Consol., Inc. v. Northbrook Ins. Co. (1979) 92 Cal.App.3d 888, 891, 155 Cal.Rptr. 172.) “Claims made” coverage arose more than 20 years ago, initially in the field of professional liability insurance, because underwriters were concerned that occurrence-based coverage was adversely affecting the underwriting process. Because the injury and negligence giving rise to a malpractice claim is often not discoverable until years after the negligent act or omission, professional liability insurance carriers, in an effort to reduce their exposure to an unpredictable and lengthy “tail” of lawsuits, shifted to the “claims made” policy. (Pacific Employers Ins. Co. v. Superior Court, supra, 221 Cal.App.3d at p. 1358, 270 Cal.Rptr. 779; see also Keeton & Widiss (1988) Insurance Law: A Guide to Fundamental Principles, Legal Doctrines, and Commercial Practices, § 5.10(d), at p. 598.) The “claims made” concept was subsequently extended into the field of general liability coverage, and in 1986 ISO issued both a revised standard form occurrence-based CGL policy (now referred to as a commercial general liability policy) and a new standard form CGL “claims made” policy.
MOSK, KENNARD, ARABIAN, GEORGE and WERDEGAR, JJ., concur.

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