Opinion ID: 575203
Heading Depth: 2
Heading Rank: 2

Heading: Existence of an occurrence within the meaning of the Policy

Text: 37 Under the Policy, Hartford was obliged to pay damages Intel became liable to pay that were caused by an occurrence. 38 Although its opinion does not focus on this point, in finding that coverage existed under the Policy, the district court implicitly found that there was no dispute that an occurrence had taken place.
39 In insurance litigation, [w]hile the burden is on the insurer to prove a claim covered falls within an exclusion, the burden is on the insured initially to prove that an event is a claim within the scope of the basic coverage. Royal Globe Ins. Co. v. Whitaker, 181 Cal.App.3d 532, 226 Cal.Rptr. 435, 437 (1986) (citations omitted). Here, the parties disagree as to who bears the burden of proof on the occurrence issue. Hartford suggests that as the phrase caused by an occurrence is found in the general description of policy coverage, Intel had the burden of proving that the contamination constituted an occurrence, and that Intel failed to meet that burden in its motion for summary judgment. Intel responds suggesting that we follow the lead of Clemco Industries v. Commercial Union Ins. Co., 665 F.Supp. 816 (N.D.Cal.1987) (Clemco ), aff'd, 848 F.2d 1242 (9th Cir.1988) and find that the occurrence language is an exclusion, for which Hartford bears the burden of proof. 40 In Clemco, the court rejected the argument that the location of the occurrence language within the policy is decisive. It reviewed the background of the clause. The occurrence clause came into use in standard insurance policies in about 1966; it was meant to serve the same  'exclusion' objective as a clause, previously in use, which excluded coverage for damages arising from  'bodily injury or property damage caused intentionally by or at the direction of the insured.'  James L. Rigelhaupt, Jr., Annotation, Construction and Application of Provision of Liability Insurance Policy Expressly Excluding Injuries Intended or Expected by Insured, 31 A.L.R. 4th 957, 972 (1984). The Clemco court concluded, The placement of the phrase, however, in no way changed the effect or character of the phrase; 'expected or intended' remained an exclusion of the coverage grant by the very operation of its terms. Clemco, 665 F.Supp. at 820. 41 The Clemco court thus took a functional view of the occurrence clause. However sound its reasoning may be, Clemco 's support in California caselaw is not so sturdy. Clemco relies principally on U.S. Fidelity & Guar. v. Am. Employers Ins., 159 Cal.App.3d 277, 205 Cal.Rptr. 460 (1984) (U.S. Fidelity) for the proposition that those California courts that have had occasion to interpret the same language have also found that the 'expected or intended' phrase is in fact an exclusion. Clemco, 665 F.Supp. at 820. In U.S. Fidelity, at issue was section 533 of the California insurance code, which provides that [a]n insurer is not liable for a loss caused by the willful act of the insured. Cal.Ins.Code § 533 (West 1972). The court characterized this statute as an implied exclusionary clause which by statute is to be read into all insurance policies. U.S. Fidelity, 205 Cal.Rptr. at 464. However, the reasoning of U.S. Fidelity does not apply to the Clemco facts merely because a reference to intentional or willful acts of the insured appears in both Insurance Code section 533 and the occurrence clause. 42 Moreover, there are California cases which would support a result contrary to Clemco. For example, in Royal Globe Ins. Co. v. Whitaker, 181 Cal.App.3d 532, 226 Cal.Rptr. 435 (1986) (Royal Globe ), the insured argued that the insurer was required to defend and indemnify him when he was sued for fraud, emotional distress and breach of contract. The policy at issue contained an occurrence clause. The court held that the insured was required to show that the damages for which he was liable were caused by an accident. Thus, although the Clemco rationale was not addressed in Royal Globe, Royal Globe took the more bright line view that the location of the occurrence clause in the description of basic policy coverage was decisive. See also Hartford Fire Ins. Co. v. Karavan Enterprises, 659 F.Supp. 1075 (N.D.Cal.1987) (citing Royal Globe; insured failed to show termination of employee was an occurrence); Dyer v. Northbrook Property & Cas. Ins., 210 Cal.App.3d 1540, 259 Cal.Rptr. 298 (1989) (citing Royal Globe; insured must show termination of employee was an occurrence). 43 Thus, existing caselaw provides no clear answer as to how a California court would allocate the burden of proof on the occurrence issue. However, we need not decide this question as we hold that, even if it bears the burden of showing the contamination constituted an occurrence, Intel has met that burden. 44
45 Summary judgment will be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). If the moving party meets its initial burden of showing the absence of a material and triable issue of fact, the burden then moves to the opposing party, who must present significant probative evidence tending to support its claim or defense. Richards v. Neilsen Freight Lines, 810 F.2d 898, 902 (9th Cir.1987). The non-moving party has failed to meet its burden if the record taken as a whole could not lead a rational trier of fact to find for the non-moving party. Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). 46 As noted above, the district court did not focus on the occurrence issue; the parties, too, did not argue it in detail. However, the materials supporting Intel's motion clearly present a scenario of unexpected and unintended environmental damage. Affidavits adduced by Intel indicate company employees learned of contamination only after a prospective sublessor requested Intel to conduct soil sampling and testing. Thus, Intel met its initial burden. 47 The district court properly granted summary judgment on this issue because Hartford, when the burden shifted to it, failed to show that there remained genuine issues of fact. In opposing Intel's motion, Hartford neither presented any additional evidence disputing Intel's showing, nor pointed to facts already before the court that revealed the existence of a dispute. 48 Hartford asks the court to infer that Intel's contamination of its property was expected, if not intended. As the non-moving party, Hartford is entitled to have all reasonable inferences drawn in its favor. Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356. However, Hartford's proposed inferences, presented in its brief as a series of insinuating questions, 4 resemble tenuous speculations rather than potentially valid conclusions that could be grounded in evidence in the record. Hartford also suggests that [i]n similar cases discovery has consistently revealed that industrial polluters did know that their toxic chemical handling practices were causing, and would in the future cause, pollution. Hartford in effect asks this court to take judicial notice that all industrial polluters are aware that they are polluting. But the facts of other cases cannot help Hartford's effort to fend off summary judgment in this one. 49 In conclusion, the district court did not err in granting summary judgment on the occurrence issue.