Opinion ID: 2610834
Heading Depth: 4
Heading Rank: 3

Heading: Because of Property Damage

Text: (14) Several courts have held that government claims for injunctive relief and reimbursement of costs incurred in cleaning up disposal sites and water surrounding them are not covered by CGL policies, because such claims do not allege property damage. (See, e.g., Armco, supra, 822 F.2d at pp. 1353-1354; Mraz v. Canadian Universal Ins. Co., Ltd., supra, 804 F.2d at pp. 1327-1329.) We disagree. As we note above, these decisions either misperceive the basic character of remedies available under environmental statutes or apply an unduly narrow definition of property damage. (See ante, pp. 832-833.) CGL policies cover sums expended as damages not only because of harm to human or animal life ( Armco, supra, 822 F.2d at p. 1354), but more generally because of property damage. Contamination of the environment satisfies this requirement. (Cf. Aerojet, supra, 211 Cal. App.3d at pp. 229-230; NEPACCO, supra, 842 F.2d at p. 983; Port of Portland v. Water Quality Ins. Syndicate (9th Cir.1986) 796 F.2d 1188, 1193-1194; Chesapeake Utilities Corp. v. American Home Assur., supra, 704 F. Supp. at p. 566; Intel, supra, 692 F. Supp. at pp. 1183, 1185; New Castle County v. Hartford Accident & Indem. Co., supra, 673 F. Supp. at p. 1366; U.S. v. Conservation Chemical Co., supra, 653 F. Supp. at p. 193; Boeing, supra, 784 P.2d at p. 516; Compass Ins. Co. v. Cravens, Dargan & Co., supra, 748 P.2d at p. 728; Specialty Coatings, supra, 535 N.E.2d at pp. 1081-1082.) We also hold that reimbursement of response costs and the costs of injunctive relief under CERCLA and related statutes are incurred because of property damage. As discussed above (see ante, pp. 828-829), the mere fact that the governments may seek reimbursement of response costs or injunctive relief without themselves having suffered any tangible harm to a proprietary interest does not exclude the recovery of cleanup costs from coverage under the damages provision of CGL policies. For similar reasons, in plain and ordinary terms such recovery is because of property damage. It is immaterial whether motivations other than protection of property  for example, protection of the health of persons living near hazardous waste sites  also contribute to the agencies' pursuit of statutory relief. The Court of Appeal's emphasis on the fact that the agencies' objectives may be regulatory rather than proprietary is misplaced. Whatever their dominant motive, the event precipitating their legal action is contamination of property. The costs that result from such action are therefore incurred because of property damage. (See, e.g., Aerojet, supra, 211 Cal. App.3d at p. 236; Boeing, supra, 784 P.2d at p. 516.) This is true, moreover, whether the cleanup at issue in the underlying suits takes place on property owned by FMC, the state or federal government, or third parties. 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. We do agree that prophylactic costs  incurred to pay for measures taken in advance of any release of hazardous waste  are not incurred because of property damage. (Cf. Aerojet, supra, 211 Cal. App.3d at p. 236; Boeing, supra, 784 P.2d at p. 516; CPS Chem. Co., Inc. v. Continental Ins. Co., supra, 536 A.2d at p. 317.) Until such damage has occurred, whether on the waste site itself or elsewhere, there can be no coverage under CGL policies. Beyond this limited circumstance, however, and because the agencies in this suit allege that the waste sites themselves and the water on and surrounding the sites have already been contaminated by hazardous waste, we conclude that the reimbursement and the costs of injunctive relief sought here at least in part constitute damages because of property damage.