Opinion ID: 1213751
Heading Depth: 3
Heading Rank: 3

Heading: Proceedings on Summary Judgment.

Text: 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 (Oct. 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, 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. Second, with respect to the Stringfellow cases, the trial court found that coverage was further barred under the loss-in-progress rule codified in sections 22 and 250. Those statutory provisions will be examined in greater detail below; for present purposes it will suffice to note the rule provides that insurance is a contract that indemnifies against a loss or losses arising from contingent or unknown events (§ 22), and that any such contingent or unknown event may be insured against subject to the limitations of the Insurance Code (§ 250). Relying on the PRP letter that Montrose received from the EPA in August 1982, informing Montrose it might be responsible for response and other cleanup costs at the Stringfellow site, the trial court concluded coverage was barred for all claims relating to the site because, prior to the commencement of Admiral's policies issued to Montrose, Montrose knew its liability for property damage and/or bodily injury stemming from contamination at the site was likely. Montrose appealed, and the Court of Appeal reversed the summary judgment order. The appellate court rejected a manifestation of loss or discovery trigger of coverage analysis (as employed in the first party insurance context), finding it incompatible with the language of Admiral's third party CGL policies. It held that, because the underlying Levin Metals actions allege that continuous or progressively deteriorating property damage occurred throughout the period Admiral's policies were in effect, potential coverage under those policies was triggered, at least for purposes of the duty to defend. The court further held that the loss-in-progress rule did not bar coverage in the Stringfellow cases. It reasoned that Montrose's potential liability to third parties for the progressive property damage alleged to have occurred throughout the period of Admiral's policies was still contingent, and thus insurable, under section 250, even if damage as defined in the Admiral policies was inevitable, and notwithstanding Montrose's earlier receipt of the PRP letter. The Court of Appeal remanded Admiral's affirmative defense  that Montrose had concealed material facts prior to purchasing the CGL policies from Admiral  and further declined to address the insurer's argument, not raised in the trial court, that coverage for progressive damage at the Stringfellow site is also barred under specific policy exclusions because Montrose expected or intended the progressive damage that occurred during Admiral's policy periods. (§ 22.) We granted Admiral's petition for review to consider the complex and important issue of when potential coverage is triggered under a CGL policy where the underlying third party claims involve continuous or progressively deteriorating damage or injury, and how the loss-in-progress rule applies to such policies. [10]