Court Opinion

ID: 5550805
Source: CourtListenerOpinion
Date Created: 2022-01-10 23:03:39.218715+00
Date Added: 2024-06-11T08:35:05.581797
License: Public Domain

Filed 1/10/22 Motiva Enterprises v. National Fire & Marine Ins. CA1/1
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.

           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FIRST APPELLATE DISTRICT

                                                   DIVISION ONE

 MOTIVA ENTERPRISES LLC,
      Plaintiff and Appellant,
                                                                        A159229
      v.
 NATIONAL FIRE & MARINE                                                 (San Francisco City & County
 INSURANCE COMPANY,                                                     Super. Ct. No. CGC-18-567207)
      Defendant and Respondent.

 MOTIVA ENTERPRISES LLC,
      Plaintiff and Appellant,                                          A159231
      v.
                                                                      (San Francisco City & County
 AXIS SURPLUS INSURANCE
                                                                       Super. Ct. No. CGC-18-567207)
 COMPANY et al.,
      Defendants and Respondents.

 MOTIVA ENTERPRISES LLC,
      Plaintiff and Appellant,                                          A159233
      v.
                                                                      (San Francisco City & County
 MAXUM INDEMNITY COMPANY,
                                                                       Super. Ct. No. CGC1-8-567207)
      Defendant and Respondent.

           After a fire on one of its refineries injured two workers, killing one of
them, appellant Motiva Enterprises LLC (Motiva) sought insurance coverage
from the companies that insured the contractor that employed the workers.
                                                               1
The trial court concluded on summary judgment that because the workers
had been abating asbestos, the relevant policies’ asbestos exclusions barred
coverage. Because we agree with the trial court that the asbestos exclusions
applied, we affirm.
                                    I.
                          FACTUAL AND PROCEDURAL
                               BACKGROUND
      According to Motiva, it is “one of the world’s largest gasoline and diesel
fuel refiners and suppliers” and “owns and operates the largest refinery in
North America, located in Port Arthur, Texas.” 1 Under an agreement dated
December 1, 2015, Motiva hired Excel Modular Scaffold and Leasing Corp.
(Excel) to abate asbestos at the Port Arthur refinery. The agreement
incorporated a broader “Framework Agreement.” Under the Framework
Agreement, Motiva was to enroll Excel in its “Rolling Contractor Insurance
Program.”
      Excel also purchased insurance policies from respondents AXIS
Surplus Insurance Company (AXIS), Endurance American Specialty
Insurance Company (Endurance), Maxum Indemnity Company (Maxum), and
National Fire & Marine Insurance Company (National Fire). Each policy

      1  As support for these and other statements of basic fact, Motiva cites to
various trial court briefs as well as to its response to a separate statement of
undisputed material fact filed in connection with the motions for summary
judgment. These, of course, are not evidence. (Cal. Rules of Court,
rule 8.204(a)(1)(C) [brief must support any reference by citation to matter in
record]; Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 178,
fn. 4 [rule “is intended to direct the appellate court to evidence in the record,”
and separate statements are not evidence].) But although “briefs . . . are
outside the record, they are reliable indications of a party’s position on the
facts,” and we may rely on them, especially for uncontroverted and
uncontroversial facts. (Franklin v. Appel (1992) 8 Cal.App.4th 875, 893,
fn. 11.)

                                        2
contained exclusions clauses, which “remove coverage for risks that would
otherwise fall within the insuring clause.” (Waller v. Truck Ins. Exchange,
Inc. (1995) 11 Cal.4th 1, 16.)
      Although all four policies included asbestos exclusions, the trial court
disposed of the case by focusing on two of them: one in a primary policy
issued by AXIS and one in the National Fire policy. The primary policy
issued by AXIS excluded coverage for bodily injury “arising directly or
indirectly” out of “the abating, . . . cleaning up, removing, . . . remediation or
disposing of, or in any way responding to” asbestos. AXIS, Endurance, and
Maxim all issued excess polices that adopted the asbestos exclusion in the
AXIS primary policy. The National Fire policy excluded coverage for bodily
injury “arising out of . . . [the] removal of . . . asbestos.”
      According to court filings by the fire victims, in August 2017 an Excel
crew was working to abate asbestos at the Port Arthur refinery from a section
of a refinery line that was 60 feet in the air. After the asbestos was removed,
the crew was lowered to the ground and started to wash the area with what
they thought was water to remove any remaining asbestos from the
scaffolding. But because of equipment or mechanical issues that are
described in a sealed report, they actually sprayed a flammable liquid,
causing an explosion and fire. One crew member suffered severe burns and
later died, and his supervisor suffered neck injuries and posttraumatic stress
disorder.
      The supervisor and the deceased crew member’s survivors sued Motiva
in Texas for the company’s alleged negligence. Motiva ultimately paid them
as part of a settlement.
      Motiva filed this action June 2018 seeking indemnification for the
settlement payment from Excel’s insurers. As amended, the complaint

                                           3
alleged causes of action for declaratory relief, breach of contract, and breach
of the implied covenant of good faith and fair dealing.
      The insurance companies filed separate motions for summary judgment
(except AXIS and Endurance, which filed a joint motion). The companies
raised a number of arguments why their policies did not cover the accident,
but they all contended that (1) Motiva was not an insured party, and (2) the
exclusion for asbestos coverage precluded coverage.
      The trial court issued orders separately granting the motions of Axis
and Endurance, Maxum, and National Fire, all on the sole ground that the
asbestos exclusion in either the AXIS or National Fire policy barred coverage.
In effect, the court ruled that even if Motiva were an insured party, it would
not be entitled to indemnification because of the policies’ exclusions for
injuries arising out of asbestos abatement. Motiva appealed from the
subsequent judgments (case Nos. A159231 [Axis & Endurance], A159233
[Maxum], A159229 [National Fire]), and this court granted Motiva’s motion
to consolidate the three appeals.
                                        II.
                                    DISCUSSION
            A. The Trial Court Correctly Found That the Asbestos Exclusions
               Applied.
      Motiva argues that the trial court misapplied California law when it
concluded that asbestos exclusions barred coverage for the victims’ injuries.
“The interpretation of an exclusionary clause is an issue of law subject to this
court’s independent determination.” (Marquez Knolls Property Owners Assn.,
Inc. v. Executive Risk Indemnity, Inc. (2007) 153 Cal.App.4th 228, 233
(Marquez Knolls).) And we review de novo the trial court’s decision on
summary judgment, considering all the evidence before the trial court except
that to which objections were made and sustained. (Hartford Casualty Ins.

                                        4
Co. v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 286.) We conclude that
the trial court correctly applied the exclusions.
      The trial court relied on policy exclusions that barred coverage for any
injuries “arising out of” asbestos abatement/removal. Insurance coverage is
interpreted broadly to afford the insured the greatest possible protection,
whereas exclusion clauses are to be interpreted narrowly against the insurer.
(MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th 635, 648; Waller v.
Truck Ins. Exchange, Inc., supra, 11 Cal.4th at p. 16.) But “California courts
have interpreted the terms ‘arising out of’ or ‘arising from’ broadly: ‘It is
settled that this language does not import any particular standard of
causation or theory of liability into an insurance policy. Rather, it broadly
links a factual situation with the event creating liability, and connotes only a
minimal causal connection or incidental relationship.’ ” (The Travelers
Property Casualty Co. of America v. Actavis, Inc. (2017) 16 Cal.App.5th 1026,
1045.) “This broad interpretation of ‘arising out of’ applies to both coverage
provisions and exclusions.” (Ibid.; accord, Jon Davler, Inc. v. Arch Ins. Co.
(2014) 229 Cal.App.4th 1025, 1035.)
      It is undisputed that the victims who sued Motiva were working to
abate asbestos on the date of the accident, and that their injuries were
caused by a fire that occurred at the refinery at the end of their workday.
Given these undisputed facts, it appears straightforward that the injuries
arose out of asbestos abatement.
      Motiva’s argument that it is nonetheless entitled to coverage involves
different causation analyses that have developed for first- and third-party
insurance claims. “If the insured is seeking coverage against loss or damage
sustained by the insured, the claim is first party in nature. If the insured is
seeking coverage against liability of the insured to another, the claim is third

                                        5
party in nature.” (Garvey v. State Farm Fire & Casualty Co. (1989) 48 Cal.3d
395, 399, fn. 2 (Garvey).) Here, Motiva does not appear to have been the
insured; its contractor, Excel, was. But even if we assume, as did the trial
court, that this circumstance does not bar Motiva’s claim, we agree with the
trial court that Motiva’s claim must be rejected regardless of whether it is
analyzed as a first- or third-party claim.
      Motiva contends the asbestos exclusions did not apply because asbestos
did not “cause” the accident under a “proximate causation” analysis. Motiva
relies on Insurance Code section 530, which provides that “[a]n insurer is
liable for a loss of which a peril insured against was the proximate cause,
although a peril not contemplated by the contract may have been a remote
cause of the loss; but he is not liable for a loss of which the peril insured
against was only a remote cause.” Our Supreme Court has construed
Insurance Code section 530 “as incorporating into California law the efficient
proximate cause doctrine, an interpretive rule for first party insurance.
[Citation.] Pursuant to the efficient proximate cause doctrine, ‘When a loss is
caused by a combination of a covered and specifically excluded risks, the loss
is covered if the covered risk was the efficient proximate cause of the loss,’
but ‘the loss is not covered if the covered risk was only a remote cause of the
loss, or the excluded risk was the efficient proximate, or predominate cause.’ ”
(Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 750, italics
added.) The doctrine is “the preferred method for resolving first party
insurance disputes involving losses caused by multiple risks or perils, at least
one of which is covered by insurance and one of which is not.” (Id. at p. 753.)
When analyzing first-party property insurance, for example, it may be
important to analyze the primary cause of the loss so that coverage is not

                                         6
denied because an excluded risk played a legally insignificant role in the
harm. (Garvey, supra, 48 Cal.3d at p. 406.)
      Motiva devotes much of its opening brief to State Farm Mut. Auto. Ins.
Co. v. Partridge (1973) 10 Cal.3d 94 (Partridge) and its progeny, but these
cases are unhelpful to its cause. In Partridge, an insured negligently
modified a gun so that it was an “exceptionally dangerous weapon,” which
then discharged when the insured and two friends were hunting in a moving
vehicle, paralyzing one of the friends. (Id. at pp. 97–98.) Those seeking
coverage contended that both the alteration of the gun and negligent driving
were concurrent causes of the accident. (Id. at p. 99.) The insured sought
coverage from both an automobile insurance policy (which indisputably
covered the accident) and a homeowner’s policy, which had an automobile
exclusion. (Id. at pp. 98–99, 101.) The trial court concluded that the two
negligent acts were independent and concurrent proximate causes of the
victim’s injuries and that both policies thus applied despite the automobile
exclusion in the homeowner’s policy, and the appellate court affirmed. (Id. at
pp. 99, 101, 103.) To reach this conclusion, the court analyzed whether each
act of negligence was a proximate cause of the accident. (Id. at pp. 104–105.)
Because the insured’s negligent modification of the weapon indisputably
would have been covered if the accident had not occurred in a vehicle, the
homeowner’s policy applied despite the automobile exclusion since the
weapon proximately caused the accident. (Id. at p. 103.) Thus, and stated
another way, the rule is that “[i]f the insured’s nonexcluded negligence
‘suffices, in itself, to render him [or her] fully liable for the resulting injuries’
or property damage [citation], the insurer is obligated to indemnify the
policyholder even if other, excluded causes contributed to the injury or
property damage.” (State of California v. Allstate Ins. Co. (2009) 45 Cal.4th

                                          7
1008, 1031.) Partridge did not hold, as Motiva seems to suggest, that policy
exclusions apply solely when an excluded event was the “proximate cause” of
a harm.
      The Supreme Court later “put Partridge in its proper perspective” when
it held that it “should be utilized only in liability cases in which true
concurrent causes, each originating from an independent act of negligence,
simultaneously join together to produce injury.” (Garvey, supra, 48 Cal.3d at
p. 399.) “[T]he ‘efficient proximate cause standard’ comes into play in
determining whether coverage exists when both excluded and covered perils
interact to cause a loss.” (MRI Healthcare Center of Glendale, Inc. v. State
Farm General Ins. Co. (2010) 187 Cal.App.4th 766, 782.) In other authority
relied upon by Motiva, courts similarly analyzed situations where there were
multiple causes of harm and there was a question whether a covered or
excluded cause was the cause of an accident for which the insured sought
coverage. (Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co.,
Inc. (2018) 5 Cal.5th 216, 223 [tort principles govern question of causation
when determining whether a defendant’s covered negligence, as opposed to
excluded intentional acts, is substantial factor in a plaintiff’s injury]; State of
California v. Allstate Ins. Co., supra, 45 Cal.4th at pp. 1008, 1031–1033
[triable issue of fact over whether contamination caused by covered or
excluded event].)
      Here, Motiva has failed to establish the existence of a covered event
other than the asbestos-removal activities that concurrently caused the
accident. It relies on a series of cases where courts analyzed whether
concurrent causes resulted in injury, but these cases are inapplicable because
here there were no such concurrent causes of the fire. (Safeco Ins. Co. of
America v. Parks (2009) 170 Cal.App.4th 992, 1012 [because negligently

                                         8
leaving passenger on the side of highway was an “independent, concurrent
cause” of passenger’s injuries, automobile exclusion in homeowner’s policy did
not bar coverage]; Ohio Casualty Ins. Co. v. Hartford Accident & Indemnity
Co. (1983) 148 Cal.App.3d 641, 645 [because negligent supervision of student
on boating outing was independent cause of her injuries, boating exclusion on
homeowner’s policy did not bar coverage].) Motiva also relies on two cases
where there was no connection between the injury alleged and the applicable
exclusion (Marquez Knolls, supra, 153 Cal.App.4th at p. 234 [exclusion for
insured’s construction of a structure did not exclude coverage for insured’s
conduct regarding dispute over third party’s construction]) or coverage
(Peters v. Firemen’s Ins. Co. (1998) 67 Cal.App.4th 808, 810–811 [complaint
against sexual partner for transmission of herpes virus alleged no facts that
would trigger coverage under the defendant’s yacht policy]). Here, by
contrast, there is no dispute that there was a connection between asbestos
removal and the victims’ injuries.
      State Farm Fire & Casualty Co. v. Salas (1990) 222 Cal.App.3d 268 is
instructive. There, the insured used sealant to stop a tire leak, but then
failed to inform a welder about the sealant when, a few days later, he brought
the car to a welding shop for rim work. (Id. at p. 271.) The welder was
seriously injured when the tire exploded while he was working on the tire
rim. (Id. at pp. 272–272.) The insured sought coverage under a homeowner’s
policy that excluded bodily injury “arising out of the ownership, maintenance,
use, loading or unloading of . . . a motor vehicle owned . . . by . . . an insured.”
(Id. at p. 271.) He argued that the accident did not “arise out of his attempt
to maintain [his] tire’s air pressure” but instead under his failure to warn
that the sealant might be flammable, but the court disagreed. (Id. at p. 275.)
It noted that the subject of the relevant policy exclusion, the insured’s car,

                                         9
“was not the mere passive situs of negligence divorced from the vehicle’s
maintenance. Rather, the insured’s entire purpose both in using the sealant
and in hiring [a welder] to weld the rim was to maintain his tire’s air
pressure. It was not merely ‘fortuitous’ that the vehicle’s tire exploded.” (Id.
at p. 278.) Under those circumstances, “[t]he insured’s tortious conduct was
inextricably linked to his ineffective attempts to maintain his vehicle,” and
the exclusion thus was unambiguous. (Ibid.) Likewise here, the “entire
purpose” of the accident victims’ use of the hose that caused a fire was
“inextricably linked” to asbestos abatement, the subject of the relevant policy
exclusions.
      Another instructive case is State Farm Fire & Cas. Co. v. Camara
(1976) 63 Cal.App.3d 48, where an insured sought coverage for an injury
suffered while in a dune buggy “designed, constructed and assembled” by the
insured driver. (Id. at pp. 50, 53.) The insured argued that his homeowner’s
policy’s exclusion for bodily injury “arising out of” vehicle ownership did not
apply because the accident was caused by the driver’s negligent design of the
vehicle, but the court disagreed. (Id. at pp. 53–54.) “[T]he accident would not
have happened but for the defendant’s design and construction of the dune
buggy. But it does not follow that the accident did not arise out of the
operation or use of a motor vehicle. . . . As Partridge held, the nonvehicle-
related cause must be independent of the vehicle-related cause in order for
the liability to be covered by the homeowner’s policy. Although the operation
or use of the dune buggy was not the sole cause of the accident, any
contributing design cause was dependent upon such operation or use, such
that any liability for negligent design necessarily arose out of the operation or
use of the motor vehicle.” (Id. at pp. 54–55, fn. omitted.)

                                       10
      Here, of course, the deadly fire would not have happened but for the
asbestos abatement. Motiva stresses on appeal that equipment or
mechanical issues caused the explosion and fire. But we disagree that
“asbestos and asbestos abatement played no causal role in the workers’
injuries,” as Motiva argues, because the fire would not have happened but for
the workers’ role in abating asbestos. It is simply not the case that “Motiva’s
alleged liability is completely divorced from asbestos or asbestos abatement,”
as it claims.
      In short, we agree that the asbestos exclusions applied here. Motiva
faults the trial court for failing to conduct an appropriate causation analysis,
but we fail to see how any such analysis would benefit Motiva. Even if we
agree that the accident was caused by the faulty hose, the use of that hose
was inextricably linked to asbestos abatement, an excluded activity.
            B. The Asbestos Exclusions Were Sufficiently Clear.
      Motiva also argues that the judgment must be reversed because an
ordinary insured would not understand the exclusions to bar coverage for
injuries that “were the result of an industrial accident and not caused by
asbestos.” We are again unpersuaded.
      It is established that “ ‘[a]n insurer cannot escape its basic duty to
insure by means of an exclusionary clause that is unclear. As [our Supreme
Court has] declared time and again “any exception to the performance of the
basic underlying obligation must be so stated as clearly to apprise the
insured of its effect.” [Citation.] Thus, “the burden rests upon the insurer to
phrase exceptions and exclusions in clear and unmistakable language.”
[Citation.] The exclusionary clause “must be conspicuous, plain and clear.” ’
[Citation.] This rule applies with particular force when the coverage portion
of the insurance policy would lead an insured to reasonably expect coverage

                                       11
for the claim purportedly excluded. [Citation.] The burden is on the insured
to establish that the claim is within the basic scope of coverage and on the
insurer to establish that the claim is specifically excluded.” (MacKinnon v.
Truck Ins. Exchange, supra, 31 Cal.4th at p. 648, fn. omitted.)
      Motiva focuses on AXIS’s primary policy. The policy included a section
titled “EXCLUSION—ASBESTOS” that, as Motiva acknowledges, excluded
coverage for bodily injury arising directly or indirectly out of, among other
things, “[a]ny loss, cost or expenses arising out of the abating, testing for,
monitoring, cleaning up, removing, containing, treating, detoxifying,
neutralizing, remediation or disposing of, or in any way responding to, or
assessing the effects of asbestos, asbestos fibers, or any other form of
asbestos, by any insured or by any other person or entity.” It further
excluded coverage for “[a]ny injury or damage caused or alleged to have been
caused by the removal, eradication, detoxification, remediation or
decontamination of asbestos or property containing asbestos.” Contrary to
Motiva’s contention, this is hardly language that would leave an ordinary
insured—much less one of the largest gasoline and diesel fuel refiners in the
world—“hopelessly confused by its overlapping provisions and its arcane
language.”
      Motiva maintains that the exclusion should be understood to apply only
when “it is the presence of asbestos—not ordinary negligence—that causes the
injury.” It directs us to the final paragraph of the exclusion, which provides
that it “shall apply without regard to the source or sources of asbestos, or the
basis of the ‘insured’s’ liability. This exclusion includes defects or negligence
in design, construction or materials, or any other event, conduct or
misconduct, which may have or is claimed to have precipitated, caused or
acted jointly, concurrently, or in any sequence with asbestos in causing injury

                                        12
or damage.” Motiva contends that, when read together with the rest of the
provisions, the exclusion thus “is specifically limited to circumstances where
asbestos causes the injury or damage,” as opposed to “ordinary negligence
that coincidentally relate[s] to asbestos or asbestos abatement.” Given the
broad language of the exclusion, we cannot agree with Motiva’s strained
reading.
      Motiva contends that applying the asbestos exclusion here would be as
“absurd” as the following hypotheticals: applying a pollution exclusion to
deny coverage for injuries suffered when slipping on spilled Drano or having
an allergic reaction to a swimming pool’s chlorine since almost any substance
may be considered an “irritant” or “contaminant,” terms generally used in
pollution exclusions. (Pipefitters Welfare Educ. Fund v. Westchester Fire Ins.
Co. (7th Cir. 1992) 976 F.2d 1037, 1043 [courts reject such a broad
interpretation of pollution exclusions and take “a common sense approach”].)
We see no such absurdity here. There is no dispute that the injured workers
were abating asbestos, and we do not need to rely on any strained or absurd
definitions of those terms to conclude that the exclusion applies.
      In light of our conclusion that the asbestos exclusions barred coverage,
we need not analyze respondents’ alternative grounds to affirm.
                                      III.
                                 DISPOSITION
      The judgments are affirmed. Respondents shall recover their costs on
appeal.

                                      13
                                        _________________________
                                        Humes, P. J.

WE CONCUR:

_________________________
Margulies, J.

_________________________
Sanchez. J.

Motiva Enterprises v. Axis Surplus Insurance A159229, A159231, A159233

                                   14