Court Opinion

ID: 3034020
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:50:24.731345+00
Date Added: 2024-06-11T08:25:02.370439
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              FEB 26 2010

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

VALENTI AGGIO; DOROTHY L.                        No. 08-16981
AGGIO; LIVIO J. AGGIO,
                                                 D.C. No. 3:04-cv-04357-PJH
             Plaintiffs - Appellants,

  v.                                             MEMORANDUM *

ESTATE OF JOSEPH AGGIO,
DECEASED,

             Defendant - Appellee,

  v.

SEQUOIA INSURANCE COMPANY, in
its capacity as liability insurer for
Defendant The Estate of Joseph Aggio,
deceased,

             Third-party-plaintiff -
Appellee,

  v.

COTATI ROD AND GUN CLUB;
MARVIN K. SOILAND, in his capacity as
trustee of the Marvin K. Soiland Family
Trust; STONY POINT ROCK QUARRY,

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
INC.,

              Third-party-defendant.

                    Appeal from the United States District Court
                       for the Northern District of California
                    Phyllis J. Hamilton, District Judge, Presiding

                      Argued and Submitted February 10, 2010
                             San Francisco, California

Before: O’SCANNLAIN, TROTT and PAEZ, Circuit Judges.

        Livio, Valenti, and Dorothy Aggio (the “Aggios”) appeal from the district

court’s grant of summary judgment to Sequoia Insurance Company (“Sequoia”) in

this cost recovery action brought under the Comprehensive Environmental

Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9607 et

seq., and the California Hazardous Substance Account Act (“HSAA”), Cal. Health

& Safety Code § 25300 et seq. The Aggios seek recovery of response costs and

other damages from the now-closed estate of their deceased father, Joseph Aggio,

in connection with the cleanup of contamination on inherited real property located

in Cotati, California. Under California law, the Aggios are permitted to seek

recovery from the closed estate, but only from the estate’s available insurance.

C AL. P ROB. C ODE § 554(a). Thus, the Aggios seek recovery under the terms of two

nearly identical insurance policies issued to Joseph by appellee Sequoia (the

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“Sequoia Policies”). We have jurisdiction under 28 U.S.C. § 1291 to review the

final decision of the district court. We review de novo, Snead v. Metro. Prop. &

Cas. Ins. Co., 237 F.3d 1080, 1087 (9th Cir. 2001), and affirm.

      The district court granted Sequoia’s motion for summary judgment on three

separate grounds. First, the court held that the Sequoia Policies’ “owned property”

exclusion precluded coverage for the Aggios’ cleanup expenditures. Second, the

district court held that the Aggios’ costs of performing the voluntary environmental

cleanup did not constitute “damages” as required to trigger the Sequoia Policies’

insuring agreement. And third, the court held that the Sequoia Policies’ “business

pursuits” exception also foreclosed coverage.

      As to the “owned property” exclusion, the district court held that the

exclusion precludes coverage for costs incurred to clean up one’s own property,

even where such measures prevent potential future damage to third-party property.

On appeal, the Aggios argue that under California law, where there is potential or

threatened damage to the property of others, the “owned property” exclusion does

not apply.

      In determining the applicability of the “owned property” exclusion, the

relevant inquiry is whether there is “imminent” danger of third-party

contamination. See Shell Oil Co. v. Winterthur Swiss Ins. Co., 15 Cal. App. 4th

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715, 758 (1993) (holding that, under an insurance policy’s “owned property”

exclusion, “[e]xpenses solely for cleanup of first party property [a]re not covered

unless they [a]re necessary to prevent imminent damage to third party property”).

None of the cases cited by the Aggios in their briefs modify this standard. See

Vann v. Travelers Cos., 39 Cal. App. 4th 1610, 1619 (1995) (citing Shell Oil and

holding that “we do not believe that the standard ‘owned property’ exclusion

should automatically defeat coverage in suits seeking ‘cleanup’ costs designed to

prevent damage to third parties”); Titan Corp. v. Aetna Cas. & Surety Co., 22 Cal.

App. 4th 457, 473 (holding that the “owned property” exclusion did not apply

because there was no actual or imminent threat of damage to third-party property);

see also Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1555-56

(9th Cir. 1991) (holding that the “owned property” exclusion does not bar coverage

of the costs of preventing future harm to third-party property, but not addressing

how imminent that threat must be to fall within the exclusion).

      Thus, to prevent application of the “owned property” exclusion, the Aggios

must demonstrate imminent harm to third-party property at the time of their

cleanup efforts. While there is ample evidence of a potential for migration of

contaminants, the record directly refutes the Aggios’ contention that there was

imminent danger of such migration. In fact, a 1996 environmental assessment of

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the site prepared by the California Department of Toxic Substances Control

(“DTSC”) specifically stated: “No immediate potential hazard to health or the

environment exists at the site which necessitates an emergency removal action.”

That same report found no contamination of groundwater and “very little potential”

for any airborne transmission of the contaminants.

      The Aggios cite to a 1998 remedial action work plan also prepared by the

DTSC, which states that “[t]he only significant risks to the environment are risks

posed to aquatic organisms in the unnamed drainage which traverses portions of

[the Property].” The Aggios argue that because the unnamed drainage ditch

extends onto third-party properties, contaminants in surface runoff could migrate

off the property via this ditch. Whatever the merit of that hypothesis, the remedial

action work plan directly contradicts the Aggios’ claim that such migration was

imminent. Rather, the report states that “there has been no significant impact on

the water and sediment of the drainage ditch or on the aquatic and semiaquatic

receptors.” Thus, we find that neither of the DTSC reports reasonably supports the

contention that off-site contamination was imminent. Nor have the Aggios

provided any other evidence in the record demonstrating imminent harm to third-

party property. Although the declaration submitted by the project manager hired

by the Aggios in 1994 states that the contamination, “if not remediated, posed a

                                         -5-
substantial threat and risk of migration,” it identifies no specific evidence in the

record of any imminent threat.

      In sum, we hold that the Aggios have failed to create a genuine issue of

material fact as to whether there was an imminent threat of contamination to third-

party properties. Accordingly, we conclude that the “owned property” exclusion of

the Sequoia Policies applies to the Aggios’ cleanup costs and precludes recovery.

As the Aggios are thereby foreclosed from recovery, we need not address the other

two grounds upon which the district court denied relief.

      All pending motions are dismissed as moot.

      AFFIRMED.

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