Tuesday, March 10, 2009
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S.C. Revives Part of State’s Suit Over Stringfellow Cleanup Costs
By KENNETH OFGANG, Staff Writer
The state Supreme Court yesterday unanimously concluded that four insurers may be responsible for a share of the state’s $500 million-plus liability for the costs of cleaning up the damage caused by discharge of hazardous wastes from the Stringfellow Acid Pits in Riverside County.
The ruling is the latest in the decades of litigation resulting from the pollution of groundwater resulting from discharges at the site, located in the Jarupa mountains just north of Glen Avon.
More than 30 million gallons of industrial waste was deposited at the site after a geologist erroneously concluded, in the mid-1950s, that there was no water beneath an impermeable layer of rock, leading to the belief that there would be no threat of pollution if a watertight barrier dam was built across the canyon in which the site was located.
A state expert found pollution seeping into the groundwater through fractured bedrock as early as 1960. In addition to the underground leaking, there were two major overflows, in 1969 and 1978, resulting from heavy rains.
District Court Ruling
A suit by the federal government resulted in a 1998 U.S. District Court ruling that the state was liable under state and federal law for past and future costs of cleaning up the state.
The state then sued about three dozen insurance companies to recover those costs. News reports indicate that 16 companies have settled for a total of $93 million, and that more than $100 million in jury verdicts have been returned against non-settling insurers.
Yesterday’s ruling involves four insurers—Allstate Insurance Company, Century Indemnity Company, Columbia Casualty Company, and Westport Insurance Corporation—who won a now-overturned summary judgment in Riverside Superior Court.
The state sought coverage against the four based on comprehensive general liability policies containing pollution exclusions.
All but the Columbia policy provided that damages caused by land or air pollution were not excluded if caused by “sudden and accidental” discharge, but that damages caused by pollution of watercourses and bodies of water were absolutely excluded. The Columbia policy applied the “sudden and accidental” exception to water, air, and land pollution.
Riverside Superior Court Judge E. Michael Kaiser, who has since retired, ruled that the exclusions applied and were a complete bar to coverage.
The Fourth District Court of Appeal, Div. Two, reversed, holding in part that the trial judge, in determining that the release of pollutants was not sudden and accidental, erroneously focused on the initial deposit of wastes into storage on the site, rather than on the subsequent escape of pollutants from the pits into the larger environment.
Pollution Exclusion
Justice Kathryn M. Werdegar, writing for the high court, agreed with the Court of Appeal. Since the state was held liable based on its negligence in allowing hazardous chemicals to escape into the surrounding environment, the applicability of the pollution exclusion is dependent on whether that discharge was “sudden and accidental,” she reasoned.
“We conclude the initial deposit of wastes was not a polluting event subject to the policy exclusion (i.e., a “discharge, dispersal, release or escape” of pollutants) and, even if it were, the State’s liability was based not on the initial deposit, but instead on the subsequent escape of chemicals from the Stringfellow ponds into the surrounding soils and groundwater, making that the relevant set of polluting events,” the justice wrote.
Werdegar also concluded, as did the Court of Appeal, that triable issues exist as to whether the 1969 overflow was “sudden and accidental” within the meaning of the absolute water pollution exclusion contained in the Allstate, Century and Westport exclusions.
There is a factual dispute, she explained, as to whether the flood waters flowed directly from the site into a nearby creek, which would make the exclusion applicable, or whether they flowed down onto surrounding land, in which case the “sudden and accidental” exception might apply.
The high court reversed the Court of Appeal on its conclusion that the insurers were entitled to summary adjudication on their claim that there could be no coverage for damage caused by the 1978 overflow. Div. Two’s reasoning, that the overflow had to be non-accidental because the state should have anticipated it in light of what happened nine years later, doesn’t support summary adjudication, based on the evidence viewed in the light most favorable to the state, Werdegar said.
There was evidence, the justice conceded, that the state’s chief geologist recommended various measures that might have averted the need for a controlled release following the 1978 rains, had they been undertaken. But if the wastes were released only to prevent the more harmful result that would have occurred if the dam had broken and far more contaminated water was allowed out, there may be coverage, Werdegar said.
“Liability policies have been held to cover damages resulting from an act undertaken to prevent a covered source of injury from coming into action, even if that act would otherwise not be covered,” the jurist explained.
The case was argued in the high court by Roger W. Simpson of Cotkin & Collins for the state and by Steven M. Crane of Berkes Crane Robinson & Seal for the insurers.
The case is State of California v. Allstate Insurance Company, 09 S.O.S. 1360.
Copyright 2009, Metropolitan News Company