DD 3/26 revised Ground Pollution as a TrespassHAZARDOUS SUBSTANCES; INSURANCE: Contamination of groundwater from landfill is "wrongful entry or eviction, or other invasion of the right of private occupancy," so that insurer that has provided coverage for liability for such class of wrongs in "automobile and personal injury" policy must defend remediation claim for costs of clean up caused by such contamination. Martin Marietta Corp. v. Insurance Company of North America, 47 Cal. Rptr. 2d 670 (Cal. App. 2d 1995) Note that the insurance here was not a casualty policy and not acquired in connection with any particular land. The language in question is standard language that is part of the Broad Form Comprehensive General Liability Endorsement (or at least has been part of that endorsement until the drafters react to this case.) Although the exact amount of liability is not set forth, a large number of properties were included in the claim, and the insurance company had able counsel. We can assume that the court got a good look at all the precedent, which it discusses at length.
The court ruled that the term "wrongful entry" is not restricted to forceful invasion or dispossession, but includes any physical trespass. If a trespass has occurred, it conncludes, the insurance would cover any actionable injury or damage resulting from that conduct. The court specifically disagrees with the conclusion of 1994 decision in another California Appeals Court district that had concluded (as an alternative holding) that the term applies to "actual disruptions of the ability of the landowner to actually occupy his property, not mere injury to the property."
The court further concludes that the mere fact that the endorsement is entitled "Personal Injury" does not preclude insurance coverage for trespass and nuisance damages to land interests.
The court then proceeds to savage the precedent profferred by insurance company counsel from courts of other jurisdictions. Most of the precedent cases included an environmental exclusion clause, and the court concludes that such clause must also have colored the court's view of the meaning of the coverage language as well. In addressing a Texas Supreme Court case that does not involve a pollution exclusion clause and seems to be on all fours with the case at hand, the court opines that the Texas court's conclusion that coverage is limited to interference with physical occupancy indicates that the Texas court was "[a]pparently employing a standard different than the California standard to protect the reasonable expectations of the insured."
Turning to its own interpretation of the language, the court holds that "interference with the right of private occupancy" connotes nuisance, as well as trespass damages. This important conclusion opens the door to even broader applications of the language in the future.
The insurer finally argued that the government claims alleged here arose from absolute liability statutes, and not from nuisance and trespass claims at all. But the court responds that some of the claims in each case sounded in nuisance, trespass, or both. In some cases, the government allegations were stated to be "in lieu of" nuisance claims. Further, the court concludes that it matters not that the claims were made by the government, rather than neighboring property owners, since the government was vindicating property interests of others.
Comment: Considering the amounts of money potentially at stake in numerous other cases, and the differences in opinion in the California appellate districts, it is quite likely that this case will be considered on appeal by the California Supreme Court. But it can be added to the increasing number of apparently "result oriented" pollution insurance cases that appear to have determined that the "deep pockets" of the innocent landowners of the nation are not enough to solve the pollution problems our industrial society has created, and that the pockets of insurance companies must also be picked.
Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Laprica Mims at the ABA. (312) 988 6233.
Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.