County of Stanislaus v. Travelers Indemnity Company

Filing 40

MEMORANDUM and ORDER signed by Senior Judge William B. Shubb on 11/5/2015 re 28 Defendant's Motion for Summary Judgment and 29 Plaintiff's Motion for Partial Summary Judgment: IT IS ORDERED that 29 Plaintiff's Motion for Summ ary Judgment be, and the same hereby is, GRANTED with respect to defendant's duty to defend under the policy and DENIED in all other respects; and 28 Defendant's Motion for Summary Judgment be, and the same hereby is, GRANTED with respect to any pre-tender costs and DENIED in all other respects. IT IS FURTHER ORDERED that discovery is reopened for forty-five days from the date of this Order for the limited purpose of defendant deposing Tom Bower. (Kirksey Smith, K)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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COUNTY OF STANISLAUS,
Plaintiff,

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CIV. NO. 1:14-00666 WBS SMS
MEMORANDUM AND ORDER RE: CROSSMOTIONS FOR SUMMARY JUDGMENT

v.
TRAVELERS INDEMNITY COMPANY;
and DOES 1 through 50,
inclusive,

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Defendant.

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This action seeks to resolve disputes regarding the

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coverage due under a comprehensive general liability policy

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issued to plaintiff County of Stanislaus by the Insurance Company

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of the Pacific Coast, which was a former entity of defendant

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Travelers Indemnity Company.

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Procedure 56, both parties move for summary judgment to resolve

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defendant’s obligations under the policy.

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I.

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Pursuant to Federal Rule of Civil

Factual and Procedural Background
From 1970 until 1990, plaintiff operated the Greer
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Landfill in the eastern edge of the San Joaquin Valley adjacent

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to the Tuolumne River.

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which closed in 1995, contains approximately 4.5 million tons of

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residential, commercial, industrial, construction, and demolition

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waste that was deposited into excavated cells in the ground.

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(Id.)

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October 13, 1972 to October 13, 1975.

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policy excludes coverage for contamination, but reinstates

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coverage for “sudden and accidental” discharges.

(Docket No. 28-13.)

The Greer Landfill,

The policy at issue in this case was in effect from only

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(Docket No. 28-8.)

The

(Id.)

In 1985, groundwater degradation was identified at the

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landfill and efforts have been undertaken to remediate the

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groundwater contamination since at least 1991.

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13.)

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Board (“CRWQCB”) issued an order identifying plaintiff’s “Waste

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Discharge Requirements.”

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groundwater contamination has not been defined” and that the

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existing “landfill gas and groundwater extraction systems are not

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adequate,” the CRWQCB issued a Cease and Desist Order in 2011.

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(Docket No. 32-3 at STATRAV2316-STATRAV2318.)

(Docket No. 28-

In 2009, the California Regional Water Quality Control

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(Id.)

Finding that the “extent of the

On August 5, 2011, plaintiff initiated an action in

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state court against the City of Modesto (the “City”) seeking

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damages against the City based on contamination at the Greer

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Landfill.

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against plaintiff seeking indemnity and damages incurred as a

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result of the contamination.

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lawsuit against the City five months after filing it and then

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tendered the defense of the City’s Cross-Complaint on January 27,

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2012.

On August 24, 2011, the City filed a Cross-Complaint

Plaintiff informed defendant of its

(Barillari Decl. ¶¶ 3, 5 (Docket No. 28-7).)
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Defendant

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accepted the tender subject to a complete reservation of rights

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and informed plaintiff that the “defense may be conducted by

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appropriately qualified counsel of the County of Stanislaus’s

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choice, in any manner deemed appropriate to protect the interests

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of the County.”

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(Docket No. 28-15.)

While defendant has paid legal fees incurred in

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defending against the City’s Cross-Complaint, it has not paid any

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of the non-legal environmental consultant invoices plaintiff

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submitted.

Plaintiff initiated this action in state court

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seeking declaratory relief to resolve defendant’s obligations

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under the policy and alleging claims for breach of contract and

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breach of the implied covenant of good faith and fair dealing.

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(Docket No. 1.)

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and the parties now seek summary judgment resolving whether

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defendant has a duty to defend plaintiff and, if so, whether the

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non-legal environmental consultant costs are defense costs.

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III. Analysis

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A.

Defendant removed the action to federal court,

Legal Standard

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Summary judgment is proper “if the movant shows that

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there is no genuine dispute as to any material fact and the

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movant is entitled to judgment as a matter of law.”

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P. 56(a).

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of the suit, and a genuine issue is one that could permit a

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reasonable jury to enter a verdict in the non-moving party’s

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favor.

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(1986).

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burden of establishing the absence of a genuine issue of material

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fact and can satisfy this burden by presenting evidence that

Fed. R. Civ.

A material fact is one that could affect the outcome

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
The party moving for summary judgment bears the initial

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negates an essential element of the non-moving party’s case.

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Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

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Alternatively, the moving party can demonstrate that the non-

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moving party cannot produce evidence to support an essential

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element upon which it will bear the burden of proof at trial.

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Id.

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Once the moving party meets its initial burden, the

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burden shifts to the non-moving party to “designate ‘specific

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facts showing that there is a genuine issue for trial.’”

Id. at

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324 (quoting then-Fed. R. Civ. P. 56(e)).

To carry this burden,

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the non-moving party must “do more than simply show that there is

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some metaphysical doubt as to the material facts.”

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Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

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“The mere existence of a scintilla of evidence . . . will be

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insufficient; there must be evidence on which the jury could

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reasonably find for the [non-moving party].”

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at 252.

Matsushita

Anderson, 477 U.S.

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In deciding a summary judgment motion, the court must

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view the evidence in the light most favorable to the non-moving

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party and draw all justifiable inferences in its favor.

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255.

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and the drawing of legitimate inferences from the facts are jury

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functions, not those of a judge . . . ruling on a motion for

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summary judgment . . . .”

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judgment, the court “must review the evidence submitted in

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support of each cross-motion [in a light most favorable to the

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non-moving party] and consider each party’s motions on their own

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merits.”

Id. at

“Credibility determinations, the weighing of the evidence,

Id.

On cross-motions for summary

Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090,
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1097 (W.D. Wash. 2004).

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B.

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Duty to Defend and the Pollution Exclusion
An insurer’s duty to defend “runs to claims that are

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merely potentially covered, in light of facts alleged or

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otherwise disclosed” and “extends to all specified harm that may

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possibly have been caused by an included occurrence.”

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Gen. Corp. v. Transp. Indem. Co., 17 Cal. 4th 38, 58 (1997)

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(“Aerojet”).

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liability under the policy ultimately fails to materialize; this

Aerojet-

“[T]he insurer must defend in some lawsuits where

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is one reason why it is often said that the duty to defend is

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broader than the duty to indemnify.”

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Superior Court, 6 Cal. 4th 287, 299 (1993).

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whether the facts establish the existence of the defense duty

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must be resolved in the insured’s favor.”

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Montrose Chem. Corp. v.
“Any doubt as to

Id. at 299-300.

The duty to defend “arises as soon as tender is made”

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and is “discharged when the action is concluded” unless it is

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“extinguished earlier” because the insurer shows “that no claim

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can in fact be covered.”

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action wherein none of the claims is even potentially covered

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because it does not even possibly embrace any triggering harm of

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the specified sort within the policy period caused by an included

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occurrence, the insurer does not have a duty to defend.”

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59.

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Aerojet, 17 Cal. 4th at 58.

“[I]n an

Id. at

“An insurer is entitled to limit its coverage to

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defined risks, and if it does so in clear language, [the court]

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will not impose coverage where none was intended.”

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Ins. Co. v. Sacramento Plating, Inc., 861 F. Supp. 964, 968 (E.D.

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Cal. 1994) (quoting Titan Corp. v. Aetna Casualty & Sur. Co., 22
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Am. States

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Cal. App. 4th 457, 469 (4th Dist. 1994)) (alteration in

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original).

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but reinstated coverage if the contamination was “sudden and

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accidental”:

Here, the policy excluded coverage for contamination,

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It is agreed that the insurance does not apply to
bodily injury or property damage arising out of the
discharge, dispersal, release or escape of smoke,
vapors, soot, fumes, acids, alkalis, toxic chemicals,
liquids or gases, waste materials or other irritants,
contaminants or pollutants into or upon land, the
atmosphere or any watercourse or body of water, but
this exclusion does not apply if such discharge,
dispersal, release or escape is sudden and accidental.
(Docket No. 28-8.)
When addressing similar exclusions, California

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appellate courts have held that the insured “establishes that

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[the insurer] is obligated to defend . . . if there is any

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potential that the release or escape of at least some of the

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pollutants was ‘sudden and accidental.’”

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Cos., 39 Cal. App. 4th 1610, 1616 (1st Dist. 1995); A-H Plating,

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Inc. v. Am. Nat’l Fire Ins. Co., 57 Cal. App. 4th 427, 437

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(1997); accord Arrowood Indem. Co. v. Bel Air Mart, No. 2:11-CV-

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00976 JAM-AC, 2014 WL 841314, at *5 (E.D. Cal. Mar. 4, 2014);

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Bolton v. Lumbermans Mut. Cas. Co., No. 05-1109 SC, 2006 WL

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193519, at *4 (N.D. Cal. Jan. 23, 2006) (“[S]o long as [the

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insurer] is unable to conclusively establish that the underlying

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claim cannot fall within the ambit of the policies, it will be

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bound to defend Plaintiff.”).

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has more generally explained in the context of a dispute about

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the duty to defend, “the insured must prove the existence of a

Vann v. Travelers

As the California Supreme Court

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potential for coverage, while the insurer must establish the

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absence of any such potential.”

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at 300.1

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Montrose Chem. Corp., 6 Cal. 4th

“[I]n the phrase, ‘sudden and accidental,’ ‘accidental’

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conveys the sense of an unexpected and unintended event, while

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‘sudden’ conveys the sense of an unexpected event that is abrupt

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or immediate in nature.”

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Co., 12 Cal. App. 4th 715, 755 (1st Dist. 1993).

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repeatedly held that “sudden and accidental” cannot include

Shell Oil Co. v. Winterthur Swiss Ins.
Courts have

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gradual pollution.

See, e.g., FMC Corp. v. Plaisted & Cos., 61

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Cal. App. 4th 1132, 1146 (1998); ACL Techs., Inc. v. Northbrook

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Prop. & Cas. Ins. Co., 17 Cal. App. 4th 1773, 1787 (4th Dist.

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1993); Am. States Ins. Co. v. Sacramento Plating, Inc., 861 F.

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Supp. 964, 970 (E.D. Cal. 1994).

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sudden and accidental exception to the pollution exclusion must

As a “coverage provision” the

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Defendant relies on Aydin Corp. v. First State Ins.
Co., 18 Cal. 4th 1183, 1194 (1998), to argue that plaintiff has
the burden of proving a sudden and accidental discharge. The
California Supreme Court in that case, however, held that “in an
action seeking indemnity under a standard commercial general
liability insurance policy, once the insurer carries its burden
of proving that the general pollution exclusion applies, the
insured bears the burden of proving that a claim comes within the
‘sudden and accidental’ exception.” Aydin Corp., 18 Cal. 4th at
1194 (emphasis added). The insured in Aydin Corp. did not seek
defense costs and the Court did not address allocation of the
burden of proof with respect to the duty to defend. See id. at
1194 n.6 (“We note that some Courts of Appeal have held that
regardless of which party bears the burden of proof when
indemnification is at issue, when the defense duty is implicated,
the insurer is obligated to defend its insured in an underlying
action if there is any potential that the release or escape of at
least some of the pollutants was ‘sudden and accidental.’ Since
the duty to defend is not at issue in this case, we express no
opinion as to which party should bear the burden of proof in that
context.”) (citations omitted).
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be “construed broadly in favor of the insured.”

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Allstate Ins. Co., 45 Cal. 4th 1008, 1018 (2009).

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State v.

In determining whether the sudden and accidental

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exception applies, “the focus of analysis must be on the

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particular discharge or discharges that gave rise to [the]

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property damage,” thus the court must “look[] first to the

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underlying claims to determine the polluting event.”

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1018-19.

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California Supreme Court has distinguished between (1) the

Id. at

With a landfill like the one at issue in this case, the

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initial discharge of the waste into the landfill; and (2) “the

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subsequent migration of wastes from the landfill to other

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property.”

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that the City’s Cross-Complaint could seek damages for either of

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these discharges.

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Id. at 1019.

The parties in this case do not dispute

In Standun, Inc. v. Fireman’s Fund Ins. Co., the

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insured operated a manufacturing facility in Compton and

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knowingly sent waste to the landfill on a regular basis.

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App. 4th 882 (2d Dist. 1998).

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that even though the initial discharges were not sudden and

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accidental, “there may have been subsequent sudden and accidental

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discharges of the pollutants from the landfill into the

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environment.”

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rejected this theory because the underlying environmental actions

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sought to hold the insured liable for the discharges into the

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landfill and thus even if subsequent events were sudden and

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accidental they “were not the basis of the underlying claims . .

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. and were therefore irrelevant.”

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“Where hazardous waste material is deposited directly into a

Id. at 888.

62 Cal.

The insured unsuccessfully argued

The Second Appellate District

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Id.

The court explained,

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landfill, the relevant discharge of pollutants for purposes of

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the pollution exclusion is the initial release of the hazardous

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waste into the landfill, not the subsequent release of pollutants

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from the landfill into the water, air, and adjoining land.”

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at 891.

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Id.

The California Supreme Court subsequently distinguished

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Standun, Inc. and explained that a subsequent release of the

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pollutants could be the relevant discharge under certain

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circumstances.

In State v. Allstate Ins. Co., the state

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maintained “open, unlined evaporation ponds to contain the

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hazardous waste” and intentionally deposited hazardous waste into

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those ponds with the expectation that the waste would remain in

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the ponds.

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believed was “an impermeable layer of rock” was actually

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“decomposed granite and fractured bedrock,” which allowed

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chemical pollutants to seep into the groundwater.

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16.

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45 Cal. 4th at 1015.

It turned out what the state

Id. at 1015-

In the underlying environmental action, “[t]he State

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was not held liable for polluting the evaporation ponds,” and

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thus it did not matter that the initial deposit of the waste into

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the ponds was neither sudden nor accidental.

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Instead, “the State’s liability was based on its having sited,

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designed, built, and operated the [] facility in such a negligent

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manner as to allow hazardous chemicals to escape from the

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evaporation ponds (by both seepage and overflow) into the

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surrounding environment.”

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for purposes of the sudden and accidental exception was thus “the

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release of wastes from the site when, because of the State’s

Id. at 1018.

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Id. at 1018-19.

The relevant discharge

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negligence, the site failed to contain them properly.”

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1020.

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Id. at

The Court further explained, “When, as in Standun,

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pollutants are deposited directly onto land or into water,

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without any attempt at containment, their further migration may

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reasonably be viewed as an aspect of property damage rather than

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an additional release or discharge; arguably, the only

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‘discharge’ to be considered in such a case is the initial

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deposit.”

Id. at 1020.

In contrast, the unlined evaporation

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ponds were “intended and expected” to contain the hazardous

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waste, even though they were “poorly sited and designed for that

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purpose.”

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ponds were therefore liability-causing events, not merely aspects

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of the property damage as in Standun.”

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Id.

1.

“The instances of seepage and overflow from the

Id. at 1021.

Sudden and Accidental Discharge After the Initial
Deposit

Relying on Allstate Insurance Co., plaintiff first

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seeks to establish defendant’s duty to defend as a matter of law

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based on the possibility that a sudden and accidental discharge

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occurred during the coverage period when flooding caused the

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groundwater to seep into the deposited waste and thereby

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contaminate the groundwater.

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show the possibility that it intended the landfill to contain the

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waste, but “sited, designed, built, [or] operated the [Greer

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Landfill] facility in such a negligent manner as to allow

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hazardous chemicals to escape from the [landfill cells].”

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Allstate Ins. Co., 45 Cal. 4th at 1018.

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a.

Under this theory, plaintiff must

Intent for Landfill Cells To Contain Waste
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In Allstate Insurance Co., the California Supreme Court

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found that waste was placed into containment in evaporation ponds

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because the state “intended and expected” the layer of rock

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beneath the ponds to contain the waste.

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Similarly, in Patz v. St. Paul Fire & Marine Ins. Co., the

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Seventh Circuit found that an “evaporation pit was a containing

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structure, despite its lack of artificial materials” lining the

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bottom of the pit.

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Circuit found that the unlined pit was a “containing structure”

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because the insureds believed that the “clay composition of the

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soil . . . would stop the water” from “leaching through the

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bottom of the pit.”

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insured could believe that waste was placed into containment even

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though the landfill is unlined.

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Id. at 1015, 1020.

15 F.3d 699 (7th Cir. 1994).

Id. at 704.

The Seventh

These cases show that an

Here, the CRWQCB’s “Waste Discharge Requirements” for

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the Greer Landfill issued in 1970 conditioned plaintiff’s and the

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City’s ability to operate the landfill on the limitation that the

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deposited waste would “not cause a pollution of ground or surface

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waters.”

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“discharge of solid or liquid wastes, including leachate, to

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surface or underground waters.”

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(Docket No. 32-6.)

It further prohibited the

(Id.)

Although the CRWQCB recognized that “a portion of this

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parcel may be flooded on occasion,” it seemed to believe that

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“discharge to ground or surface waters” would be avoided so long

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as waste was not “deposited below the elevation of seventy-seven

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feet above sea level” and “disposal trenches [were] bottomed

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above the anticipated high ground water level including the

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capillary fringe and surface waters [were] diverted around the
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disposal site.”

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shown the possibility that it, along with the CRWQCB, believed it

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was placing waste into containment if the cells were not

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excavated too close to the groundwater.

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(Id. at 1, 2, app. A.)

b.

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Plaintiff has therefore

Negligent Excavation

Plaintiff must also show the possibility that it

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accidentally excavated the cells too close to the groundwater.

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Plaintiff put forth evidence that the County purchased parcels of

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land and excavated those parcels during the coverage period and

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that waste was deposited into the landfill during the coverage

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period.

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2452.)

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1970’s, indicates that he “saw the cells being excavated for the

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trash to be deposited in” and that the contractor “excavate[d]

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into wet clay during the constructions of the cells at the Site.”

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(Bower Decl. ¶¶ 3, 7-8 (Docket No. 37-13).)2

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(E.g., Docket No. 32-3 at STATRAV2398-2411, STATRAV2415Tom Brower, who worked at the Greer Landfill during the

Bower explains

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Defendant objects to consideration of Bower’s
declaration because Bower was never identified in discovery,
which closed on June 17, 2015. Federal Rule of Civil Procedure
37(c)(1) provides:
If a party fails to provide information or identify a
witness as required by Rule 26(a) or (e), the party is
not allowed to use that information or witness to
supply evidence on a motion, at a hearing, or at a
trial, unless the failure was substantially justified
or is harmless.
In addition to or instead of this
sanction, the court, on motion and after giving an
opportunity to be heard: (A) may order payment of the
reasonable expenses, including attorney’s fees, caused
by the failure; (B) may inform the jury of the party's
failure;
and
(C)
may
impose
other
appropriate
sanctions, including any of the orders listed in Rule
37(b)(2)(A)(i)-(vi).
In determining whether the sanction of exclusion is merited, the
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that, “from his experience excavating in the Central Valley . . .

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when you hit clay in [the] area, you are just above the

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groundwater, which presents a danger of the groundwater rising

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into the excavated area.”

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with the CRWQCB’s requirement that the trenches be “bottomed

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above the anticipated high ground water level,” establishes the

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possibility that plaintiff accidentally excavated too deep during

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the coverage period.

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c.

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(Id. ¶ 9.)

Brower’s testimony, along

Flooding During Coverage Period

Plaintiff also put forth evidence showing “above-normal

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rainfall” in February 1973, (Cal. Dep’t of Water Res. Bulletin

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No. 69-73, California High Water 1972-1973 at iii, 1, 7, (Docket

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No. 37-10)), which resulted in the cresting of the Toulumne River

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on February 12, 1973, (see Nat’l Weather Serv.’s Advanced

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Hydrologic Prediction Servs. (Docket No. 37-9 at 3) (showing that

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the Toulumne River crested at 49.55 on February 12, 1973).)3

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The

court must consider “1) the public’s interest in expeditious
resolution of litigation; 2) the court’s need to manage its
docket; 3) the risk of prejudice to the defendants; 4) the public
policy favoring disposition of cases on their merits; 5) the
availability of less drastic sanctions.” Wendt v. Host Int’l,
Inc., 125 F.3d 806, 814 (9th Cir. 1997).
Plaintiff’s counsel represents that he did not discover
Bower’s identity until September 25, 2015. (Supp. Syz Decl. ¶ 12
(Docket No. 37-11).) Although plaintiff’s counsel should have
been more diligent in performing discovery, the untimely
disclosure in this case does not merit the drastic sanction of
exclusion, especially when three months remain before trial.
(See Docket No. 36.) To address any prejudice defendant may
suffer at trial from the untimely disclosure, the court will
reopen discovery to allow defendant to depose Bower.
3

For purposes of the motions before the court, the court
takes judicial notice of the above-normal rainfall recorded in
the Department of Water Resources Bulletin No. 69-73 (Docket No.
37-10) and the cresting of the Toulumne River memorialized in the
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Greer Landfill is adjacent to the Toulumne River, (Docket No. 32-

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6 at 1), and the groundwater beneath the landfill is in

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“hydraulic communication” with the river and thus can rise as the

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river rises, (Docket No. 32-3 at STATRAV2317).

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plaintiff, when the river crested in February 1973, groundwater

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elevations potentially flooded the buried waste at the landfill

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and thereby potentially resulted in a sudden and accidental

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discharge of pollutants into the groundwater.

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According to

The CRWQCB’s 2009 Cease and Desist Order corroborates

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the possibility that contamination occurred when the groundwater

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levels raised: “It is highly probable that groundwater rises into

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the waste mass at times.”

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the possibility that the groundwater level rose during the

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coverage period due to above-average rainfall and was potentially

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contaminated when it came in contact with the waste.

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d.

(Id.)

Plaintiff has thus established

Defendant’s Showing

Plaintiff has put forth sufficient circumstantial

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evidence establishing the possibility that the Greer Landfill was

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intended to contain the waste, but was suddenly contaminated when

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it seeped into the cells during heavy rain because plaintiff had

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accidentally excavated the cells too close to the groundwater.

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National Weather Services Advanced Hydrologic Prediction Services
(Docket No. 37-9). See Fed. R. Evid. 201(b) (“The court may
judicially notice a fact that is not subject to reasonable
dispute because it: . . . (2) can be accurately and readily
determined from sources whose accuracy cannot reasonably be
questioned.”); Sanchez v. City of Fresno, Civ. No. 1:12-00428
LJO, 2014 WL 2042058, at *2 (E.D. Cal. May 16, 2014) (taking
judicial notice of weather information from the National Climate
Data Center). Although defendant disputes the inferences to be
drawn from this evidence, it does not dispute the accuracy of the
information in these documents.
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To negate plaintiff’s showing of a potential for coverage,

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defendant “must establish the absence of any such potential.”

3

Montrose Chem. Corp., 6 Cal. 4th at 300.

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to show that the claim is not covered, or may not be covered, but

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are insufficient to eliminate the possibility that resultant

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damages (or the nature of the action) will fall within the scope

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of coverage, [] add no weight to the scales.”

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“Facts merely tending

Id.

Defendant primarily argues that plaintiff should have
known contamination of the groundwater could occur because the

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landfill was unlined.

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conclusively show that the discharge was not accidental as a

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matter of law.

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(“Evidence the State should have known flooding was likely, and

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should have taken additional measures against it, is insufficient

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to prove, as an undisputed fact, that a waste discharge due to

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flooding was expected and therefore nonaccidental.”).

17

Such evidence is insufficient to

See Allstate Ins. Co., 45 Cal. 4th at 1028

Defendant also cannot extinguish its duty to defend

18

based on plaintiff’s inability to prove its right to indemnity at

19

this stage in the litigation.

20

defense under the policy upon a showing the possibility of a

21

sudden and accidental discharge, it is entitled to indemnity

22

under the policy only if it proves “that a claim comes within the

23

‘sudden and accidental’ exception.”

24

1194 (emphasis added).

25

cannot sustain this burden at summary judgment based on the

26

evidence before the court, which establishes only the possibility

27

of coverage.

28

While plaintiff is entitled to a

Aydin Corp., 18 Cal. 4th at

There is little question that plaintiff

As the California Supreme Court has explained, however,
15

1

forcing plaintiff to establish coverage prior to resolution of

2

the underlying action could prejudice the insured.

3

Chem. Corp., 6 Cal. 4th at 301.

4

party seeks damages on account of the insured’s negligence, and

5

the insurer seeks to avoid providing a defense by arguing that

6

its insured harmed the third party by intentional conduct, the

7

potential that the insurer’s proof will prejudice its insured in

8

the underlying litigation is obvious.”

9

plaintiff to establish that it negligently excavated the landfill

10

cells to establish coverage could undoubtedly prejudice it in the

11

City’s underlying action against it, and thus the court cannot

12

resolve indemnity at this time.

13

Superior Court, 25 Cal. App. 4th 902, 907-11 (2d Dist. 1994).

14

e.

Montrose

“For example, when the third

Id. at 302.

Forcing

Id.; Montrose Chem. Corp. v.

Conclusion

15

Because plaintiff has carried its burden of showing the

16

possibility of coverage under the sudden and accidental exception

17

to the pollution exclusion and defendant has not established the

18

absence of a potential for coverage as a matter of law, defendant

19

has a duty to defend plaintiff under the policy.

20

Corp., 6 Cal. 4th at 301.

21

plaintiff’s motion for summary judgment with respect to

22

defendant’s duty to defend and deny defendant’s motion for

23

summary judgment on that issue.

24
25
26

2.

Montrose Chem.

Accordingly, the court must grant

Sudden and Accidental Discharge at the Time of
Deposit

Plaintiff also seeks to show the possibility that a

27

sudden and accidental discharge occurred when the waste was

28

initially deposited into the landfill cells because the cells
16

1

were accidentally excavated so deep that deposited waste was

2

immediately exposed to the groundwater.

3

plaintiff relies primarily on Kleinfelder’s May 23, 2007 “South

4

Area Groundwater Investigation Report” (the “Kleinfelder

5

Report”), which states:

6
7
8
9
10
11

Under this theory,

An employee from Stanislaus County, who was present at
the
landfill
in
1985
and
1986,
reported
that
excavations in the landfill area north of Jantzen Road
were dug to depths of approximately 80 feet below
grade, which would have potentially immersed landfill
waste in the groundwater table when groundwater
elevations were high.
In the southern area, waste
cells
were
also
dug
in
the
summer
close
to
groundwater.

12

(Docket No. 32-3 at STATRAV7233.)

13

refers to excavations in 1985 and 1986, which is outside of the

14

coverage period, plaintiff argues that the statement is

15

circumstantial evidence about how the landfill was excavated ten

16

years earlier during the coverage period.

17

Although this description

Putting aside the attenuated relevance of evidence

18

about excavations that occurred a decade past the coverage

19

period, defendant objects to consideration of the Kleinfelder

20

Report on the ground that it contains inadmissible hearsay within

21

hearsay.

22

plaintiff’s theory of a sudden and accidental discharge at the

23

time of the initial deposit of the waste, the court provided

24

plaintiff with the opportunity to reply to defendant’s

25

evidentiary objections and resubmit any evidence in light of

26

them.

Because the Kleinfelder Report is central to

(See Docket No. 35.)

27

“Hearsay ‘is a statement, other than one made by the

28

declarant while testifying at the trial or hearing, offered in
17

1

evidence to prove the truth of the matter asserted.’”

2

County of Maricopa, 747 F.3d 1048, 1056 (9th Cir. 2013) (quoting

3

Fed. R. Evid. 801(c)).

4

by the rule against hearsay if each part of the combined

5

statements conforms with an exception to the rule.”

6

Evid. 805.4

7

Wagner v.

“Hearsay within hearsay is not excluded

Fed. R.

Rule 801(d)(2) provides that an admission by the

8

opposing party, including a statement made “by the party’s agent

9

or employee on a matter within the scope of that relationship and

10

while it existed,” is not hearsay.

11

however, was prepared at the behest of plaintiff and it is

12

plaintiff’s own employee who described the excavations from 1985

13

to 1986.

14

clear in Rule 801(d)(2), a party “may not offer his own

15

statements as party admissions, as only statements offered

16

against a party-opponent are admissible under Federal Rule of

17

Evidence 801(d)(2).”

18

Supp. 2d 1156, 1162 (C.D. Cal. 2008).

19

characterize the CRWQCB as the “opposing party” at the time of

20

the investigation and somehow construe the report as against

21

plaintiff’s interest vis-à-vis the CRWQCB.

22

The Kleinfelder Report,

(See Crandall Decl. ¶ 3 (Docket No. 37-14).)

As is

United States v. Castro-Cabrera, 534 F.
Nor can plaintiff

The Kleinfelder Report also does not become a public

23

record subject to the exception in Rule 803(8) merely because the

24

CRWQCB summarized the findings from the Kleinfelder Report in its

25
26
27
28

4

Plaintiff’s reliance on a case discussing California’s
“invited error doctrine” in the context of a bar to federal-court
habeas relief of a state conviction is misplaced. (See Pl.’s
Evidentiary Br. at 12 (citing Jackson v. Herndon, Civ. No. 0901145 RSWL, 2009 WL 3122552, at *5 (C.D. Cal. Sept. 25, 2009)).
18

1

documents.

2

803(8) (“A record or statement of a public office if: (A) it sets

3

out: (i) the office’s activities; (ii) a matter observed while

4

under a legal duty to report, but not including, in a criminal

5

case, a matter observed by law-enforcement personnel; or (iii) in

6

a civil case or against the government in a criminal case,

7

factual findings from a legally authorized investigation; and (B)

8

the opponent does not show that the source of information or

9

other circumstances indicate a lack of trustworthiness.”).

10

(E.g., Docket No. 20-13 ¶ 28); see Fed. R. Evid.

Although Michael Franck, the employee interviewed for

11

the Kleinfelder Report, is now deceased, (Supp. Aggers Decl. ¶ 8

12

(Docket No. 37-12)), his statements do not come within any of

13

Rule 804’s hearsay exceptions when a declarant is unavailable.

14

While his statement could be viewed as against plaintiff’s

15

interest, Rule 804(b)(3) allows admission of a statement against

16

interest by an unavailable witness when that statement is “so

17

contrary to the declarant’s proprietary or pecuniary interest or

18

had so great a tendency to invalidate the declarant’s claim

19

against someone else or to expose the declarant to civil or

20

criminal liability.”

21

is against pecuniary and proprietary interest when it threatens

22

the loss of employment, or reduces the chances for future

23

employment, or entails possible civil liability.”

24

Antonio Troiano Tile & Marble Co., 410 F.2d 238, 242 (D.C. Cir.

25

1969).

26

deep, nothing in the record suggests that Franck was responsible

27

for those excavations or that the statements were against his

28

pecuniary interest for some other reason.

Fed. R. Evid. 804(b)(3)(A).

“A statement

Gichner v.

Although Franck reported that excavations were dug too

19

1

Lastly, the court finds that the hearsay statement

2

within the Kleinfelder Report would not be admissible under Rule

3

807’s residual exception, which provides:

4
5
6
7

Under the following circumstances, a hearsay statement
is not excluded by the rule against hearsay even if
the statement is not specifically covered by a hearsay
exception in Rule 803 or 804:

8

(1)
the
statement
has
equivalent
guarantees of trustworthiness;

9

(2) it is offered as evidence of a material fact;

10
11

circumstantial

(3) it is more probative on the point for which it is
offered than any other evidence that the proponent can
obtain through reasonable efforts; and

12
13

(4) admitting it will best serve the purposes of these
rules and the interests of justice.

14

Fed. R. Evid. 807(a).

15

the discretion to admit a hearsay statement in ‘exceptional

16

circumstances’ so long as it meets the Rule’s requirements.”

17

Draper v. Rosario, Civ. No. 2:10-32 KJM EFB, 2014 WL 1664917, at

18

*4 (E.D. Cal. Apr. 25, 2014) (citing United States v. Bonds, 608

19

F.3d 495, 500–01 (9th Cir. 2010)).

20

consideration is whether the hearsay has circumstantial

21

guarantees of trustworthiness ‘equivalent to those present in the

22

traditional exceptions to the hearsay rule.’”

23

v. Am. Airlines, Inc., 626 F.2d 759, 763 (9th Cir. 1980)).

24

“Under the Rule, a district [court] has

“The most important

Id. (quoting Fong

Plaintiff argues that the statement by the employee has

25

“adequate alternative assurance of reliability,” Giles v.

26

California, 554 U.S. 353, 389 (2008), because it occurred during

27

an administrative investigation.

28
20

Plaintiff, however, initiated

1

the investigation that culminated in the Kleinfelder Report and

2

there is no indication that the interview was done in conjunction

3

with the CRWQCB.

4

employee’s own words, was not made under oath or recorded.

5

United States v. Sanchez–Lama, 161 F.3d 545, 547–48 (9th Cir.

6

1998) (holding that the district court erred in excluding video-

7

taped statements that were made under oath by witnesses who were

8

later deported).

9

excavations in 1985 and 1986 “more probative” about how the

The statement, which is not even in the
See

Nor is an employee’s statement about

10

landfill was excavated during the coverage period of 1972 to 1975

11

“than any other evidence that the proponent can obtain through

12

reasonable efforts.”

13

Fed. R. Evid. 807(a)(3).

Because Franck’s statements are inadmissible hearsay,

14

the court cannot consider them in deciding plaintiff’s motion for

15

summary judgment.

16

object that the material cited to support or dispute a fact

17

cannot be presented in a form that would be admissible in

18

evidence.”); Burch v. Regents of Univ. of Cal., 433 F. Supp. 2d

19

1110, 1122 (E.D. Cal. 2006) (“[C]urrent law in the Ninth Circuit

20

is arguably that the rule against hearsay, Fed. R. Evid. 802,

21

applies to evidence submitted in support of and in opposition to

22

a motion for summary judgment.”).

23

to establish the possibility that a sudden and accidental

24

discharge occurred at the time of the initial deposit of the

25

waste.

26
27
28

C.

See Fed. R. Civ. P. 56(c)(2) (“A party may

Plaintiff has therefore failed

Site Investigations as Defense Costs
Having found that defendant owes plaintiff a duty to

defend, the parties next dispute whether plaintiff’s site
21

1

investigation expenses constitute defense costs.

2

its duty [to defend, the insurer] must undertake reasonable and

3

necessary efforts to avoid or at least minimize liability.”

4

Aerojet, 17 Cal. 4th at 60.

5

held that “the insured’s site investigation expenses constitute

6

defense costs” only if the following requirements are met:

7
8
9
10
11

“In fulfilling

The California Supreme Court has

First, the site investigation must be conducted within
the temporal limits of the insurer’s duty to defend,
i.e., between tender of the defense and conclusion of
the action.
Second, the site investigation must
amount to a reasonable and necessary effort to avoid
or at least minimize liability. Third and final, the
site investigation expenses must be reasonable and
necessary for that purpose.

12

Id. at 60-61.

13

are defense costs that the insurer must incur in fulfilling its

14

duty to defend must be determined objectively, and not

15

subjectively from the viewpoint of either the insurer or the

16

insured.”

17

“Whether the insured’s site investigation expenses

Id. at 62.
“In the general case, it is the insured that must carry

18

the burden of proof on the existence, amount, and reasonableness

19

and necessity of the site investigation expenses as defense

20

costs, and it must do so by the preponderance of the evidence.”

21

Id. at 64.

22

insurer has breached its duty to defend, it is the insured that

23

must carry the burden of proof on the existence and amount of the

24

site investigation expenses, which are then presumed to be

25

reasonable and necessary as defense costs, and it is the insurer

26

that must carry the burden of proof that they are in fact

27

unreasonable or unnecessary.”

28

breach its duty to defend and agreed, under a reservation of

“By contrast, in the exceptional case, wherein the

Id.

22

Here, defendant did not

1

rights, to provide a defense to the City’s Cross-Complaint.

2

1.

Pre-Tender Costs

3

Aerojet first requires that “the site investigation

4

must be conducted within the temporal limits of the insurer’s

5

duty to defend, i.e., between tender of the defense and

6

conclusion of the action.”

7

on January 27, 2012.

8

2013,5 (Docket 29-16), and is for work completed in November 2012

9

through January 2013, (Acosta Decl. ¶ 4 (Docket 29-15)).

Here, plaintiff tendered the defense

Invoice 50613104 is dated January 22,

10

Similarly, Invoice 50640959 is dated January 15, 2013, (Docket

11

No. 29-17), and is for services provided in November 2012 through

12

January 7, 2013, (Acosta Decl. ¶ 40).

13

that Invoices 50613104 and 50640959 satisfy the first Aerojet

14

requirement because they are for services provided after tender

15

of the defense and before completion of the underlying state

16

action.

17

It is therefore undisputed

While the specific invoices plaintiff submitted are

18

limited to post-tender costs, plaintiff argues defendant is also

19

obligated to cover pre-tender costs.

20

California law, ‘[i]t is well understood . . . that an insurer’s

21

duty does not arise until defense is tendered by the insured and

22

the known facts point to a potential for liability under the

23

policy.’”

24

1125, 1127 (E.D. Cal. 2012) (quoting Valentine v. Membrila Ins.

25
26
27
28

Generally, “under

Burgett, Inc. v. Am. Zurich Ins. Co., 875 F. Supp. 2d

5

Plaintiff initially indicates in its brief that Invoice
50613104 is dated January 22, 2012, which is five days before
plaintiff tendered the defense. (See Pl.’s Mem. at 4:15.) It
appears plaintiff merely misstated the year as the date on the
invoice is January 22, 2013.
23

1

Servs., Inc., 118 Cal. App. 4th 462, 473 (2004)) (alteration and

2

omission in original).

3

coverage for pre-tender expenses through a “no voluntary payment”

4

provision like the one included in the policy at issue in this

5

case.

6

at his own cost, voluntarily make any payment, assume any

7

obligation or incur any expense other than for such immediate

8

medical or surgical relief to others as shall be imperative at

9

the time of injury.”).)

Insurance policies often seek to exclude

(See Docket No. 28-7 ¶ 13 (“The insured shall not, except

10

Nonetheless, California appellate courts have

11

recognized that an insured might be able to seek pre-tender

12

expenses despite inclusion of a “no voluntary payments”

13

provision.

14

counsel upon being served with the summons and complaint and did

15

not tender the defense to the insurer until four months later

16

after they located and reviewed their insurance policies.

17

Cal. App. 3d 433, 438 (4th Dist. 1990).

18

excluding voluntary payments, the insureds alleged they did not

19

voluntarily incur pre-tender defense costs because “they were

20

‘compelled’ to incur the pre-tender defense costs in order to

21

respond to legal process and to protect their legal interests.”

22

Id.

23

In Fiorito v. Superior Court, the insureds retained

226

Despite the provision

The Fourth Appellate District held that the trial court

24

erred in finding that the insurer was not required to pay pre-

25

tender expenses as a matter of law because the insureds had

26

sufficiently “raise[d] a question as to the ‘voluntariness’ of

27

[their] actions in incurring pre-tender expenses.”

28

accord Shell Oil Co. v. Nat’l Union Fire Ins. Co., 44 Cal. App.
24

Id. at 439;

1

4th 1633, 1649 (2d Dist. 1996) (affirming finding after trial

2

that “defense expenditures incurred during a four-month interval

3

between service of summons and tender of defense” while the “the

4

insureds had ‘searched for insurance policies that might provide

5

coverage or defense’” “were not barred from recovery, because

6

they were not voluntary”).

7

Here, the City filed its Cross-Complaint on August 24,

8

2011, but plaintiff did not tender the defense until five months

9

later on January 27, 2012.

Plaintiff’s attorney, William Brown,

10

indicates that he unsuccessfully searched for evidence of

11

plaintiff’s insurance policies in 2008, again in 2011, and a

12

third time after the City filed its Cross-Complaint.

13

Decl. ¶¶ 1-6 (Docket No. 32-9).)

14

that, in January 2012, she located a reference to the insurance

15

policy in a correspondence from 1975 between the City and

16

plaintiff and that Mr. Brown’s law firm was not aware of the

17

policy until that discovery.

18

32-10).)

(Brown

Mr. Brown’s paralegal explains

(Depies Decl. ¶¶ 1, 3-4 (Docket No.

19

While this case is similar to Fiorito and Shell in that

20

there was a relatively short delay between service of the summons

21

and complaint and the tender because the insured had not yet

22

located the insurance policy, the insureds in those cases sought

23

pre-tender costs that were “involuntarily” incurred to “respond

24

to legal process and to protect their legal interests.”

25

Fiorito, 226 Cal. App. 3d at 438; see Insua v. Scottsdale Ins.

26

Co., 104 Cal. App. 4th 737, 747 (2d Dist. 2002) (explaining that

27

the insureds in Shell argued they were “‘compelled’ to respond to

28

legal process and to protect their legal interests”).
25

Here,

1

neither party has identified any pre-tender defense costs

2

plaintiff incurred to “respond to legal process and to protect

3

their legal interests.”

4

The only costs discussed in both motions are

5

plaintiff’s site investigations and the court therefore assumes

6

that pre-tender site investigation costs are the only pre-tender

7

costs at issue.

8

distinguishable from pre-tender costs to respond to legal process

9

and protect legal interests, Aerojet unequivocally limits the

Not only are pre-tender site investigation costs

10

inclusion of site inspections as defense costs to investigations

11

that occur “between tender of the defense and conclusion of the

12

action.”

13

v. Nat’l Union Fire Ins. Co., 18 Cal. 4th 857, 886 (1998)

14

(“[S]ite investigation expenses incurred prior to the instigation

15

of a lawsuit against the insured are not defense costs the

16

insurer must incur . . . . because the insurer does not yet have

17

a duty to defend the insured.”).

18

Court articulated this requirement, the lower appellate courts

19

had already decided Fiorito and Shell and thus the Supreme Court

20

could have included a similar exception, but did not.

21

Accordingly, the court must grant defendant’s motion for summary

22

adjudication with respect to any pre-tender site investigation

23

costs.

24

Aerojet, 17 Cal. 4th at 61; accord Foster-Gardner, Inc.

2.

When the California Supreme

Reasonable and Necessary Effort to Avoid or

25

Minimize Liability

26

a.

27
28

Compulsion by the CRWQCB

Next, the site investigation costs incurred “must
amount to a reasonable and necessary effort to avoid or at least
26

1

minimize liability.”

2

Defendant first argues that the site inspections were not related

3

to defending against the City’s Cross-Complaint because plaintiff

4

incurred those costs in response to the CRWQCB’s orders.

5

California Supreme Court in Aerojet, however, emphasized that an

6

objective standard governs whether costs incurred were a

7

reasonable effort to minimize liability “even in the general

8

context of a governmental request or order for the insured to

9

conduct a site investigation and/or to incur site investigation

Aerojet-Gen. Corp., 17 Cal. 4th at 61.

10

expenses.”

11

explained, whether the insured incurred the site investigation

12

expenses to “resist liability,” to “satisfy the government,” for

13

both of those reasons, or for an entirely different reason.

14

see id. at 66 (“What matters is what is done, not why.”).

15

this objective standard, it is simply irrelevant whether the

16

insured incurred costs for the inspection voluntarily in an

17

effort to minimize liability or involuntarily because the federal

18

or state government ordered it to do so.

19

Id. at 63.

The

It does not matter, the Aerojet Court

Id.;
Under

Id. at 66.

Defendant attempts to distinguish this case from

20

Aerojet on the ground that the CRWQCB’s Orders mandated the site

21

inspections before plaintiff tendered the defense of the City’s

22

Cross-Complaint and thus plaintiff’s “obligation to investigate

23

and remediate the Site existed independently of, and years

24

before, the City filed its cross-complaint.”

25

13:6-15.)

26

occur after the tender of the defense, nothing in the opinion

27

suggests that a government action mandating the same site

28

investigation must also occur after the tender.

(Def.’s Mem. at

While Aerojet requires that the site investigations

27

Adopting

1

defendant’s position would abandon the objective inquiry Aerojet

2

requires because the court would be speculating that plaintiff

3

incurred the site investigation costs because it had a pre-

4

existing obligation to do so.

5

the “purely fictive” “mind and heart” of a government insured and

6

emphasized that the controlling inquiry “is whether the site

7

investigation expenses would be incurred against liability by a

8

reasonable insured under the same circumstances.”

9

Cal. 4th at 63 (citation omitted).6

10

b.

Aerojet rejected an inquiry into

Aerojet, 17

Reasonable and Necessary Effort to Avoid or

11

Minimize Liability in Light of the

12

Allegations in the Cross-Complaint

13

In the Cross-Complaint, the City alleges twelve claims

14

against plaintiff: (1) indemnity/contribution under the Hazardous

15

Substance Account Act; (2) declaratory relief under the

16

California Hazardous Substances Accounting Act; (3)

17

indemnity/contribution under the Porter Cologne Act; (4)

18

declaratory relief under the Porter Cologne Act; (5) private

19
20
21
22
23
24
25
26
27
28

6

Nor does Foster-Gardner, Inc. or County of San Diego v.
Ace Property & Casualty Ins. Co., 37 Cal. 4th 406 (2005), support
defendant’s position. In Foster-Gardener Inc., the California
Supreme Court held that a policy’s provision for defense of a
“suit” did not extend to “environmental agency activity prior to
the filing of a complaint,” and “site investigation expenses
incurred prior to the instigation of a lawsuit against the
insured are not defense costs the insurer must incur” because a
duty to defend under the policy did not arise until the “suit”
commenced. 18 Cal. 4th at 860-61, 886. Ace Property & Casualty
Ins. Co. dealt with excess indemnity coverage, not defense costs,
and held that coverage for “damages” did not extend to “costs and
expenses associated with responding to administrative orders to
clean up and abate soil or groundwater contamination outside the
context of a government-initiated lawsuit seeking such remedial
relief . . . .” 37 Cal. 4th at 406.
28

1

nuisance; (6) private nuisance per se; (7) public nuisance; (8)

2

public nuisance per se; (9) breach of contract; (10) dangerous

3

condition of public property; (11) express

4

indemnity/contribution; and (12) equitable

5

indemnity/contribution.

6

plaintiff has operated the Geer Landfill since approximately 1970

7

and that it caused and is responsible for the “hazardous

8

substance contamination in and around the Greer Landfill” and is

9

“liable for the removal and remedial action costs incurred by”

The Cross-Complaint alleges that

10

the City.

11

13, 24 (Docket No. 29-7).)

12

that the contamination is “continuing and abatable” and

13

“[b]ecause of the nature, extent and magnitude of the

14

contamination at and/or near Greer Landfill is not fully known at

15

this time, investigatory and remedial work has not been completed

16

and may occur in the future” and the City “may incur necessary

17

response costs, including but not limited to investigatory,

18

monitoring and remedial expenses . . . in the future.”

19

Cross-Compl. ¶¶ 20, 31).

20

(Menacher Decl. Ex. D (“City’s Cross-Compl.”) ¶¶ 11The Cross-Complaint further alleges

(City’s

Resolution of these claims will require findings about

21

the extent and cause of the contamination.

22

plaintiff’s claims and the equitable considerations required to

23

allocate costs, some site investigation expenses would be

24

incurred against liability by a reasonable insured because doing

25

so allows the insured to identify the concentration and extent of

26

the contamination and the cause of the contamination.

27

example, Gregory Acosta, who was the project manager of the

28

investigation culminating in the Plume Investigation Report,
29

In light of

For

1

indicates that the “purpose of the Plume Investigation Report was

2

to (1) better define the nature and extent of the groundwater

3

impacts, especially in the deeper zone, (2) to evaluate the area

4

west of the Toulumne River with respect to landfill-related

5

impacts and (3) to provide a groundwater model, both conceptual

6

and numerical, for the groundwater system at the Site.”

7

Decl. ¶¶ 2, 13.)

8

Invoices 50643104 and 50640949 “included an investigation into

9

the vertical and lateral extent of the groundwater impacts at the

(Acosta

He further explains that the work billed in

10

Site and the creation of a groundwater model both conceptual and

11

numerical for groundwater system at the Site.”

12

c.

13

(Id. ¶¶ 6, 11.)

Inadequacy of Invoices

The evidence before the court is inadequate, however,

14

to determine as a matter of law whether all of the services in

15

Invoices 50643104 and 50640949 would have been “incurred against

16

liability by a reasonable insured under the same circumstances.”

17

Aerojet, 17 Cal. 4th at 63.

18

are extremely vague.

19

“Task 100,” which is described as “ROUTINE LFG SERVICES” and

20

$69,822.55 to “Task 200,” which is described as “NON-ROUTINE

21

GROUNDWATER/INVESTIGATIVE SERVICES.”

22

declaration, Acosta provides a short explanation of the services

23

included in the Invoices, but it too lacks adequate detail to

24

ensure that all costs in the Invoices are limited to site

25

investigations that were reasonably and necessarily conducted to

26

defend against the City’s Cross-Complaint.

27

5-6.)

28

The descriptions of the billed work

Invoice 50614103 attributes $32,306.30 to

(Docket No. 29-16.)

In his

(See Acosta Decl. ¶¶

While site investigation expenses may “do double duty”
30

1

by constituting defense costs and fulfilling a separate

2

obligation imposed by state or federal environmental laws,

3

Aerojet, 17 Cal. 4th at 65-66, clean-up costs are not defense

4

costs simply because they “minimize liability” by remediating the

5

contamination.

6

and remediation[] by enabling [the responsible party] to

7

determine how to neutralize the substance in question” or

8

“minimize liability[] by making it possible for it to show that

9

it was not in fact the source of the discharge.”

For example, defense costs may “promote removal

Id.

Costs are

10

no longer site investigation costs, however, when they take the

11

next step of remediating the contamination even though

12

remediation could have the ultimate benefit of “minimizing

13

liability.”

14

costs cannot be both indemnification costs and defense costs.”).

15

Cf. id. at 61 n.13 (“[A]t least generally, the same

It is unclear from the invoices whether all of the

16

costs are attributable to reasonable investigations performed to

17

defend against the City’s Cross-Complaint or whether some of the

18

costs were part of on-going remediation and clean-up efforts

19

entirely unrelated to any sudden and accidental discharges at

20

issue in the City’s Cross-Complaint.

21

13 at 11 (requiring plaintiff to “maintain in good working order

22

any facility, control system, or monitoring device installed to

23

achieve compliance with the waste discharge requirements,”

24

“conduct routine maintenance of the final cover, areas with

25

interim cover, the precipitation and drainage control facilities,

26

the groundwater, unsaturated zone and landfill gas monitoring

27

systems, the landfill has extraction system, and any facilities

28

associated with corrective action”).)
31

(See, e.g., Docket No. 28-

1

Plaintiff also references 107 other invoices that it

2

allegedly submitted to defendant for payment, but has not

3

submitted those invoices to the court and it is unclear whether

4

their motion for summary judgment is limited to Invoices 50643104

5

and 50640949 or extends to 107 additional invoices that are not

6

before the court.

7

work performed, the court cannot determine as a matter of law

8

that the charges were limited to investigations that a reasonable

9

insured would have performed to defend against the City’s Cross-

10

Without the ability to meaningfully review the

Complaint.

11

Similar to Aerojet, “[w]hether and to what extent [any

12

site investigation expenses] actually were” reasonable and

13

necessary to defend against the City’s Cross-Complaint remains an

14

issue for trial.

15

plaintiff has not shown as a matter of law that the invoices

16

defendant did not pay were defense costs under Aerojet, the court

17

must deny plaintiff’s motion for summary judgment with respect to

18

those defense costs.

19

17 Cal. 4th at 65.

Accordingly, because

IT IS THEREFORE ORDERED that plaintiff’s motion for

20

summary judgment be, and the same hereby is, GRANTED with respect

21

to defendant’s duty to defend under the policy and DENIED in all

22

other respects; and defendant’s motion for summary judgment be,

23

and the same hereby is, GRANTED with respect to any pre-tender

24

costs and DENIED in all other respects.

25

IT IS FURTHER ORDERED that discovery is reopened for

26

forty-five days from the date of this Order for the limited

27

purpose of defendant deposing Tom Bower.

28

///
32

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Dated:

November 5, 2015

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