California CM Report of Recent Decisions (2002v1)
2002 Volume 1
A summary of significant recent developments in the law focusing on substantive issues of litigation and featuring analysis and commentary on special points of interest.
Articles in this report
Absolute Pollution Exclusion on Review By The California Supreme Court
Whether the “absolute pollution exclusion” now found in most CGL policies is clear and unambiguous and whether a particular substance falls within the scope of the absolute pollution exclusion have been the subject of extensive litigation with conflicting results nationwide. Recently, two California appellate court decisions ruled that the absolute pollution exclusion is clear and unambiguous and not limited to injuries arising only from “environmental” contamination, MacKinnon v. Truck Ins. Exchange (2002) 115 Cal.Rptr.2d 369 and Bechtel Petroleum Operations, Inc. v. Continental Ins. Co. (2002) 96 Cal.App.4th 571. These decisions addressed the doctrine of the insured’s “reasonable expectations” but refused to look past the policy when the language is clear on its face. Both MacKinnon and Bechtel have recently been granted review by the California Supreme Court.
Cal. Bill Mandating Mold Coverage Killed in Assembly Committee After Passage in the Senate
On June 26, 2002, the California insurance industry was given a reprieve when a bill that would have prevented both property and liability insurers from excluding mold losses that resulted from a covered peril failed to get out of the California Assembly’s Insurance Committee. The bill, SB 1763, had passed the State Senate on May 23, 2002 by a vote of 21-11.
California "Direct Action" Statute Given Broad Interpretation by Court of Appeal
This case addressed the scope of the “direct action” provision of California Insurance Code §11580. Section 11580(a) requires certain insurance policies to have the direct action provision, and section 11580(b) specifies what the provision must contain. A policy that is required to have such a provision, but does not, shall nevertheless be construed as if it contains the provision. Section 11580(b) allows judgment creditors who have judgments against policyholders arising from bodily injury, death, or property damage to sue directly any carrier (“on the policy and subject to its terms and limitations”) that was obligated to have the direct action provision in its policy under section 11580(a). The issue in Willits was whether the scope of section 11580(b) should be determined by its own language or by the language of section 11580(a).