HomeMy WebLinkAbout1989-12-19; City Council; 10425; Amicus BriefQ
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MTG. 12/19/89
DEPT. CA
CIT'- OF C; .RLSBAD AGEND
TITLE:
IN SUPPORT OF AMICUS PARTICIPATION
BILL 1
DEPT. HD.
RECOMMENDED ACTION:
That the Council, by motion, authorize the City Attorney to add the City of Carlsbad as an amici curiae in seeking to have the Supreme Court reverse the decision of the court of appeal in the case of AIU v. SuDerior Court, (1989) 213 Cal.App.3d 1219, 262 Cal.Rptr.182.
ITEM EXPLANATION
On April 19, 1989, the first appellate district in the State of California which is comprised of the San Francisco Bay area counties ruled in the case Aeroiet-General Corn. v. San Mateo Countv Superior Court (1989) 209 Cal.App.3d 973, 257 Cal.Rptr.621, that property owners insured under a comprehensive general liability policy were covered for response costs incurred by them or by a governmental agency who was required to respond to an incident where environmental damage had occurred. For example, a city, county, the state or federal government. brings an action against a polluter and either cleans up the environmental damage
with its own forces or orders the company to repair and mitigate
the damage. In the first instance, the public entity seeks to recover to response costs expended in responding to the situation. This is consistent with our general policies of requiring persons or firms to reimburse the City for its costs expended, for example, for fire suppression or abatement costs, emergency response costs provided by the Fire Department, response to false alarms by the Police Department, second calls to excessively noisy parties, damage to City property caused by drunk drivers, etc.
In the Aeroiet-General CorD. case, the appellate court construed the plain language of the insurance policy to require the insurance company to pay for environmental clean-up costs incurred by either its-insured or a governmental entity in cleaning up the property.
That language of its comprehensive general liability policy stated:
"TO pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or loss, destruction, or loss of use
of property. )I
The appellate court also pointed out that such an interpretation of the coverage clauses in the insurance policy was consistent and
supported by sound public policy. The court agreed with the California attorney general which pointed out that if an insured polluter knows that it is covered for clean-up costs, clean-up activities will be conducted sooner and with greater cooperation with the government. Thus, in the long run, insurance coverage would seem to enhance the quality of environmental protection.
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Agenda Bill #- Page 2
This case was appealed to the California Supreme Court which denied
a hearing.
Meanwhile, another case was windirlg its way through the legal system and on September 7, 1989, the sixth district court of
appeal, which sits in San Jose and comprises the southern Bay Area, declined to follow this holding .in its own decision in the case AIU
Insurance Company v. Superior Court of Santa Clara Countv (1989)
213 Cal.App.3d 1219, 262 Cal.Rptr.182. In this case, the sixth appellate district held that such response costs were not damages within the meaning of the insurance policy and held that the insurance company had no duty to pay for costs incurred by its insured or response costs incurred by the government. It felt that
the Aeroiet-General case was factually distinguishable and brushed
aside the public policy argument stating:
"Neither the government's unwillingness to budget funds for environmental clean up nor a particular corporation's
disinclination or inability to do the job bears on our judicial task to interpret the insurance contracts before
us. By our role we are limited to interpreting the language of these contracts in light of well-established
legal principles, we decline the invitation to assume the role of legislators.
On November 30, 1989, the California Supreme Court accepted the AIU Insurance Company case for hearing in order to resolve these
conflicts between appellate courts. The law firm of Frelich,
Stone, Leitner and Carlisle is preparing an amicus brief urging the California Supreme Court to reverse the AIU v. SuDerior Court case.
The League of California Cities has recommended that its members support this amicus brief and has requested our support.
FISCAL IMPACT
There will be no significant fiscal impact other than minor expenditures of staff time.
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