Plaintiff insured sued defendant insurance company alleging breach of contract and breach of the implied covenant of good faith and fair dealing. The Superior Court of Los Angeles County (California) granted summary judgment in favor of the insurance company on the grounds that the insurance company did not owe the insured a duty to defend in another lawsuit. The insured appealed.
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Overview
The insured was sued by its lessee for damages that arose out of an order to clean up groundwater contamination at the property owned by the insured. The trial court found no potential for coverage under the comprehensive general liability (CGL) policy at issue, based upon a qualified pollution exclusion (QPE) in the policy. The court of appeals found that the policy language established that the exception to the QPE did not apply unless both the release of contaminants and the damage occurred during the insurance company’s policy period. The QPE provided a permissible exclusion on coverage and there was no reasonable ambiguity that warranted reversal of the trial court’s order. The insurance company did not waive its right to assert a defense pursuant to the QPE. The insured’s estoppel argument also failed, as there was no evidence that the insurance company intended for the insured to believe that it would not enforce the QPE. Because it was clear that the lessee only sought damages for negligence that occurred well-before the time the insurance company’s policy was in place, there was no potential for coverage, and the insurance company did not have a duty to defend.
Outcome
The judgment was affirmed.