The state of California is likely to receive tens of millions of dollars more from insurance companies to clean up the Stringfellow Acid Pits toxic waste dump as a result of a ruling Thursday by the California Supreme Court.
In a unanimous decision, the high court said consecutive insurance policies by various companies required each to pay up to their policy limits for damage caused by the Riverside County waste site. The companies wanted to restrict liability to just a share of the damage that occurred during the time each insurer’s policy was in effect.
“In cases such as this it is impossible to prove precisely what property damage occurred during any specific policy period,” Justice Ming W. Chin wrote for the court. “The fact that all policies were covering the risk at some point during the property loss is enough to trigger the insurers’ indemnity obligation.”
The court’s decision, based on the language of the insurance policies, affects situations in which multiple insurance companies have provided coverage for a site with continual damage, like toxic pollution. The court said that the state, which purchased multiple policies and paid multiple premiums, should be able to collect up to the policy limit from each company.
Rene L. Siemens, a Los Angeles lawyer who represents policyholders, said the ruling could cost the insurance industry billions of dollars in future cases. Calling it “the most important insurance coverage decision in a decade,” Siemens said the ruling “cements California’s reputation as a paradise for policyholders.”
Philip Matthews, a lawyer for insurance companies, disagreed. He said the decision was “disappointing,” but most insurance policies written since 1985 would not be affected.
California has been fighting with its insurance companies over Stringfellow for years, and Thursday’s decision was eagerly awaited by both sides.
Stringfellow, an industrial waste disposal facility operated by the state from 1956 to 1972, leaked contaminants into underground water. A federal court in 1996 held the state liable for cleaning up the site. The state has estimated that the cleanup would cost several hundred million dollars.
Roger W. Simpson, who represented the state in the case, said the insurance companies may owe California as much as $60 million, including interest, as a result of the ruling. The state already has collected $120 million in settlements with other insurance companies.
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