Procedural Posture

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Appellant insured and appellant insurer both sought review of an order of the Superior Court of Los Angeles County (California), which found that four primary insurers were liable for defense costs and that one of those four carriers, appellant insurer, was also liable for indemnity. None of the excess carriers was found liable.

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Overview

The new owner of the property sued appellant insured, among others, alleging that it had discharged hazardous substances onto the soil throughout its period of ownership. Before the settlement, appellant insured filed an action against the insurers, seeking a declaration of its rights to defense costs and indemnity. The trial court, in a bench trial, found that four primary insurers were liable for defense costs and that one of those four carriers, appellant insurer, was also liable for indemnity. The court concluded that appellant insurer had a duty to defend appellant insured under certain of its policies, those which provided potential coverage for the underlying litigation. However, the trial court erred in concluding that the language of the policies required the insurers to bear defense costs as to property damage that occurred when appellant insured was not covered. The trial court also erred in apportioning defense costs among the insurers based on the number of years that each carrier had a duty to defend. Finally, the trial court did not properly assess the reasonableness of the attorneys' fees incurred in the underlying litigation.

Outcome

The court reversed the trial court's order, which found that four primary insurers were liable for defense costs and that one of those four carriers, appellant insurer, was also liable for indemnity. The trial court erred in apportioning defense costs among the insurers and did not properly assess the reasonableness of the attorneys' fees.

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