In a case of first impression, the California Supreme Court approved the stacking of excess insurance policies in the continuous property loss scenario typical of environmental contamination and toxic tort litigation, thus issuing a sweeping insurance coverage opinion in favor of policy holders in California v. Continental Ins. Co., 2012 WL 3206561 (Aug. 9, 2012).

The Facts.  Between 1956 and 1972, the State of California operated an industrial waste disposal facility known as the Stringfellow Acid Pits waste site.  In 1955, a state geologist determined that a quarry located in a canyon was a suitable location for the disposal of industrial waste provided that the State build a concrete barrier dam to close a 250-foot gap in the canyon’s natural walls.  After having received more than 30 million gallons of waste, it was determined that the use of a quarry was a bad idea – there was an underground aquifer 70 feet below the canyon floor that allowed groundwater to move in and out of the site; the rock underlying the canyon was fractured allowing waste to leak into the groundwater and escape the site; and the barrier dam proved ineffective in heavy rains.  A federal court found the State negligent in the selection and design of the site.  The State claimed it was obligated by a federal court to remediate the site and the remediation costs could exceed $700 million.

To read more. please read Bill Wagner's recent blog post on Commonground.