was that requiring the insurer to "negative the possible applicability of an exception to an exclusion, at the stage of deciding on the duty to defend, seems to require the insurer to possess specialized knowledge about the insured's circumstances which it could not otherwise be expected to have." Id. at 669. In Marglen, the insured manufactured carpets which faded after installation. There was a defective products exclusion in the Policy, and there were "no allegations in the underlying actions that the carpeting had failed to withstand ordinary indoor conditions to which carpeting is normally subject." Id. at 670. In other words there was nothing in the underlying action that would put the insurer on notice that the defective products exclusion would not apply because the damage was "sudden and accidental". In addition, plaintiffs came up with a theory, almost at the eleventh hour, that a sudden phenomenon of ozone oxidation created the damage. This made the damage "sudden and accidental" according to the plaintiffs. Id. at 667.
In the present case, defendant was put on notice by the underlying action that the "sudden and accidental" exception would apply. The underlying complaint alleges in paragraph 27 that the contamination was caused by ". . . spilling, leaking . . . escaping . . ." among other things. This was certainly enough to let defendants know that the "sudden and accidental" exception may apply. Further, plaintiffs are not using a theory unknown to the defendant to bring the damage within this exception. Thus, even if the court were to apply the Marglen case, plaintiffs have satisfied their burden, in that the underlying complaint states a theory so that the "sudden and accidental" exception would apply, and defendant had sufficient facts to have been placed on notice that the exception may apply.
Completely separate and independent from the property damage claim, plaintiffs claim that coverage exists under the personal injury provision of the Policy as well. The Policy contains a Broad Form Comprehensive General Liability Endorsement which defines personal injury as "injury arising out of one or more of the following offenses committed during the policy period: . . . (2) wrongful entry or eviction or other invasion of the right of private occupancy . . . ." The underlying complaint alleges causes of action based on nuisance and trespass, and plaintiffs contend that those claims fall within the Policy definition of personal injury.
At a minimum, the term "other invasion of the right of private occupancy" is ambiguous, and any ambiguity is to be resolved against the insurer. See American States Ins. Co. v. Canyon Creek, et al., No. C-90-2376 WHO, 92 Daily Journal D.A.R. 3958, 3962 (N.D.Cal 1992). Keeping in mind that only the possibility of coverage need be raised for the duty to defend to be implicated, this alone may be enough. In addition, however, California courts have defined trespass as "an invasion of the interest in the exclusive possession of land." Wilson v. Interlake Steel Co., 32 Cal. 3d 229, 233, 185 Cal. Rptr. 280 , 649 P.2d 922 (1982). Nuisance has been defined as an "interference with the interest in the private use and enjoyment of land." Id. In Titan Holdings Syndicate, Inc. v. City of Keene, 898 F.2d 265, 274 (1st Cir. 1990), the First Circuit held that allegations "sounding in 'trespass or nuisance'" were covered because the policy defined personal injury as "wrongful entry or eviction or other invasion of the right of private occupancy," language identical to the Policy here.
Further, commentators have recognized that in the context of personal injury coverage of general comprehensive liability policies, the "invasion of the right of private occupancy" affords coverage "for interference with possession and enjoyment by means such as noise, leaky roofs, obstruction of access, obnoxious fumes, . . . actionable on a variety of theories such as . . . nuisance, or trespass." D. Farberstein & F. Stillman, Insurance for the Commission of Intentional Torts, 20 Hastings L.J. 1219, 1241 n.96 (1969). Since the underlying complaint alleges claims for the interference with WSA's "comfortable use and enjoyment of the property," there exists the potential for coverage, and correspondingly, a duty to defend.
Defendant contends that a summary judgment is inappropriate because more discovery is necessary. The discovery defendant is requesting, however, relates to coverage and not to the duty to defend. The duty to defend should not be suspended so that defendant can conduct discovery relating to its duty to indemnify.
Since the underlying complaint raises the possibility of coverage under the policy, defendant has a duty to defend plaintiffs. Plaintiffs' motion for partial summary judgment is, therefore, GRANTED.
Lastly, the plaintiffs seek a determination that Exclusion (f) has been waived. Under California law, waiver is a question of fact, and an affirmative defense, for which the insured bears the burden of proof. Insurance Co. of the West v. Haralambos Beverage Co., 195 Cal. App. 3d 1308, 1320, 241 Cal. Rptr. 427 (1987); Intel Corporation v. Hartford Accident & Indemnity, 952 F.2d 1551, 1559 (9th Cir. 1992). A waiver may result from, (1) the intentional relinquishment of a right or (2) acts which are so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished. Further, the court in Intel reviewed existing case law regarding waiver, and found that California courts, and Federal courts applying California law, require a showing of misconduct on the part of the insurer or detrimental reliance on the part of the insured for waiver to have occurred. Id. at 1560.
In the present case, the plaintiffs were appraised of the pollution exclusion when the defendant reserved its right to deny coverage on the pollution exclusion contained in the Policy, if different from the one in later policies, similar to the situation in Intel. There has been no showing that later actions have been so inconsistent with the exercise of this right so as to induce a reasonable belief that the right has been relinquished. Furthermore, there has been no showing of detrimental reliance by plaintiffs, or misconduct by defendant. Plaintiffs request for a declaration that Exclusion (f) has been waived is, therefore, DENIED.
Accordingly, it is HEREBY ORDERED:
(1) Plaintiff's motion for partial summary judgment with respect to the second cause of action is GRANTED for the reasons set forth above.
(2) Plaintiff's request for a declaration that Exclusion (f) of the Policy has been waived is DENIED.
DATED: May 7, 1992.
VAUGHN R. WALKER
United States District Judge
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