Pacific Indemnity Co. v. Continental Ins. Co. CA2/7

Filed 7/13/23 Pacific Indemnity Co. v. Continental Ins. Co. CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

PACIFIC INDEMNITY COMPANY, B320417

Plaintiff and Respondent; (Los Angeles County
Super. Ct.
CONTINENTAL INSURANCE No. BC561655)
COMPANY,

Defendant and Respondent;

v.

NORTHROP GRUMMAN
SYSTEMS CORPORATION,

Defendant and Appellant.

APPEAL from a judgment of the Superior Court of Los
Angeles County, Daniel J. Buckley, Judge. Reversed with
directions.
 Pasich, Michael S. Gehrt, Kirk Pasich, and Nathan M.
Davis for Defendant and Appellant.
Chamberlin & Keaster, Kirk C. Chamberlin and Michael C.
Denlinger for Plaintiff and Respondent.
Berkes Crane Santana & Spangler, Steven M. Crane and
Barbara S. Hodous for Defendant and Respondent.

INTRODUCTION

Northrop Grumman Systems Corporation appeals from a
stipulated judgment entered after the trial court granted a
motion for summary adjudication filed by Northrop’s insurers,
Pacific Indemnity Company and Continental Insurance
Company. Pacific Indemnity filed this action after Northrop
sought coverage under commercial general liability insurance
policies issued by Pacific Indemnity and Continental for a lawsuit
filed by Hot Rods, LLC, the owner of property in Orange County
Northrop sold to Hot Rods’ owners. In that action Hot Rods sued
Northrop for damages and equitable relief relating to Northrop’s
contamination of the property and subsequent efforts to
remediate the contamination.
The trial court ruled Pacific Indemnity and Continental did
not have a duty to defend or indemnify Northrop in the
underlying action by Hot Rods because Hot Rods’ alleged injuries
occurred after the relevant policies expired and affected only the
property Northrop had owned or alienated. Contrary to the trial
court’s ruling, we conclude the allegations in Hot Rods’ complaint
created the possibility of coverage and therefore triggered the
insurers’ duty to defend Northrop. We also conclude, however,
that Northrop forfeited the argument the insurers had a duty to
indemnify and that, in any event, Northrop has not shown the

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trial court erred in granting the insurers’ motion for summary
adjudication concerning indemnification. Therefore, we reverse
the judgment and direct the trial court to enter a new order
denying the insurers’ motion for summary adjudication regarding
the duty to defend and granting the motion regarding the duty to
indemnify.

FACTUAL AND PROCEDURAL BACKGROUND

A. Pacific Indemnity and Continental Issue Insurance
Policies to Northrop
Northrop owned property in Orange County where it
conducted various aerospace operations that used toxic chemicals
(the Property). Pacific Indemnity provided commercial general
liability coverage to Northrop for the Property from 1955 to 1974,
and Continental provided similar coverage from 1979 to 1984.
The policies issued by Pacific Indemnity required it to pay
Northrop “all sums which [Northrop] shall become legally
obligated to pay as damages because of injury to or destruction of
property, including but not limited to the loss of use of property.”
The policies also required Pacific Indemnity to defend any suit
against Northrop “alleging such injury, sickness, disease, or
destruction, and seeking damages on account thereof, even if the
suit is groundless, false or fraudulent.” The policies applied to
“accidents or occurrences wherever they may occur during the
policy period” and defined “[o]ccurrence” as “an event or a
continuous or repeated exposure to conditions which result in
injury or damage during the term of this policy.” The policies
excluded from coverage “injury to, or destruction of property

3
owned, occupied, or used by or rented to [Northrop]” and
“property in the care, custody or control” of Northrop.
The policies issued by Continental required it to pay
Northrop “all sums that [Northrop] shall become legally obligated
to pay as damages because of . . . property damage . . . caused by
an occurrence.” The policies defined “occurrence” as “an accident,
including continuous or repeated exposure to conditions, which
results in ‘bodily injury’ or ‘property damage’ neither expected
nor intended from the standpoint of the insured.” The policies
defined “property damage” to include “physical injury or
destruction of tangible property which occurs during the policy
period” and required Continental to defend Northrop in any suit
“seeking damages on account of such . . . property damage.” The
policies excluded from coverage liability for property damage to
“property owned or occupied by or rented to [Northrop]” and to
“premises alienated by [Northrop] arising out of such premises or
any part thereof.”

B. Northrop Sells the Property, and the Buyers’
Successor-in-interest Sues Northrop
In 1995 Northrop entered into an agreement to sell the
Property to Daniel and Kathy Welden, the owners of Hot Rods,
an auto parts business. The agreement included an
environmental indemnity provision that required Northrop to
indemnify the buyers and hold them harmless from and against
“any claims, demands, penalties, fees, fines, liability, damages,
costs, losses, or other expenses including without limitation
reasonable environmental consulting fees and reasonable
attorney fees arising out of (a) any Environmental Action(s)
and/or Remediation involving an environmental condition or

4
liability involving the [Property] caused by an act or omission of
[Northrop] before or after the Closing; (b) any personal injury . . .
or property damage . . . arising out of Hazardous Materials used,
handled, generated, transported, disposed, or released by
[Northrop] at the [Property] before or after the Closing.”
Hot Rods sued Northrop in 2009 and asserted eight causes
of action; an amendment filed in 2011 added another six causes of
action (the Hot Rods action). Hot Rods alleged that, at the time
Northrop sold the Property, “all parties to the transaction
recognized that the Property had been contaminated with
hazardous materials. However, remediation had taken place and
it appeared . . . that the Property was no longer significantly
contaminated. Nonetheless, monitoring wells were in place on
the Property, and remained there, as required by the California
Regional Water Quality Control Board, Santa Ana Region
(RWQCB).” Hot Rods further alleged Northrop was “aware that
the property was substantially more contaminated” than Hot
Rods or the RWQCB believed it was. Hot Rods alleged that,
when Northrop owned the Property, Northrop “generated
substantial hazardous waste on the Property, which required
remediation.” Hot Rods further alleged “hazardous materials . . .
found their way into the water table and . . . continue to
contaminate the underground water supply in the area.”
Hot Rods alleged it learned in 2007 that certain monitoring
wells on the Property showed “an increase in contaminant levels.”
According to Hot Rods, these tests showed “contamination
broadly distributed in the earth of the Property,” as well as
“substantial groundwater and earth contamination, not only
under the Property, but in the surrounding area.” In its
complaint Hot Rods acknowledged “ongoing litigation brought by

5
the Orange County Water District against Northrop and others
relating to this extensive contamination.” Indeed, the Orange
County Water District sued Northrop and other companies in
2005 seeking damages and other relief “to protect the
groundwater resources of Northern Orange County from toxic
pollution” that allegedly occurred “[o]n various dates since 1951.”
Pacific Indemnity and Continental contributed to Northrop’s
defense in that action.
As part of its efforts to remediate air and soil vapor
contamination at the Property, Northrop installed a “soil vapor
extraction (SVE) system.” Hot Rods alleged that the SVE system
was operating “at a fraction of its capacity” and that “[t]here
[was] no guarantee that the system will be completely
successful.” Hot Rods also alleged that the installation of the
SVE system caused extensive damage to the Property
necessitating a variety of repairs; that a newly discovered
underground storage tank could cause additional contamination;
and that other remediation efforts on the Property required Hot
Rods and its tenant to incur various expenses, delayed the
commencement of another tenant’s lease, and diminished the
rental and actual value of the Property.
Regarding groundwater, Hot Rods alleged that, “if the
water table rises (such as can happen during a period of heavy
rain), it is possible that the contamination in the water could be
spread to the soil higher up, adding to the contamination already
there, or possibly even undoing the benefits of remediating the
soil of the Property.” Hot Rods also alleged Northrop intended to
install certain equipment over Hot Rods’ objections to remedy the
groundwater contamination at issue in the Orange County Water

6
District litigation. Hot Rods alleged the installation of that
equipment would diminish the value of the Property.
Based on these and other allegations, Hot Rods’ first
through eighth causes of action alleged breach of contract, fraud,
negligent misrepresentation, private nuisance, public nuisance,
trespass, and violation of Business & Professions Code section
17200 (section 17200) and sought declaratory and injunctive
relief.1 As a result of the alleged breach of contract, fraud, and
negligent misrepresentation, Hot Rods sought damages for “loss
of use, diminution in value, physical damage to the [P]roperty,
loss of interest on monies expended, attorney’s fees and costs,
consultant’s fees and costs, reimbursement of the reasonable
value of time expended to address contamination, loss of present
and future economic opportunity, and unknown costs related to
the cleanup of the Property.”2
Regarding the causes of action for private and public
nuisance, Hot Rods alleged, among other things, that Northrop
attempted to remove “contaminants which have affected the soil,
water and air of the Property and surrounding land,” but that
such efforts “have caused contaminants to remain on the
Property” and “negatively affect the potability of water.” Hot
Rods alleged the nuisance could be “abated through proper
remediation efforts” and requested an order requiring Northrop
to “fully abate the nuisance, by removing all contaminants in the

1 In the amendment to the complaint, Hot Rods alleged
additional causes of action for breach of contract, fraud, negligent
misrepresentation, trespass, and declaratory and injunctive relief
that are not relevant to this appeal.

2 The causes of action for fraud and negligent
misrepresentation also sought damages for “investigatory costs.”

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Property” and to reimburse Hot Rods “for all reasonable costs
associated with any abatement ordered hereunder.”
Hot Rods’ cause of action for trespass alleged contaminants
placed on the Property, which affected the soil, water, and air,
constituted a trespass, for which Hot Rods sought, among other
things, an order requiring Northrop to remove all contaminants
in and adjacent to the Property. Hot Rods also sought an order
requiring Northrop to reimburse Hot Rods for the costs
associated with any such abatement. Hot Rods’ cause of action
for violation of section 17200 also sought an order requiring
Northrop to remove the alleged contaminants, including
contaminants “on the Property, in the surrounding land, and in
the water table.” Hot Rods’ cause of action for declaratory and
injunctive relief sought an order requiring Northrop to reimburse
Hot Rods for damages caused by Northrop’s “failure to properly
remediate the contamination,” “for costs and damages arising
from future remediation,” and “for other costs and damages
arising from the continued presence of contaminants in and on
the Property, the surrounding land, and in the water table.”
Hot Rods also requested an order “of specific performance that
Northrop is required to perform all contractual obligations under
the [1995 purchase and sale agreement], including the abatement
and remediation of the Property.”
Northrop tendered the Hot Rods action to Pacific Indemnity
and Continental in 2009. Pacific Indemnity agreed to participate
in Northrop’s defense subject to a reservation of rights;
Continental did not.3

3 Northrop also tendered the Hot Rods action to Great
American Insurance Company, which, like Pacific Indemnity,
agreed to defend Northrop subject to a reservation of rights.

8
 C. The Trial Court Enters Judgment in the Hot Rods
Action, and Northrop Appeals
Northrop and Hot Rods agreed to a trial by reference of all
issues of fact and law, under Code of Civil Procedure section 638,
and the court appointed a retired judge to serve as the referee. In
2013 the referee found that Northrop disclosed its plan to place
wells on the Property to monitor groundwater contamination to
the Weldens, but that Northrop did not know “the extent of the
environmental remediation subsequently required.” In
particular, the referee found that by 1994 Northrop had some
knowledge it contributed to groundwater contamination under
the Property, which compromised the concrete in and around a
building that had created “a barrier to the escape of soil vapor
and the leaching of contaminants in the soil to the groundwater.”
The referee also found that the presence of groundwater
contamination placed the Property “at risk of substantial
remediation activities on the surface to extract soil vapor and gas
as well as monitor ground water.” In addition, the referee found
that, since the sale of the Property, the Regional Water Quality
Control Board had “required Northrop to spend millions on
remediating soil and groundwater contamination” in light of
“developing knowledge of how much cleanup and abatement of
soil, soil gas, and groundwater must take place to safeguard the
environment.”
The referee concluded that Northrop’s conduct in failing to
disclose the extent of the soil and groundwater contamination

Great American joined Pacific Indemnity in suing Northrop in
this action, but settled its dispute with Northrop in September
2020.

9
was negligent, but not fraudulent, and that Northrop breached
the indemnity provision in the purchase and sale agreement.
The referee ordered Northrop to pay “damages suffered by Hot
Rods as a result of the contamination and required remediation
activities.” The referee also declared Northrop was responsible
for all future reasonable “‘losses, costs, and expenses incurred in
connection with contamination and remediation’” and “harm that
may take place as a result of environmental contamination
expenses . . . .” The referee awarded Hot Rods $1 million in
damages for remediation activities that impaired the use of the
Property and approximately $117,000 for lost rent, air testing,
and utilities attributable to Northrop’s activities on the Property.
Regarding compensation for lost rent, the referee stated the
evidence showed the potential tenant delayed proceeding with its
lease because of “concerns over air contamination in the portion
of the [P]roperty to be leased.” The referee denied Hot Rods’
requests for damages for diminution in the value of the Property
and for punitive damages and awarded Hot Rods attorneys’ fees
and costs. In January 2014 the trial court entered judgment
pursuant to the referee’s statement of decision.
Northrop appealed from the judgment, and the Court of
Appeal reversed the $1 million award for loss of use of the
Property and the award of attorneys’ fees and costs. (Hot Rods,
LLC v. Northrop Grumman Systems Corp. (2015)
242 Cal.App.4th 1166, 1170, 1185.) On remand the referee found
Hot Rods was still the prevailing party and again awarded
attorneys’ fees and costs. The Court of Appeal affirmed.
(Hot Rods, LLC v. Northrop Grumman Corp. (Dec. 5, 2018, No.
G054432) [nonpub. opn.].)

10
 D. Pacific Indemnity Files This Action Against Northrop
and Continental, and the Trial Court Enters
Judgment for the Insurers
In 2014 Pacific Indemnity filed this action against
Northrop and Continental seeking a declaration Pacific
Indemnity had no duty to defend or indemnify Northrop in the
Hot Rods action and asking for full or partial reimbursement for
the cost of Northrop’s defense. Alternatively, Pacific Indemnity
sought a declaration Continental had a duty to defend Northrop
and equitable contribution from that insurer. Northrop filed a
cross-complaint against the insurers alleging breach of contract
and tortious breach of the implied covenant of good faith and fair
dealing.
Pacific Indemnity and Continental filed a joint motion for
summary adjudication on the issues of duty raised by the
complaint and Northrop’s cross-complaint. The insurers argued
the allegations in the Hot Rods action did not trigger a duty to
defend Northrop because, among other reasons, Hot Rods did not
allege any harm occurring during the policy periods. In
particular, the insurers argued Hot Rods could not have alleged
harm occurring before 1995, when the Weldens purchased the
Property, and Hot Rods did not allege any actual injuries
occurred until 2007. The insurers also argued they did not have
a duty to indemnify Northrop because Hot Rods did not recover
damages for injuries that occurred during the policy periods and
the policies excluded coverage for harm to property Northrop
owned or alienated.
Northrop argued the harm alleged by Hot Rods “flows from
the premise that Northrop is responsible for the Property’s
contamination, and without that allegation, there is no basis for

11
the rest of the lawsuit.” Under California law, Northrop argued,
“‘[i]t is only the effect—the occurrence of . . . property damage
during the policy period . . . —that triggers potential liability
coverage.’” (See Montrose Chemical Corp. v. Admiral Ins. Co.
(1995) 10 Cal.4th 645, 675 (Montrose II).) Because the original
contamination occurred when the policies were in force, Northrop
argued, the Hot Rods action was covered. Northrop argued the
“owned property” and “alienated property” exclusions did not
apply because Hot Rods alleged Northrop contaminated the
groundwater, which Northrop did not own. (See Wat. Code, § 102
[“All water within the State is the property of the people of the
State, but the right to the use of water may be acquired by
appropriation in the manner provided by law.”]; AIU Ins. Co. v.
Superior Court (1990) 51 Cal.3d 807, 818, fn. 6 [same]; A-H
Plating, Inc. v. American National Fire Ins. Co. (1997)
57 Cal.App.4th 427, 442 [“It is well settled that the state and
federal governments, not [the insured], own the groundwater.”].)
Northrop conceded Hot Rods’ causes of action for fraud and
misrepresentation did not trigger the insurers’ duty to defend.
The trial court granted the insurers’ motion for summary
adjudication on their complaint and Northrop’s cross-complaint,
ruling there was no potential for coverage for two reasons. First,
the court concluded that, if it accepted Northop’s argument the
property damage occurred when Northrop owned the Property
and the insurance policies were in effect, Northrop damaged only
“its then-owned, now-alienated property,” which would mean the
owned property and alienated property exclusions applied. The
court rejected Northrop’s argument the Hot Rods action was
based in part on groundwater contamination because a different
action brought by the Orange County Water District “addressed”

12
that contamination; thus, the trial court reasoned, any additional
remediation efforts undertaken by Hot Rods were limited to
Northrop’s previously owned property. Second, the court
concluded the policies did not cover breach of contract claims
alleging Northrop failed to indemnity Hot Rods because “that
1995 obligation was incurred (and breached) well outside the
coverage period . . . the last of which was in effect until 1984.”
The parties stipulated to entry of judgment to facilitate
Northrop’s intent to appeal,4 and Northrop timely appealed from
the stipulated judgment.

DISCUSSION

A. Applicable Law and Standard of Review
“A liability insurance policy ordinarily imposes on the
insurer both a duty to defend the first-party insured and a duty
to ‘indemnify the insured . . . for harm proved within coverage.’”
(Guastello v. AIG Specialty Ins. Co. (2021) 61 Cal.App.5th 97,
102; see Certain Underwriters at Lloyd’s of London v. Superior
Court (2001) 24 Cal.4th 945, 957.) “‘“The issue is largely one of
timing—what must take place within the policy’s effective dates
for the potential of coverage to be ‘triggered’?”’” (Guastello, at
p. 102; see State of California v. Continental Ins. Co. (2012)

4 “[T]here is an exception to the rule that a party may not
appeal a consent judgment. If consent was merely given to
facilitate an appeal following adverse determination of a critical
issue, the party will not lose his right to be heard on appeal.”
(Building Industry Assn. v. City of Camarillo (1986) 41 Cal.3d
810, 817; accord, Norgart v. Upjohn Co. (1999) 21 Cal.4th 383,
400; Villano v. Waterman Convalescent Hospital, Inc. (2010)
181 Cal.App.4th 1189, 1198.)

13
55 Cal.4th 186, 196.) In general, an “‘occurrence’ policy provides
coverage for damages that occur during the policy period, even if
the claim is made after the policy has expired.” (Guastello, at
pp. 102-103; see Aerojet-General Corp. v. Transport Indemnity Co.
(1997) 17 Cal.4th 38, 56 [coverage is “triggered if specified harm
is caused by an included occurrence, so long as at least some such
harm results within the policy period,” fn. omitted].) “‘[I]t is well
established that the time of the relevant “occurrence” or
“accident” is not when the wrongful act was committed but when
the complaining party was actually damaged.’” (Guastello, at
p. 103; see Montrose II, supra, 10 Cal.4th at pp. 669; Century
Indemnity Co. v. Hearrean (2002) 98 Cal.App.4th 734, 739.) “It is
also a ‘settled rule . . . when continuous or progressively
deteriorating damage or injury first manifests itself’ the insurer
‘remains obligated to indemnify the insured for the entirety of the
ensuing damage or injury.’” (Guastello, at p. 103; accord,
Montrose II, at pp. 686-687; see Aerojet-General Corp., at p. 75
[“although the trigger of the duty to defend is limited to the policy
period, the extent of the duty to defend is not”].)
The duty to defend is broader than the duty to indemnify.
(Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287,
295 (Montrose I).) A liability insurer has a duty to defend its
insured against claims “‘that create a potential for indemnity.’”
(24th & Hoffman Investors, LLC v. Northfield Ins. Co. (2022)
82 Cal.App.5th 825, 833; see La Jolla Beach & Tennis Club, Inc.
v. Industrial Indemnity Co. (1994) 9 Cal.4th 27, 40; Montrose I, at
p. 295.) But if there is no potential for coverage, the insurer has
no duty to defend. “This standard is met ‘“if the third party
complaint can by no conceivable theory raise a single issue which
could bring it within the policy coverage.”’ [Citation.] Thus, the

14
duty to defend is ‘not without limits’; rather, it is ‘limited by “the
nature and kind of risk covered by the policy.”’” (24th & Hoffman
Investors, at pp. 833-834; see La Jolla Beach & Tennis Club, at
p. 39; Montrose I, at p. 300.) In “a ‘mixed’ claim, in which at least
one of the parts is at least potentially covered and at least one of
the parts is not, the insurer . . . has a prophylactic duty to defend
the entire ‘mixed’ claim. That is because to defend meaningfully,
it must defend immediately, and to defend immediately, it must
defend entirely.” (Aerojet-General Corp. v. Transport Indemnity
Co., supra, 17 Cal.4th at p. 60; accord, Hartford Casualty Ins. Co.
v. J.R. Marketing, L.L.C. (2015) 61 Cal.4th 988, 991-992; 24th &
Hoffman Investors, at pp. 836-837.)
“The defense duty is a continuing one, arising on tender of
defense and lasting until the underlying lawsuit is concluded
[citation], or until it has been shown that there is no potential for
coverage . . . .” (Montrose I, supra, 6 Cal.4th at p. 295; see
Scottsdale Ins. Co. v. MV Transportation (2005) 36 Cal.4th 643,
655.) “When the duty, having arisen, is extinguished by a
showing that no claim can in fact be covered, ‘it is extinguished
only prospectively and not retroactively.’” (Scottsdale Ins. Co., at
p. 655; see Buss v. Superior Court (1997) 16 Cal.4th 35, 46 [the
duty to defend “may be extinguished . . . if it is shown that no
claim can in fact be covered,” but the duty “is extinguished only
prospectively and not retroactively: before, the insurer had a duty
to defend; after, it does not have a duty to defend further”];
American Internat. Specialty Lines Ins. Co. v. Continental
Casualty Ins. Co. (2006) 142 Cal.App.4th 1342, 1370 [same].)
“‘The determination whether the insurer owes a duty to
defend usually is made in the first instance by comparing the
allegations of the complaint with the terms of the policy.’ . . . ‘We

15
resolve any doubts about whether the facts establish a duty to
defend in favor of the insured.’” (24th & Hoffman Investors, LLC
v. Northfield Ins. Co., supra, 82 Cal.App.5th at p. 834; see
Montrose I, supra, 6 Cal.4th at pp. 295, 299-300.) “‘On summary
judgment, “[t]o prevail [on a duty to defend issue], the insured
must prove the existence of a potential for coverage, while the
insurer must establish the absence of any such potential. In other
words, the insured need only show that the underlying claim may
fall within policy coverage; the insurer must prove it cannot.
Facts merely tending to show that the claim is not covered, or
may not be covered, but are insufficient to eliminate the
possibility that resultant damages (or the nature of the action)
will fall within the scope of coverage, therefore add no weight to
the scales.” [Citations.] ‘“[W]hen an insurer seeks summary
judgment on the ground the claim is excluded, the burden is on
the insurer to prove that the claim falls within an exclusion.”
[Citation.]’ [Citation.] In contrast, an insured must prove its
claim may fall within policy coverage, even when the insurer has
moved for summary judgment.’” (Ghukasian v. Aegis Security
Ins. Co. (2022) 78 Cal.App.5th 270, 274; see Montrose I, at
p. 300.) We review the trial court’s ruling on summary
adjudication de novo. (Ghukasian, at p. 274; see Dua v.
Stillwater Ins. Co. (2023) 91 Cal.App.5th 127, 135.)

B. The Complaint in the Hot Rods Action Created the
Potential for Coverage and Triggered the Duty To
Defend
Northrop argues Pacific Indemnity and Continental had a
duty to defend Northrop in the underlying Hot Rods action
because historic “groundwater remediation formed part of the

16
liability that Northrop faced” in that action and Northrop did not
own or alienate the groundwater. Northrop concedes damage to
the actual Property did not trigger the duty to defend or to
indemnify because of the owned property and alienated property
exclusions in the policies. But Northrop contends Hot Rods
sought damages and equitable relief to address past and future
harm that arose from groundwater contamination that began
during the policy periods.
Pacific Indemnity and Continental are correct that some of
the damages and other relief Hot Rods sought in the underlying
action did not appear to arise from alleged groundwater
contamination or concern injuries occurring during the policy
periods. At a minimum, however, the causes of action for public
and private nuisance, unlawful and unfair business practices,
and injunctive and declaratory relief created a potential for
coverage, which was enough to trigger the duty to defend. For
example, as stated, Hot Rods alleged there was substantial
groundwater contamination and sought equitable relief and
damages to remove all contaminants “in and adjacent to the
Property such that the remediation complies with all applicable
laws . . . regarding the area to be abated, including the
[P]roperty.” Hot Rods also sought equitable relief and “costs and
damages arising from future remediation,” including costs and
damages related to “the continued presence of contaminants in
and on the Property, the surrounding land, and in the water
table.” These allegations included the potential for liability for
remediating groundwater contamination and were not limited to
contamination of the Property or buildings on the Property.
Thus, they created the potential for coverage under the policies.
(See AIU Ins. Co. v. Superior Court, supra, 51 Cal.3d at p. 814

17
[insurance policies provided coverage for the costs of reimbursing
third parties and complying with injunctions ordering the
polluter to remediate groundwater and other contamination];
Wausau Underwriters Ins. Co. v. Unigard Security Ins. Co. (1998)
68 Cal.App.4th 1030, 1043 [complaint alleging the insureds were
liable for damages because of “possible pollution of the
groundwater” created the potential for coverage and thus
triggered the duty to defend]; A-H Plating, Inc. v. American
National Fire Ins. Co., supra, 57 Cal.App.4th at p. 442 [“because
there is no evidence that [the insured] owned, occupied, rented,
used, cared for, possessed, or controlled the groundwater, the
owned property exclusion did not eliminate the potential for
coverage” where the third party complaint alleged groundwater
contamination].)
The insurers argue the allegations in Hot Rods’ causes of
action for public and private nuisance, unlawful and unfair
business practices, and injunctive and declaratory relief “are for
Northrop’s actions after Hot Rods demanded in 2007 that it do
the remediation” and thus “are not concerned with historical
contamination.” The insurers point to allegations in the causes of
action for private and public nuisance that “currently” Northrop
has “caused to be placed on the Property[] contaminants which
have affected” the groundwater, suggesting Hot Rods sought only
damages and equitable relief for “post-policy damages.” But even
if we read the word “currently” to limit the scope of those
allegations to Northrop’s post-2007 actions, that qualification
does not appear in the causes of action for violation of section
17200 and for declaratory and injunctive relief. For example, the
cause of action for violation of section 17200 is based on
Northrop’s alleged “deposit . . . of contaminants” in the

18
groundwater, which occurred long before 2007. And the cause of
action for declaratory and injunctive relief (which the insurers do
not address) is based on Northrop’s alleged “failure to properly
remediate the contamination to the Property,” resulting in the
“continued presence of contaminants in and on the Property” and
in the groundwater. Hot Rods alleged those contaminants
originated from Northrop’s activities on the Property, which in
another context the insurers have conceded occurred during the
policy periods.5
The insurers also argue that the Orange County Water
District action concerned “historical groundwater contamination”
and that “Hot Rods did not sue Northrop to clean up the
historical groundwater contamination, as OCWD did.” As
discussed, the insurers read the allegations in the Hot Rods
action too narrowly, and, as Northrop argues, the existence of the
Orange County Water District action did not preclude Hot Rods
from seeking damages from Northrop relating to the removal of
contaminants from the groundwater. Separate and apart from
the Orange County Water District action, the allegations in the
Hots Rods action could have resulted in damages for
“investigating, monitoring, and initiating cleanup” of
groundwater contamination, for which Northrop is responsible.
(See AIU Ins. Co. v. Superior Court, supra, 51 Cal.3d at p. 816;
see also Wausau Underwriters Ins. Co. v. Unigard Security Ins.
Co., supra, 68 Cal.App.4th at p. 1044 [damages requested in a
third party complaint are not necessarily limited to

5 The insurers agreed to defend Northrop in the Orange
County Water District action, where the government claimed
Northrop contaminated the groundwater at the Property during
the policy periods.

19
reimbursement for remediation ordered by a government
agency].)
Finally, the insurers argue there is no potential for liability
because “it is not conduct during the policy period that triggers
coverage, but when the complaining party (Hot Rods) was
damaged and what damages the complaining party alleges.” The
insurers’ argument, however, fails to account for Hot Rods’
allegations of “continuous or progressively deteriorating”
property damage that began during the policy periods and
“trigger[ed] potential liability coverage.” (Montrose II, supra,
10 Cal.4th at p. 675.) Thus, a case the insurers cite and attempt
to distinguish—Garriott Crop Dusting Co. v. Superior Court
(1990) 221 Cal.App.3d 783—actually supports finding a duty to
defend Northop in the Hot Rods action. In Garriott the City of
Bakersfield bought property adjacent to the insured’s property
15 years after the insured’s acts or omissions contaminated its
property and adjacent properties, including the one purchased by
the City. (Id. at p. 786.) The City sued the insured for damages
and injunctive relief, and the insured tendered the complaint to
its insurers. The court in Garriott stated that the question raised
by the policy language for purposes of determining whether the
insurers had a duty to defend the insured against the City’s
action was “not when the City was damaged; it is, instead, when
the property now owned by the City was damaged.” (Id. at
p. 791; see Montrose II, at pp. 688-689 [insurer had a duty to
defend where the continuing property damage began before the
plaintiff in the underlying action purchased the contaminated
property]; Standard Fire Ins. Co. v. Spectrum Community
Assn. (2006) 141 Cal.App.4th 1117, 1129 [insurers had a duty to
defend a lawsuit by a condominium association after the policies

20
ended, where the alleged property damage arose from a
construction defect that occurred during the policy periods];
Century Indemnity Co. v. Hearrean, supra, 98 Cal.App.4th at
pp. 740-741 [insurers had a duty to defend a lawsuit by a third
party for construction defect that occurred during the policy
periods, even though the third party did not purchase the
property until after the policy expired].)

C. Northrop Has Not Shown the Trial Court Erred in
Granting the Insurers’ Motion for Summary
Adjudication Regarding the Duty To Indemnify
The trial court did not address whether Pacific Indemnity
and Continental had a duty to indemnify Northrop because the
trial court found the insurers had no duty to defend Northrop in
the Hot Rods action. (See Certain Underwriters at Lloyd’s of
London v. Superior Court, supra, 24 Cal.4th at p. 958 [“Where
there is a duty to defend, there may be a duty to indemnify; but
where there is no duty to defend, there cannot be a duty to
indemnify.”].) In its opening brief Northrop does not argue the
trial court erred in granting the insurers’ motion for summary
adjudication on the duty to indemnify. The only mention in
Northrop’s opening brief of the duty to indemnify is in support of
its discussion of the duty to defend.6 Northrop does not argue

6 Northrop does state, in the section of its opening brief titled
“Principles of Insurance Policy Interpretation,” that it “also seeks
indemnification promised under the Policies for the sums
awarded to Hot Rods,” but Northrop does not explain why or how
the trial court erred. (See Golden Door Properties, LLC v.
Superior Court (2020) 53 Cal.App.5th 733, 786 [“issues not
addressed as error in a party’s opening brief with legal analysis
and citation to authority are forfeited”]; Benach v. County of Los

21
that, if we reverse the order on the (broader) duty to defend, we
should reverse the order on the duty to indemnify. Therefore,
Northrop forfeited any argument the trial court erred in granting
the motion on the latter issue. (See Doe v. McLaughlin (2022)
83 Cal.App.5th 640, 653 [“An appellant abandons an issue by
failing to raise it in the opening brief.”]; Western Growers Assn. v.
Occupational Safety & Health Standards Bd. (2021)
73 Cal.App.5th 916, 947 [same].) The forfeiture rule applies even
though the insurers discuss the duty to indemnify in their
respondents’ brief because Northrop precluded the insurers from
responding to the argument Northrop made for the first time on
that issue in its reply brief. (See Bitner v. Department of
Corrections & Rehabilitation (2023) 87 Cal.App.5th 1048, 1065,
fn. 3 [“‘It would be unfair to permit an appellant to wait to argue
his substantive points until after the respondent exhausts its
only opportunity to address an issue on appeal.’”]; Dameron
Hospital Assn. v. AAA Northern California, Nevada & Utah Ins.
Exchange (2022) 77 Cal.App.5th 971, 982 [“‘“To withhold a point
until the closing brief would deprive the respondent of his
opportunity to answer it or require the effort and delay of an
additional brief by permission.”’”]; Vines v. O’Reilly Auto
Enterprises, LLC (2022) 74 Cal.App.5th 174, 190 [argument in
the reply brief “was made too late to be considered”].)

Angeles (2007) 149 Cal.App.4th 836 [“[a]n appellant must provide
an argument and legal authority to support his contentions,” and
when the appellant makes an argument, “but fails to support it
with reasoned argument and citations to authority,” it is
forfeited].) And in the next sentence of its opening brief Northrop
makes clear it is arguing only, again, the duty to defend is
broader than the duty to indemnify.

22
 In any event, Northrop has not demonstrated the damages
Hot Rods obtained in the underlying action are covered by the
policies. Northrop argues the referee’s “reasoning in fixing
liability against Northrop had as much to do with groundwater
contamination as it did with contamination of the land,” but the
referee made clear that at least two categories of the award
pertained to air contamination, not groundwater contamination.
These included $105,600 in lost rent due to a concern by Hot
Rods’ tenant “over air contamination” and a $10,000 “air study.”
Northrop does not argue or cite evidence that groundwater
contamination caused Hot Rods’ tenant to delay its lease or
prompted the air study Hot Rods commissioned. It is possible the
remaining $1,450 for “electricity and water used by Northrop on
the site” related in some way to groundwater contamination, but
again, Northrop has not shown the trial court erred in concluding
the insurers did not have a duty to indemnify Northrop for that
amount. Northrop does not argue or cite evidence that
Northrop’s utilities usage related to groundwater contamination
as opposed to air or property contamination. Even though the
insurers had the burden in the trial court to show the owned
property exclusion barred coverage, “‘[o]n review of a summary
judgment, the appellant has the burden of showing error.’”
(Abdulkadhim v. Wu (2020) 53 Cal.App.5th 298, 301; see Vasquez
v. Department of Pesticide Regulation (2021) 68 Cal.App.5th 672,
685 [“Although we independently consider whether summary
judgment was properly granted, ‘“it is the appellant’s
responsibility to affirmatively demonstrate error,”’ and ‘review is
limited to issues adequately raised and supported in the
appellant’s brief.’”].)

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 DISPOSITION

The judgment is reversed. The trial court is directed to
vacate its order granting the insurers’ motion for summary
adjudication on their cause of action regarding the duty to
defend, and to enter a new order denying the motion on that
cause of action and granting the motion on the insurers’ cause of
action regarding the duty to indemnify. The trial court is also
directed to enter an order denying the insurers’ motion for
summary adjudication on the causes of action in Northrop’s cross-
complaint. Northrop is to recover its costs on appeal.

SEGAL, J.

We concur:

PERLUSS, P. J.

FEUER, J.

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