City of San Buenaventura v. The Ins. Co. of Pa.

"Continuous exposure" and "continuous damage" language in an insurance policy will not provide a remedy for an occurrence arising prior to coverage.

The City of San Buenaventura ("City") brought declaratory judgment actions against the Insurance Company of the State of Pennsylvania and Great Lakes Reinsurance PLC (collectively, "Insurers") to establish insurance coverage and a "breach of contract and breach of the covenant of good faith and fair dealing." In 2004, the City was sued by low-income condominium buyers that alleged the City, among other things, "negligently failed to tell them about the low-income price ceilings." In 2007, after exhausting its entire self-insurance policy, the City sought coverage from the insurers under policies covering July 2002 to July 2003 and July 2003 to July 2004. The insurers rejected the City's request, claiming the City's negligent conduct occurred prior to the policy periods. The City's action against the insurers was dismissed on summary judgment. On appeal, the City argued that the insurers had a duty to defend and/or duty to indemnify because the damage to the buyers continued during the policy period. The Ninth Circuit held that the specific language of the insurance contracts precluded coverage. Specifically, the language premised coverage only for damage "first arising out of an Occurrence during the Policy Period...." Since the City's negligent conduct predated the insurance policy, the insurers were not required to defend or indemnify. AFFIRMED.