City of Carlsbad and Carlsbad Municipal Water District v. Pacific Indemnity, et al.
San Diego Superior Court, 37-2011-00092451-CU-IC-CTL
City of Carlsbad and Carlsbad Municipal Water District
Great Lakes Reinsurance (UK)
Facts and Background:
The La Costa de Marbella Condominium Complex is located on La Costa Avenue in the City of Carlsbad, California. Due, in part, to the City’s failure to maintain the water system, in March 2005, an earthen slope became saturated with water and failed, resulting in a landslide that damaged or destroyed a number of condominium units and common areas. The City and the Carlsbad Municipal Water District (CMWD) were sued in four separate lawsuits, which alleged, in pertinent part, that unstable soils of which it had long been aware led to leaks in water pipes which, in turn, caused a landslide to occur. These lawsuits resolved for $11 million.
The CMWD tendered its insurance claim to Great Lakes, which declined to either defend or indemnify it based on the assertion that a “continuous trigger” analysis did not apply because the injury was a single event occurring in 2005 after its policy period ended, and that responsibility for the loss had to be allocated between the City and the Water District. Great Lakes insured both the City and the Water District. The other defendants insured only the City.
An earlier settlement of defense costs of $4.7 million was reached in City of Carlsbad v. Insurance Company of the State of Pennsylvania, Allianz Global Risks U.S. Insurance Company, San Diego Superior Case No. 37-2007- 00072351-CU-IC-CTL, arising out of the same set of facts. AIG paid $3.1 million in defense fees and indemnification. Plaintiff also received a settlement of $3 million from one of the other insurers named as a defendant in this case.