32 ELR 20533 -- Aerojet-General Corp. v. American Excess Insurance Co.

Aerojet-General Corp. v. American Excess Insurance Co.

No. C030874 (117 Cal. Rptr. 2d 427) (COURT OF APPEAL OF CALIFORNIA February 28, 2002)

ELR Digest

The court holds that res judicata bars a manufacturer's declaratory relief action seeking a declaration that insurers must indemnify the manufacturer for claims brought against it for harm caused by the discharge of chemicals to groundwater at a California site. In a prior action, a court held that the insurers had no duty or obligation to indemnify the manufacturer for any liability incurred with respect to the alleged discharge of waste materials. The manufacturer now claims that the prior decision does not apply to new claims because the new claims address ammonium perchlorate, which was not one of the chemicals at issue in the prior action. The court first holds that the prior decision specifically covers the ammonium perchlorate claims. The prior action applied to all past and future claims arising from the release of all waste materials at the site. Although the manufacturer claims that the prior decision is too broad and covers matters not litigated in that action, the manufacturer cannot now object to that decision. It should have challenged the breadth of the prior judgment while the case was pending, but it failed to do so. The court next holds that although state law divides res judicata for declaratory judgments into two aspects--claim preclusion and issue preclusion--for certain declaratory judgments, a declaratory judgment is final and conclusive for those matters that appear on the face of the judgment. Here, even though the prior decision was a declaratory judgment, it conclusively addressed the matter of the insurers' duty to indemnify the manufacturer for any liability arising from the alleged contamination at the site. Further, a declaratory judgment's conclusive claim preclusion effect is not only limited to issues actually litigated and determined, but also to matters stated in the declaratory judgment. Thus, res judicata for declaratory judgments is not limited to preclusion of those issues actually litigated. Lastly, the court holds that even assuming that the prior decision is only conclusive as to issues actually litigated, the manufacturer's present action would be barred because the gravamen of the action--whether the insurers had an obligation to provide coverage for all chemical releases at the site--is the same in both actions.

The full text of this decision is available from ELR (29 pp., ELR Order No. L-467).

Counsel for Plaintiff
Scott P. Devries
Nossaman, Guthner, Knox & Elliot
915 L St., Ste. 1000, Sacramento CA 95814
(916) 442-8888

Counsel for Defendants
Rebecca Sanhueza
Gibson, Dunn & Crutcher
333 S. Grand Ave., Los Angeles CA 90071
(213) 229-7000

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]