Joseph Aggio owned a 156-acre parcel of land in Cotati, Calif., which was leased to the Cotati Rod and Gun Club. The club used the land for shooting ranges from 1958-98. From 1981-85, Sequoia Insurance Co. provided liability insurance for Aggio on the property. In 1988, Aggio died, leaving the property to his three children.

At some point in time, it was discovered that the gun club’s operations had contaminated the land with lead. In 1995, the gun club agreed to investigate and decontaminate the property under a voluntary agreement with the state of California and its Department of Toxic Substances Control, as well as the federal Environmental Protection Agency. In 2005, Aggio’s children spent more than $1 million to carry out the lead remediation.

Afterwards, Aggio’s children filed suit to recover the costs of cleaning up the lead contamination from their father’s estate, seeking reimbursement from Aggio’s insurance company. At the district court level, summary judgment was granted in favor of the insurer, on grounds that the liability insurance policies’ "owned property" exclusion precluded coverage from cleaning up property owned by the insured, even where that cleanup prevented the property from contaminating other properties not owned by the insured.

Additionally, the district court ruled that the Aggio family’s voluntary cleanup of the property did not constitute damages covered by the insurance company, and that the policies’ "business pursuits" exclusion also barred coverage.

Aggio’s children appealed, and the Ninth Circuit Court of Appeals upheld the lower court’s ruling.

The Aggio family’s primary contention was that, "Under California law, where there is potential or threatened damage to the property of others, the ‘owned property’ exclusion does not apply." Under California law, the proper decision rule for whether the "owned property" exclusion applies, the Court of Appeals explained, is whether the cleaned-up contamination posed an "imminent" danger of polluting a third party’s property at the time the remediation took place.

While the Aggios provided plenty of evidence that there was a potential for third-party contamination, the appellate court went on, "A 1996 environmental assessment of the site prepared by the California Department of Toxic Substances Control ("DTSC") specifically stated: ‘No immediate potential hazard to health or the environment exists at the site which necessitates an emergency removal action.’ That same report found no contamination of groundwater and ‘very little potential’ for any airborne transmission of the contaminants."

The Aggios offered a 1998 DTSC remedial action work plan that suggested there might be significant risks to marine creatures in the drainage ditches that ran from the Aggio property onto third parties’ properties, but the court noted that that same 1998 document clearly stated that "there has been no significant impact on the water and sediment of the drainage ditch."

Accordingly, the Court of Appeals found, the Aggios had produced no evidence that the lead contamination they cleaned up posed any imminent threat of contaminating third parties’ properties. As a result, the "owned properties" exclusion did apply to preclude the Aggio children from recovering their cleanup costs from Sequoia, their father’s insurer. The district court’s ruling was upheld.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Ask her a real estate question online or visit her Web site,


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