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Karen Kaika <br /> August 7, 1996 <br /> Page 9 <br /> administrative remedies or go directly to litigation." Id. The California Supreme <br /> Court expressed a similar public policy rationale when it concluded in AIU Insurance <br /> ComRany v. FMC Corporation (1990) 51 Cal.3d 807, that coverage should not depend <br /> on the remedies sought by the government to clean up contaminated property under <br /> CERCLA and similar state statutes; i.e., an injunction mandating the responsible party <br /> to clean up the site versus a suit by the government to recover sums expended by the <br /> government to clean up the property. <br /> All of the district court opinions in California have also held that under <br /> California law, administrative proceedings constitute a "suit" triggering an insurer's <br /> duty to defend. See, County of Santa Clara v. U.S. Fidelity and Guarantee Company <br /> (N.D. California 1994) 859 F.Supp. 396, 397; County of Santa Clara Y. U.S. Fidelity <br /> and Guarantee Company (N.D. California 1993) 993 U.S. Dist.; Lexis, 19019 (holding <br /> that the insurance of a remedial action order by the Cal EPA constituted a "suit" <br /> triggering the insurer's duty to defend; McDonnell Douglas Corp. v. Allstate Insurance <br /> Company CV-93-6290 (C.D. Cal. October 27, 1994) (holding that administrative <br /> enforcement actions constitute a "suit"); Southwest Coaches, Inc. v. American NAT <br /> Fire Ins. Compmy No. 94-1563 J (S.D. Cal. March 27, 1995) (holding that insured's <br /> receipt of a corrective action order from the County of San Diego Department of <br /> Environmental Health Services constituted a "suit" triggering the insurer's duty to <br /> defend). <br /> Based on the foregoing, it is clear that TFS's receipt of corrective action orders <br /> from the PHS/EHD and the SWRCB constitute a suit thereby triggering Royal's and <br /> Continental's duty to defend. <br /> Duty to Pay for Investigation and Technical Proposals <br /> As part of its duty to defend, Royal must also pay for costs and fees associated <br /> with investigation of the contamination of the site and for preparation of remediation <br /> proposals in response to the directives of the agencies. <br /> The principal that an insurer must pay, as part of its defense obligation the cost <br /> of investigating the underlying claim, has long been established in traditional insurance <br /> coverage settings. <br /> CT iMTCJIWTInCCH .O 11l1QQH I.IHTInTM C�•OT QA, )n qnH <br />