The insured's effort to expand the California Supreme Court's decision in Montrose did not survive the Ninth Circuit's review. City of San Buenaventura v. The Insurance Company of the State of Pennsylvania, 2013 U.S. App. LEXIS13084 (9th Cir. June 26, 2013).

   The City of San Buenaventura contracted with a developer to build condominium units for low and moderate income residents. Sale and resale prices were restricted by ceilings governing the development. 

   In 2004, a number of buyers sued the City and the developer, alleging that they bought low-income condominiums in 2001 without being told that their condominiums were subject to low-income ceilings. The alleged they had paid prices higher than the ceilings. They argued that the City had negligently failed to tell them about the low-income price ceilings. 

   The condominium buyers sued the City. In 2007, three years after the underlying suit began, the City tendered the action to its two insurers. Both insurers denied coverage, saying that the alleged negligence occurred prior to their policy periods.

   The City sued its two insurers. Summary judgment was granted by the trial court to both insurers because any occurrence took place prior to the policy periods.

   The Ninth Circuit affirmed. It was undisputed that the City's alleged negligence occurred in 2001, prior to the policy periods. The City argued that because the condominium buyers continued to suffer under the burden of having overpaid and having their resale prices restrained by a ceiling, the "occurrence" continued into the policy periods. To make this argument, the City relied upon Montrose Chemical Corp. v. Admiral Ins. Co., 913 P.2d 878 (Cal. 1995). 

   The court felt the City stretched Montrose too far. The policy language was more restrictive that that used in the Montrose case. Here, the policy promised indemnification for loss caused by property damage "first arising out of an Occurrence during the Policy Period." The Montrose policies required only damages during the policy period, but the Great Lakes policy required the occurrence causing the damage to have been during the policy period.

   Here, the condominium buyers alleged that they were damaged by the City's negligence when they purchased their units in early 2001. This was before the insurers' policy periods.