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January 29, 1987

Washington Occupational Health Associates, Inc., Plaintiff,
Twin City Fire Insurance Co., and Pennsylvania Casualty Company, Defendants

The opinion of the court was delivered by: PRATT

 John H. Pratt, United States District Judge

 Washington Occupational Health Associates (WOHA) seeks a declaratory judgment against two insurance companies which have issued policies to WOHA. The judgment sought would determine the rights and responsibilities of each party in the defense of a case pending against WOHA in California Superior Court. All three parties have submitted cross motions for summary judgment, as well as a list of stipulated facts. The matter has been fully briefed.


 In May of 1983, an electrical transformer caught fire and exploded in a San Francisco office building, contaminating the building with toxic polychlorinated biphenyls (PCBs). WOHA, a Washington, D.C.-based occupational and environmental health consulting business, was engaged to monitor the health of persons who may have been exposed to PCBs and other toxic substances as a result of this accident. In performing its contractual duties, WOHA conducted blood and tissue tests and analyses of those people entering the contaminated building. See Complaint para. 10; Stip. Facts para. 4.

 Eighteen building engineers who were tested by WOHA brought suit in California Superior Court, claiming that they were exposed to toxic substances in the office building. Id. These plaintiffs have named WOHA as one of the defendants, alleging that WOHA tested them for the wrong PCB contaminant and also bringing claims of fraud and misrepresentation, lack of consent, and violations of a California human experimentation law. Second Amended Complaint, Ahrens v. Pacific Gas and Electric Co., No. 816843, Superior Court of California, City and County of San Francisco.

 After being named as a defendant in the Ahrens case, WOHA notified both Twin City Fire Insurance Company (Twin City) and Pennsylvania Casualty Company (PHICO), each of which had issued insurance policies to WOHA. Stip. Facts paras. 7, 17, 29, 35. *fn1" Twin City began defending the Ahrens litigation, while reserving its rights to contest its liability under the policy issued to WOHA. Stip. Facts para. 30. PHICO initially denied responsibility on the grounds that the events occurred prior to the effective date of the PHICO policy; it later also denied both coverage and defense obligations on the grounds that the Ahrens claims were not covered by its policy. Stip. Facts paras. 36, 39, 41.

 This action is an attempt by WOHA to resolve some of the issues raised by its insurers and establish coverage for the Ahrens litigation. The parties have all moved for summary judgment on the four basic issues that have been raised, all of which can be decided as a matter of law. These issues are:

 (1) whether the Twin City policy deductible of $ 10,000 applies to each claim or to the aggregate of claims. WOHA seeks a declaration that only one deductible applies to the entire Ahrens case, while Twin City argues that the deductible applies to each of the 18 Ahrens plaintiffs.

 (2) Whether PHICO has a duty to defend the Ahrens suit, a finding urged by WOHA. On the other hand, PHICO seeks a ruling that the Ahrens allegations do not fall within its policy's coverage of "medical incidents" only, and that it therefore has no duty to defend.

 (3) The issue between Twin City and PHICO as to which is the excess carrier and which is the primary carrier for WOHA. Both insurance policies have "other insurance" clauses upon which each insurer places reliance.

 (4) Finally, WOHA's alleged entitlement to attorneys' fees and costs from both defendants for its expenses in bringing this action to establish its right to coverage. Both insurers have opposed this portion of WOHA's summary judgment motion, claiming that under the American Rule parties are required to bear their own expenses.


 Standard for Summary Judgment

 Under Federal Rule of Civil Procedure 56(c), summary judgment may be entered in an action if there is no genuine issue of material fact *fn2" and the moving party is entitled to judgment as a matter of law. All four of the issues raised by the cross-movants are legal questions concerning the construction of the two insurance policies and shifting of legal fees. These legal questions do not raise disputed issues of fact. See Owens-Illinois, Inc. v. Aetna Casualty and Surety Co., 597 F. ...

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