The central legal issue in dispute revolves around the characterization and treatment of Montgomery Ward's "self$-$insured retentions" $($SIRs$)$ in the context of comprehensive general liability policies. The trial court determined that these SIRs, which represented the amounts for which Montgomery Ward retained responsibility under its policies, were to be treated as equivalent to primary insurance. According to the trial court's application of legal principles, the exhaustion of all primary insurance was deemed necessary before any excess insurer had an obligation to indemnify Montgomery Ward.

In essence, the question at the heart of the legal dispute is whether Montgomery Ward should be required to exhaust its SIRs under potentially applicable policies before the excess insurers$$Imperial Casualty and Indemnity Company $($Imperial$),$ The Home Insurance Company $($Home$),$ Century Indemnity Company $($Century$),$ and Travelers Indemnity Company $($Travelers$)$have any duty to provide indemnification. This determination has significant implications for the sequence in which insurance coverage is accessed and the corresponding obligations of the insurers.

The legal issue further involves the interpretation of the comprehensive general liability policies issued between $1962$ and $1976$ and the application of principles regarding the exhaustion of primary insurance before excess coverage kicks in$.$ The resolution of this dispute would impact the allocation of responsibility for defense and indemnity costs incurred by Montgomery Ward due to alleged environmental contamination at its automotive service centers in California.

The Court of Appeal's eventual decision to reverse and remand the case suggests a divergence from the trial court's interpretation, signaling the need for a reevaluation of the legal principles and their application to Montgomery Ward's self$-$insured retentions. The specifics of the Court of Appeal's reasoning and the ultimate resolution of this pivotal legal issue are not provided in the available excerpt.