Justia Insurance Law Opinion Summaries

Griffith Foods International Inc. and Sterigenics U.S. operated a medical supply sterilization plant in Willowbrook, Illinois, emitting ethylene oxide (EtO) over 35 years. In 2018, a report linked these emissions to high cancer rates in the area, leading to over 800 lawsuits against the companies. The plaintiffs alleged that the companies knowingly emitted dangerous levels of EtO, causing various illnesses, including cancer.The United States District Court for the Northern District of Illinois handled the insurance dispute between Griffith, Sterigenics, and National Union Fire Insurance Company. Griffith and Sterigenics sought a declaration that National Union had a duty to defend them under their commercial general liability (CGL) policies. The district court ruled in favor of Griffith and Sterigenics, determining that the pollution exclusion in the CGL policies did not apply because the emissions were authorized by a permit from the Illinois Environmental Protection Agency (IEPA).The United States Court of Appeals for the Seventh Circuit reviewed the case. The court focused on whether the pollution exclusion in the CGL policies applied to the emissions of EtO. The court noted that the Illinois Supreme Court's decision in American States Insurance Co. v. Koloms interpreted the pollution exclusion to apply to traditional environmental pollution. However, an Illinois appellate court decision in Erie Insurance Exchange v. Imperial Marble Corp. suggested that emissions authorized by a regulatory permit might not constitute traditional environmental pollution.Given the conflicting interpretations and the significant implications for the insurance industry, the Seventh Circuit decided to certify the question to the Illinois Supreme Court. The court sought clarification on the relevance of a permit or regulation authorizing emissions in assessing the application of a pollution exclusion within a standard-form CGL policy. View "Sterigenics U.S., LLC v National Union Fire Insurance Company of Pittsburg" on Justia Law

Griffith Foods International and Sterigenics U.S. operated a medical supply sterilization plant in Willowbrook, Illinois, emitting ethylene oxide (EtO) over a 35-year period. In 2018, a report revealed high cancer rates in Willowbrook, allegedly due to these emissions. Griffith and Sterigenics faced over 800 lawsuits from residents claiming bodily injuries, including cancer, caused by the emissions. Griffith had obtained permits from the Illinois Environmental Protection Agency (IEPA) for the plant's operation, which included EtO emissions.The United States District Court for the Northern District of Illinois reviewed the case. Griffith and Sterigenics sought declarations that National Union Fire Insurance Company had a duty to defend them under their commercial general liability (CGL) policies. The district court ruled in favor of Griffith and Sterigenics, determining that the pollution exclusion in the CGL policies did not apply because the emissions were authorized by IEPA permits. The court relied on the Illinois appellate decision in Erie Insurance Exchange v. Imperial Marble Corp., which found ambiguity in the pollution exclusion when emissions were permitted by regulatory authorities.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court acknowledged the importance of the pollution exclusion in CGL policies and the precedent set by the Illinois Supreme Court in American States Insurance Co. v. Koloms. The Seventh Circuit noted the conflicting interpretations between Koloms and Imperial Marble regarding the scope of the pollution exclusion. Given the significant implications for Illinois law and the insurance industry, the Seventh Circuit decided to certify the question to the Illinois Supreme Court to determine the relevance of regulatory permits in applying the pollution exclusion in CGL policies. View "Griffith Foods International Inc. v National Union Fire Insurance Company of Pittsburg" on Justia Law

The case involves an insurance contribution action under the Oregon Environmental Cleanup Assistance Act (OECAA). The parties are insurers who issued comprehensive general liability (CGL) insurance policies to Schnitzer Steel Industries, Inc., and Schnitzer Investment Corporation. Schnitzer was named by the federal government as potentially responsible for contamination at the Portland Harbor Superfund Site. Continental Casualty Company and Transportation Insurance Company (together, Continental) paid defense costs on behalf of Schnitzer and sought contribution from Schnitzer’s other insurers, including Employers Insurance Company of Wausau (Wausau) and Century Indemnity Company (Century).The Multnomah County Circuit Court ruled that Wausau was still liable for contribution despite a settlement agreement with Schnitzer. The court found that Schnitzer had already obtained a federal judgment against Continental for all unpaid defense costs, and thus Schnitzer no longer had a claim for those costs against Wausau. The Court of Appeals reversed, holding that Wausau’s settlement with Schnitzer was a settlement of the environmental claim, which barred Continental’s contribution claim.The Oregon Supreme Court reviewed the case and reversed the Court of Appeals' decision. The Supreme Court held that the term "the environmental claim" in ORS 465.480(4)(a) refers to the specific environmental claim that has been paid by the targeted insurer. Since Schnitzer had already recovered the defense costs from Continental, Schnitzer had no remaining claim for those costs against Wausau that it could settle. Therefore, Wausau’s settlement did not extinguish Continental’s right to seek contribution for the defense costs it had paid. The judgment of the circuit court was affirmed, and the case was remanded for further proceedings. View "Continental Casualty Co. v. Argonaut Insurance Co." on Justia Law

A paint company was sued by Santa Clara County, California, along with other governmental entities, for promoting and selling lead-based paint, which was alleged to have created a public nuisance. The lawsuit sought abatement, not damages, to mitigate the hazards of lead paint. The California trial court ordered the paint companies to pay $1.15 billion into an abatement fund, later reduced to $409 million, to be used for future lead hazard control measures. The paint companies eventually settled, agreeing to pay $101,666,667 each into the fund.The paint company then sought indemnification from its insurers in the Cuyahoga County Court of Common Pleas, arguing that the payment into the abatement fund constituted "damages" under their insurance policies. The trial court granted summary judgment in favor of the insurers, concluding that the payment was not for "damages" as it was intended to prevent future harm rather than compensate for past harm.The Eighth District Court of Appeals reversed the trial court's decision, holding that the payment into the abatement fund did qualify as "damages" under the insurance policies, as it was essentially to reimburse the government for its ongoing efforts to remediate lead paint hazards.The Supreme Court of Ohio reviewed the case and reversed the Eighth District's decision, reinstating the trial court's summary judgment in favor of the insurers. The Supreme Court held that the payment into the abatement fund was not "damages" under the insurance policies because it was intended to prevent future harm rather than compensate for past harm. The court emphasized that the abatement fund was an equitable remedy aimed at eliminating the hazard of lead paint to prevent future injuries, not to compensate for any prior harm. View "Sherwin-Williams Co. v. Certain Underwriters at Lloyd's London" on Justia Law

The City and County of Honolulu and the County of Maui sued several fossil fuel companies, including Aloha Petroleum, Ltd., for climate change-related harms. Aloha sought a defense in these suits from two insurance companies, National Union Fire Insurance Company of Pittsburgh, PA, and American Home Assurance Company, both subsidiaries of American Insurance Group (AIG). The insurance companies had issued several commercial general liability (CGL) insurance policies to Aloha’s parent company. The case revolves around whether these policies obligate AIG to defend Aloha in the counties’ lawsuits.The United States District Court for the District of Hawai‘i reviewed the case and certified two questions to the Supreme Court of the State of Hawai‘i. The first question asked whether an “accident” includes an insured’s reckless conduct. The second question asked whether greenhouse gases (GHGs) are “pollutants” as defined in the policies’ pollution exclusions. The District Court noted that the counties’ lawsuits allege Aloha acted recklessly by emitting GHGs and misleading the public about the dangers of these emissions.The Supreme Court of the State of Hawai‘i answered both certified questions. The court held that an “accident” includes reckless conduct, aligning with its precedent in Tri-S Corp. v. Western World Ins. Co., which held that recklessness may be an “occurrence.” The court clarified that an “accident” includes conduct where harm was not intended or practically certain. The court also held that GHGs are “pollutants” under the insurance policies’ pollution exclusion clause, as they are “gaseous” “contaminants” that cause “property damage” when released into the atmosphere. The court concluded that the pollution exclusion bars coverage for emitting or misleading the public about emitting GHGs. View "Aloha Petroleum, LTD. v. National Union Fire Insurance Company of Pittsburgh, PA." on Justia Law

This case involves a catastrophic wildfire that occurred in 2016 in the Great Smoky Mountains National Park in Eastern Tennessee. The fire spread into Gatlinburg and Sevier County, resulting in the destruction of over 2,500 structures and the death of 14 people. The appellant insurance companies paid claims to policy holders and then filed claims under the Federal Tort Claims Act (FTCA) against the National Park Service (NPS), alleging negligence for failure to follow multiple mandatory fire-management protocols and for the failure to issue mandatory warnings to the public.The government moved to dismiss the case for lack of subject-matter jurisdiction, arguing that it was immune from suit under the discretionary-function exception to the FTCA. The district court granted the motion on all three claims relating to fire-management protocols, but denied the motion on claims relating to the duty to warn. The insurance companies appealed, and the government cross-appealed.The United States Court of Appeals for the Sixth Circuit reversed the district court's order granting the government's motion to dismiss the insurance companies' incident-command claim. The court affirmed the district court's dismissal of the fire-monitoring claim and the Wildland Fire Decision Support System (WFDSS) claim as part of the discretionary fire-suppression decision-making process. The court also affirmed the district court's denial of the government's facial challenge to the insurance companies' duty-to-warn claims, and remanded these claims for further proceedings. View "American Reliable Insurance Co. v. United States" on Justia Law

Gold Coast Commodities, Inc., a company that converts used cooking oil and vegetable by-products into animal feed ingredients, was insured under a policy by Travelers Casualty and Surety Company of America. The policy included a pollution exclusion clause. During the policy period, the City of Brandon and the City of Jackson filed suits against Gold Coast, alleging that the company dumped corrosive, high-temperature wastewater into their respective sewer systems, causing damage. Travelers denied coverage for these claims, citing the policy's pollution exclusion clause. Gold Coast appealed this decision, arguing that Travelers had a duty to defend them in these lawsuits and reimburse them for their defense costs.The United States Court of Appeals for the Fifth Circuit upheld the lower court's decision, finding that the claims against Gold Coast were clearly and unambiguously excluded from coverage based on the policy's pollution exclusion. The court noted that the pollution exclusion clause was not ambiguous in this context, as there was no reasonable interpretation of the wastewater's form or qualities that would conclude that it was not an irritant or contaminant, as defined in the policy.The court concluded that because the claims fell outside the policy's coverage, Travelers had no duty to defend or indemnify Gold Coast and its principals in relation to the lawsuits brought against them by the City of Brandon and the City of Jackson. Therefore, the court affirmed the decision of the district court, which had denied Gold Coast's motions for partial judgment on the pleadings and had granted Travelers' motion for partial summary judgment. View "Gold Coast Commodities, Inc. v. Travelers Casualty and Surety Company of America" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals in this dispute arising out of environmental-cleanup and remediation work at two Superfund sites in Bronson, Michigan, holding that Restatement (Second) 193 does not govern the choice-of-law analysis for bad faith claims.Scott Fetzer Company filed this action asserting a breach of contract claim against certain insurance companies, including Travelers Casualty and Surety Company, alleging breaches of certain insurance contracts. Fetzer also asserted a tort claim against each company, arguing that they had acted in bad faith when handling his claims. As to Travelers, an administrative judge concluded that Ohio law applied to a discovery dispute concerning Scott Fetzer's bad faith claim. The court of appeals affirmed, determining that Ohio law governed the bad-faith discovery dispute because the cause of action was a tort. In affirming, the court applied the choice-of-law rules set forth in section 145 of the Restatement. Travelers appealed, arguing that section 193 governs the choice-of-law analysis for bad faith claims because they arise out of insurance contracts. The Supreme Court affirmed, holding that the court of appeals correctly ruled that the choice-of-law analysis applicable to a bad-faith claim as provided by section 145. View "Scott Fetzer Co. v. American Home Assurance Co." on Justia Law

Gold Coast Commodities, Inc. makes animal feed using saponified poultry and plant fats at its Rankin County, Mississippi facility. Because its production process involves, among other things, old restaurant grease and sulfuric acid, Gold Coast is left with about 6,000 gallons of oily, “highly acidic,” and “extremely hot” wastewater each week. The City of Brandon, Mississippi, told a state agency that it believed Gold Coast was “discharging” that “oily, low-pH wastewater” into the public sewers. As a result, the Mississippi Department of Environmental Quality launched an investigation. Two months before the Department’s investigation, Gold Coast purchased a pollution liability policy from Crum & Forster Specialty Insurance Company. After the City filed suit, Gold Coast—seeking coverage under the provisions of its Policy—notified the insurer of its potential liability. But Crum & Forster refused to defend Gold Coast. The insurer insisted that because the Policy only covers accidents. The district court agreed with Crum & Forster—that the City wasn’t alleging an accident.   The Fifth Circuit affirmed. The court wrote that here, the Policy is governed by Mississippi law. In Mississippi, whether an insurer has a duty to defend against a third-party lawsuit “depends upon the policy's language.” The district court found that the “overarching” theme of the City’s complaint, regardless of the accompanying “legal labels,” is that Gold Coast deliberately dumped wastewater into the public sewers. The court agreed with the district court and held that Gold Coast isn’t entitled to a defense from Crum & Forster. View "Gold Coast v. Crum & Forster Spclt" on Justia Law

Sandstone operated large-scale swine farms in Scott County. Its owner also owned Red Oak. In 2007-2008, Westfield insured Sandstone. After 2008, Indemnity insured Sandstone. Star provided insurance to Red Oak. Sandstone was named as an additional insured under Star’s policy in 2009. In 2010, neighbors brought private nuisance claims against Sandstone in Illinois state court (“Marsh action”). Sandstone notified the three insurance companies. Each agreed to defend Sandstone, subject to a reservation of rights. Indemnity, citing a coverage exclusion for claims involving ”pollutants,” sought a declaratory judgment that it had no duty to defend. Sandstone withdrew its tender of defense to Indemnity, which dismissed its suit without prejudice. Star and Westfield split the defense of the Marsh action. An Illinois appellate court held that odor claims involving a hog facility are not “traditional environmental pollution” and are not excluded under insurance policy pollution exclusions, which foreclosed Indemnity’s earlier argument. Sandstone notified Indemnity, which filed another federal declaratory judgment action. In the Marsh action, a jury returned a verdict in favor of Sandstone. Westfield and then sought reimbursement of their defense costs.Reversing the district court, the Seventh Circuit ruled in favor of Indemnity. Its insurance is "excess" and Star had a duty to defend, so Indemnity’s “other insurance” provision relieves it of any duty to defend Sandstone. Indemnity is not estopped from asserting that defense because it promptly responded to Sandstone’s tender of defense. View "Indemnity Insurance Co. of North America v. Westfield Insurance Co." on Justia Law