Justia Insurance Law Opinion SummariesArticles Posted in Environmental Law
O’Brien’s Response Management, L.L.C. v. BP Exploration & Production, Inc.
BP retained the Responders (O’Brien’s and NRC) for nearly $2 billion to assist with the cleanup of the Deepwater Horizon oil spill. Thousands of the Responders' workers filed personal injury lawsuits against BP, which were consolidated and organized into “pleading bundles.” The B3 bundle included “all claims for personal injury and/or medical monitoring for exposure or other injury occurring after the explosion and fire of April 20, 2010.” In 2012, BP entered the “Medical Settlement” on the B3 claims with a defined settlement class. The opt-out deadline closed in October 2012. The Medical Settlement created a new type of claim for latent injuries, BackEnd Litigation Option (BELO) claims. After the settlement, plaintiffs could bring opt-out B3 claims if they did not participate in the settlement, and BELO claims if they were class members who alleged latent injuries and followed the approved process. Responders were aware of the settlement before the district court approved it but neither Responder had control over the negotiations, nor did either approve the settlement.In 2017, BP sought indemnification for 2,000 BELO claims by employees of the Responders. The Fifth Circuit held that BP was an additional insured up to the minimum amount required by its contract with O’Brien’s; the insurance policies maintained by O’Brien’s cannot be combined to satisfy the minimum amount. O’Brien’s is not required to indemnify BP because BP materially breached its indemnification provision with respect to the BELO claims. View "O'Brien's Response Management, L.L.C. v. BP Exploration & Production, Inc." on Justia Law
Greene v. Westfield Insurance Co.
VIM opened its Elkhart wood recycling facility around 2000. By 2009 1,025 neighbors filed a class-action lawsuit, describing VIM’s site as littered with massive, unbounded outdoor waste piles and alleging that VIM processed old, dry wood outside, which violated environmental regulations; constituted an eyesore; attracted mosquitos, termites, and rodents; posed a fire hazard; and emitted dust and other pollution. Many neighbors alleged health problems. In the meantime, VIM acquired general commercial liability policies, running from 2004-2008, that obligated Westfield to pay up to $2 million of any judgments against VIM for “property damage” or “bodily injury.” Each policy required VIM “as soon as practicable” to notify Westfield of any occurrence or offense that “may result in” a claim. Upon the filing of a claim, the policies required that VIM to provide written notice. There were three separate lawsuits over the course of 10 years. VIM sometimes successfully fended off the claims but sometimes did nothing, resulting in a $50.56 million default judgment. In a garnishment action, the Seventh Circuit affirmed summary judgment for Westfield. The neighbors cannot credibly claim that VIM was unaware of the injuries before 2004 or that they would not reasonably have expected them to continue through 2008, so the notice requirements applied. Westfield only found out about the case from its own lawyer in 2010, while it was on appeal. View "Greene v. Westfield Insurance Co." on Justia Law
Atlantic Casualty Insurance Co v. Garcia
After the Garcias bought their Lake Station Property in 2004, it was used as an automobile repair shop and a day spa. It previously was used as a dry cleaning facility and contained six underground storage tanks: four were used for petroleum-based Stoddard solvent, one was used for gasoline, and the last for heating oil. In 1999, the dry cleaning company reported a leak from the Stoddard tanks to the Indiana Department of Environmental Management (IDEM). In 2000, a site investigation was conducted and five groundwater monitoring wells were installed. IDEM requested additional information and testing in 2001 and 2004. The Garcias claim they had no knowledge of the preexisting environmental contamination before insuring with Atlantic. A 2014 letter from Environmental Inc. brought the contamination to the Garcias’ attention. The Garcias hired Environmental to investigate and learned that Perchloroethylene solvent and heating oil still affected the property. Atlantic obtained a declaration that its Commercial General Liability Coverage (CGL) policies did not apply. The Seventh Circuit affirmed, reading a “Claims in Process” exclusion to preclude coverage for losses or claims for damages arising out of property damage—known or unknown—that occurred or was in the process of occurring before the policy’s inception. View "Atlantic Casualty Insurance Co v. Garcia" on Justia Law
California v. Continental Ins. Co.
The State of California sued to recover from various insurers the costs of cleaning up the Stringfellow hazardous waste site, pending since 1993. The only remaining insurers were the Continental Insurance Company and Continental Casualty Company (collectively Continental), and the only remaining issues related to prejudgment interest. In 2015, Continental paid the State its full policy limits of $12 million. The trial court ruled that the State was entitled to mandatory prejudgment interest on that amount at seven percent, dating back to 1998. In the alternative, it also ruled that the State was entitled to discretionary prejudgment interest, at seven percent, dating back to 2002. Continental appealed. In the published portion of its opinion, the Court of Appeal addressed Continental’s contentions that the award of mandatory prejudgment interest was erroneous because: (1) the award was premised on the trial court’s erroneous ruling as to when Continental’s policies attached; and (2) the State was not entitled to mandatory prejudgment interest because the amount of its damages was uncertain. Continental further contended the award of discretionary prejudgment interest was erroneous because the trial court used an inapplicable interest rate. Finding no error affecting the award of mandatory prejudgment interest, the Court of Appeal affirmed. The Court did not review the award of discretionary prejudgment interest. View "California v. Continental Ins. Co." on Justia Law
Ironshore Specialty Insurance Co. v. United States
The First Circuit affirmed in part and reversed in part a district court order dismissing claims brought by Ironshore Specialty Insurance Company, the entity that paid the clean-up costs after a large military vessel spilled over 11,000 gallons of fuel next to Boston Harbor, against American Overseas Marine Company, LLC (AMSEA) and the United States. Ironshore sought cleanup costs and damages under the Oil Pollution Act (OPA) of 1990, a declaratory judgment finding AMSEA and the United States to be strictly liable under the OPA, and damages sounding in general admiralty and maritime law as a result of AMSEA’s and the United States’ alleged negligence. The district court dismissed all claims. The First Circuit (1) affirmed the dismissal of all of Ironshore’s claims against AMSEA; (2) affirmed the district court’s dismissal of Ironshore’s OPA claims against the United States; but (3) reversed the district court’s dismissal of Ironshore’s general admiralty and maritime negligence claims brought against the United States under the Suits in Admiralty Act because these claims were not foreclosed by the OPA. View "Ironshore Specialty Insurance Co. v. United States" on Justia Law
Certain Underwriters at Lloyds, London, et al. v. Chemtura Cororporation
At the heart of this appeal was a coverage dispute between a chemical company and a group of insurers over whether the insurers had to compensate the company for expenses and fines associated with environmental claims against the company in Ohio and Arkansas. The policies in question were part of a comprehensive insurance program that covered the chemical company‘s operations around the world. The chemical company and the insurers disputed what law applied to their contract law dispute regarding the application of the insurance policy. The Superior Court held that the insurance policy was not, in fact, to be interpreted by a consistent law, but instead that the underlying contract law of the states where the environmental claims arose would govern on a claim-by-claim basis. The Delaware Supreme Court agreed with the insurer that the Superior Court erred in its application of the relevant choice-of-law principles, and, instead, applied a consistent choice of law principle. New York was the principal place of business for the chemical company‘s predecessors at the beginning of the coverage, and there were a number of contacts with New York over time after the beginning of the coverage, the most significant relationship among the parties for these contracts was New York. Thus, New York law should have been applied to resolve this contract dispute. The Superior Court was therefore reversed and the case remanded for further proceedings. View "Certain Underwriters at Lloyds, London, et al. v. Chemtura Cororporation" on Justia Law
Givaudan Fragrances Corp. v. Aetna Casualty & Surety Co.
Plaintiff Givaudan Fragrances Corporation (Fragrances) faced liability as a result of environmental contamination from a manufacturing site that a related corporate entity operated in a facility in Clifton. The issue this case presented for review involved Fragrances' effort to obtain insurance coverage for environmental claims brought by governmental entities in response to discharges of hazardous substances that occurred during the pertinent policy periods running through January 1, 1986. Fragrances claimed that the defendant insurance companies (defendants) wrote liability policies for Givaudan Corporation during those relevant years. Fragrances argued that it was entitled, either as an affiliate of Givaudan Corporation or by operation of an assignment of rights, to have the insurers provide it with coverage for that environmental liability. Defendants claimed that they insured Givaudan Corporation as their named insured, not Fragrances, and that any assignment to Fragrances was invalid because defendants did not consent to the assignment, as was required for a valid assignment according to the language of the insurance policies. Therefore, collectively, defendants refused to honor Fragrances' right to bring insurance contract claims against them. Fragrances filed its complaint in February 2009 seeking a declaratory judgment that it was entitled to coverage under the policies. In February 2010, while the declaratory judgment action was pending, Fragrances notified defendants that Givaudan Roure Flavors Corporation (corporate successor-in-interest to Givaudan Corporation) planned to assign its post-loss rights under the insurance policies to Fragrances. Defendants refused to consent to the assignment. Nevertheless, Flavors executed the assignment to Fragrances. Both sides moved for summary judgment. Because Fragrances was not acquired by Givaudan Corporation during the policy period, the trial court determined that it could not be an affiliated corporation covered under the policies. The court also determined that the assignment in this case was an assignment of policies, which could not be assigned. The court denied Fragrances' motion and granted defendants' cross-motion for summary judgment. The Appellate Division reversed and remanded, explaining that although the anti-assignment clauses in the occurrence policies at issue would prevent an insured from transferring a policy without the consent of the insurer, once a loss occurs, an insured s claim under a policy may be assigned without the insurer s consent.The Supreme Court affirmed, concluding that, once an insured loss has occurred, an anti-assignment clause in an occurrence policy may not provide a basis for an insurer s declination of coverage based on the insured's assignment of the right to invoke policy coverage for that loss. The assignment at issue in this case was a post-loss claim assignment and therefore the rule voiding application of anti-assignment clauses to such assignments applied. View "Givaudan Fragrances Corp. v. Aetna Casualty & Surety Co." on Justia Law
Indian Harbor Ins. Co v. F&M Equip., Ltd
In 2001, Furnival and its insurer agreed to a Pollution and Remediation Legal Liability Policy, detailing $10 million in liability protection; a 10-year coverage period; and insurance coverage for 12 Furnival locations, including the Elizabethtown Landfill Site, which Furnival was obligated to clean up under a consent decree with the federal government. Insurer knew about the consent decree when the Policy issued. The Policy Endorsements list five reasons for which insurer may “refuse to offer a renewal extension of coverage,” and states that insurer “shall not cancel nor non-renew this Policy except for the reasons stated above.” None of the listed reasons for non-renewal occurred. In 2006, the parties increased the Policy’s limit to $14 million. After the term expired, insurer sent Furnival’s insurance broker its version of a renewal offer, providing $5 million of coverage over a one-year term, omitting coverage for Elizabethtown, the only previously insured site for which Furnival had made a claim, refusing to renew the same terms. The Third Circuit vacated a ruling in favor of insurer, holding that, for a contract to be considered a renewal, it must contain the same, or nearly the same, terms as the original contract. View "Indian Harbor Ins. Co v. F&M Equip., Ltd" on Justia Law
Peabody Essex Museum, Inc. v. U.S. Fire Ins. Co.
A few decades ago, an oil spill occurred on property in Salem, Massachusetts that was owned by Peabody Essex Museum. The pollution from the spill migrated to the land of a down gradient neighbor, Heritage Plaza. In 2003, Heritage Plaza discovered the subsurface contamination and notified the Museum. The Museum, in turn, gave prompt notice to state environmental authorities and to its insurer, United States Fire Insurance Company (U.S. Fire). The Museum filed a coverage suit against U.S. Fire and, in 2013, secured a judgment requiring U.S. Fire to pay the Museum over $1.5 million, including punitive damages under Mass. Gen. Laws ch. 93A. In this appeal, the parties challenged multiple district court rulings. The First Circuit affirmed the challenged rulings related to insurance coverage but reversed the finding of Chapter 93A liability and vacated the district court’s associated award of punitive damages, holding that U.S. Fire’s conduct under these circumstances was not the kind that the Massachusetts Supreme Judicial Court has condemned as egregious settlement misconduct that is actionable under Chapter 93A. View "Peabody Essex Museum, Inc. v. U.S. Fire Ins. Co." on Justia Law
McGinnes Indus. Maint. Corp. v. Phoenix Ins. Co.
McGinnes Industrial Waste Corporation dumped pulp and paper mill waste sludge into disposal pits near the San Jacinto River in Pasadena, Texas (the site). After environmental contamination was discovered at the site, the Environmental Protection Agency (EPA) instituted superfund cleanup proceedings under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). During the period that McGinnes was dumping waste at the Site, it was covered by standard-form commercial general liability (CGL) insurance policies issued by Phoenix Insurance Company and Travelers Indemnity Company (together, the Insurers). McGinnes requested a defense in the EPA proceedings from the Insurers. The Insurers refused, determining that the proceedings were not a “suit” under the policy. McGinnes sued the insurers in federal court seeking a declaration that the policies obligated them to defend the EPA’s CERCLA proceedings. The district court granted the Insurers’ motion for partial summary judgment on the duty-to-defend issue. The U.S. Court of Appeals for the Fifth Circuit certified a question regarding the issue to the Texas Supreme Court. The Supreme Court answered that “suit” in the CGL policies at issue must also include CERCLA enforcement proceedings by the EPA. View "McGinnes Indus. Maint. Corp. v. Phoenix Ins. Co." on Justia Law