Justia Insurance Law Opinion Summaries

Articles Posted in Environmental Law
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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

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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

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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

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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

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Visteon, a worldwide manufacturer headquartered in Michigan, sued National Union, from which it had purchased liability insurance between 2000 and 2002. The policy excluded liability resulting from pollution caused by Visteon, except liability arising from a “Completed Operations Hazard.” In 2001, the toxic solvent TCE that was used to clean machinery in Visteon’s Connersville, Indiana plant was discovered to have leaked into the soil and groundwater. Neighboring landowners sued Visteon. National Union has refused to indemnify or defend. Indiana does not enforce standard pollution-exclusion clauses. Michigan law does enforce the more general kind of pollution-exclusion clause found in the policy. The district court ruled that Michigan law governed and held that Visteon was not entitled to coverage under the Completed Operations Hazard clause. The Seventh Circuit affirmed. The risk materialized in Indiana, but that could not have been foreseen. The Indiana victims were compensated by Visteon, and it is unclear what benefit the state would have derived from reimbursement of Visteon’s costs by National Union.” The court rejected Visteon’s argument that its “work” was “completed” each time a contract to supply products made at the plant was performed and concluded that the exception did not apply. View "Visteon Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh" on Justia Law

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Headwaters Resources, Inc. carried commercial liability insurance issued by two insurance companies: Illinois Union Insurance Company and ACE American Insurance Company. Headwaters sought reimbursement for its litigation costs arising from a case brought by landowners in Virginia, alleging that Headwaters had caused personal injury and property damage during the construction of a nearby golf course. The complaint alleged that fly ash used in the construction process caused air and water pollution that devalued their homes and created health risks to the homeowners. The insurance companies told Headwaters that defense costs related to Headwaters’ pollution were outside the scope of the coverage and denied the claim. Headwaters sued, and the district court eventually granted summary judgment in favor of the insurance companies, finding that the pollution exclusions in the insurance policies precluded coverage. Jurisdictions that have addressed the scope of a "total pollution exclusion" were either: (1) courts that applied the pollution exclusions as written because they find them clear and unmistakable; or (2) courts that narrowed the exclusions to "traditional environmental pollution," because they found the terms of the exclusion to be ambiguous due to their broad applicability. The Utah Supreme Court had not yet weighed in on this debate, and the federal district court did not pick a side on its behalf. Instead, the district court found that certain of the at-issue pollution exclusions unambiguously applied to bar coverage and that the remaining pollution exclusions, although possibly ambiguous, still applied because the complaints unquestionably alleged traditional environmental pollution. As a result, the complaints triggered the pollution exclusions in all of the policies, and the district court granted summary judgment in favor of the insurance companies. Upon review, the Tenth Circuit found that each of the pollution exclusions was unambiguous, and affirmed the district court’s grant of summary judgment.View "Headwaters Resources v. Illinois Union Insurance Co." on Justia Law

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Defendants issued excess insurance policies to Plaintiff that required, as a threshold condition for coverage, Plaintiff to provide timely notice of any occurrence that potentially implicated Defendants’ duty of indemnification. This case concerned the investigation and remediation of environmental damage at manufactured gas plant (MGP) sites owned by Plaintiff. When Defendants denied coverage, Plaintiff commenced a declaratory judgment action. The Appellate Division concluded that Plaintiff failed to provide timely notice under the policies of environmental contamination at the MGP sites but denied summary judgment to Defendants, determining that material issues of fact remained as to whether Defendants waived their right to disclaim coverage of Plaintiff’s claims. The Court of Appeals reversed, holding that the Appellate Division erred in considering the waiver issue under N.Y. Ins. Law 3420(d)(2) because Plaintiff never relied on the statute and instead asserted a common-law waiver defense.View "KeySpan Gas E. Corp. v. Munich Reins. Am., Inc." on Justia Law

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Dozens of suits were filed against Irving Oil Limited (IOL) alleging environmental contamination by methyl tertiary butyl ether (MTBE) occurring from 1979 to the present. At the time of this opinion, all of the MTBE suits against IOL had been settled. In 2009, IOL filed a complaint asking the superior court to declare that ACE INA Insurance (ACE) had a duty to defend and indemnify in the MTBE suits. The superior court granted IOL’s motion for summary judgment in part and denied it in part, concluding that it could not declare that IOL was entitled a judgment on the duty-to-defend count as a matter of law. IOL appealed. The Supreme Court dismissed IOL’s appeal and ACE’s cross-appeal, holding that although a decision that an insurer does not have a duty to defend its insured is ordinarily immediately appealable under the death knell exception to the final judgment rule, the exception did not apply in this case because there were no MTBE cases pending against IOL. View "Irving Oil Ltd. et al. v. ACE INA Ins." on Justia Law

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In two consolidated cases involving remediation of contaminated properties, the New Jersey Property-Liability Insurance Guaranty Association (Guaranty Association) took over the administration of the claims of an insolvent insurance carrier on the risk pursuant to the New Jersey Property-Liability Insurance Guaranty Association Act. The solvent insurance company paid the property-damage claims in each of the two cases and then sought reimbursement from the Guaranty Association under the Owens-Illinois methodology. The Guaranty Association claims that, pursuant to N.J.S.A. 17:30A-5 and -12b, it was not responsible for making any contribution until the policies of the solvent carrier were fully exhausted. The solvent carrier contended on appeal that the Guaranty Association must pay the share of the insolvent carrier in accordance with the Owens-Illinois allocation scheme, and that its position is consistent with the PLIGA Act. The trial court agreed that the Guaranty Association is subject to the Owens-Illinois allocation methodology. The Appellate Division reversed, finding that N.J.S.A. 17:30A-5 expressly carves out an exception to Owens-Illinois and requires exhaustion of the solvent carrier's policies before the Guaranty Association's reimbursement commitments are triggered. Finding no error with the appellate court's judgment, the Supreme Court affirmed. View "Farmers Mut. Fire Ins. Co. of Salem v. N.J. Property-Liability Ins. Guar. Ass'n" on Justia Law

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This case arose when the EPA sent two letters to Anderson notifying Anderson of its potential liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601 et seq., for environmental contamination of the Portland Harbor Superfund Site. Anderson's general liability insurer, St. Paul, declined to provide Anderson with a legal defense. St. Paul argued that the letters sent to Anderson were not "suits" because they were not filed in a court of law. The court held that the letters were "suits" within the meaning of the policies; the letters alleged facts sufficient to alert Anderson to its potential liability for environmental contamination under CERCLA; and, therefore, St. Paul breached its duty to defend Anderson. Accordingly, the court affirmed the judgment of the district court in favor of Anderson and also affirmed the attorney's fee award in Anderson's favor in light of the court's holding on the merits. View "Anderson Bros. v. St. Paul Fire & Marine Ins. Co." on Justia Law