Justia Insurance Law Opinion Summaries

This case considered complex questions of insurance policy coverage interpretation in connection with a federal court-ordered cleanup of the state's Stringfellow Acid Pits waste site. The Supreme Court affirmed the court of appeal's judgment, holding (1) the "continuous injury trigger" and "all sums" rule announced in Montrose Chemical Corp. v. Admiral Ins. Co. and Aerojet-General Corp. v. Transport Indemnity Co. applied to the State's successive property or long-tail first party property loss, triggering the duty to indemnify here; and (2) the court of appeal correctly applied the "all-sums-with-stacking" allocation rule in allocating the indemnity duty among the insurers responsible for covering the property loss. View "State v. Cont'l Ins. Co." on Justia Law

The EPA initiated efforts to remediate contamination at the Rhode Island Centredale Manor Superfund Site under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601-9675 and issued a unilateral administrative order to compel entities, including NE Container and Emhart to remove hazardous substances that had been disposed of at the Site as part of the former operations of several companies. Emhart sued NE Container and its insurers, which had provided general commercial liability policies to NE Container during different time periods from the late 1960s through the mid-1980s. Travelers agreed to contribute to NE Container's defense pursuant to a reservation of rights, while PWIC took the position that it had no duty to defend. Travelers has incurred significant defense costs and filed this suit, seeking contribution from PWIC. The district court ruled that PWIC was not contractually obligated to defend NE Container in the Emhart action, observing that the alleged property damage occurred before the commencement of the PWIC policy period between 1982 and 1985. The First Circuit vacated. The district court mistakenly focused solely on the timing of the insured's alleged polluting activities, rather than also considering the potential timing of property damage caused by those activities. View "Travelers Casualty & Surety Co. v. Providence WA Ins. Co., Inc." on Justia Law

OneBeacon and AMICO were insurers of the B.F. Goodrich and, among others, were liable for environmental cleanup at the Goodrich plant in Calvert City, Kentucky. AMICO settled with Goodrich, but OneBeacon’s predecessor went to trial. A state court jury found for Goodrich, and OneBeacon was ordered to pay $42 million in compensatory damages and $12 million in attorney fees. The state court also denied OneBeacon's request for settlement credits to reflect amounts paid by other insurers, such as AMICO, through settlements with Goodrich. OneBeacon sought equitable contribution; AMICO removed to federal court. The district court granted AMICO summary judgment. The Sixth Circuit affirmed. Ohio policy favoring settlements provides that a settled policy is exhausted for purposes of equitable contribution; the court declined to address whether Ohio law permits interclass contribution actions or whether the jury finding of bad faith bars equitable relief.

The Indiana Department of Environmental Management (IDEM) informed Flexdar, Inc. that Flexdar would be liable for the costs of cleaning up trichloroethylene (TCE) contamination on a site where Flexdar previously had operations. State Automobile Mutual Insurance Company (State Auto), with whom Flexdar maintained general liability and umbrella insurance policies for the period when the contamination occurred, filed a declaratory judgment action, contending that coverage for the TCE contamination was excluded pursuant to a pollution exclusion in the policies. The trial court entered summary judgment in favor of Flexdar, concluding that the language of State Auto's pollution exclusion was ambiguous and therefore should be construed against State Auto and in favor of coverage. The Supreme Court affirmed, holding that the language of the pollution exclusion at issue was ambiguous, and therefore, in accordance with precedent, the policies were construed in favor of coverage.

Insurers sought a declaration that they had no duty to defend or indemnify in tort suits brought against the insured village, concerning discovery of "perc," a carcinogenic common dry cleaning solvent, in one of its wells and the village's continued use of the well without disclosure. The district court, relying on a pollution exclusion in the policies, granted summary judgment for the insurers. The exclusion refers to "actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of 'pollutants'" and excludes from coverage expenses for "cleaning up ... or in any way responding to, or assessing the effects of pollutants." After exploring the reasons for the exclusion, the Seventh Circuit affirmed. The court rejected an argument that this was not a pollution case, because the amount of perc in the water was below the maximum level permitted by environmental regulations. The complaints actually filed "describe in copious detail the conduct giving rise to the tort suits, and in doing so inadvertently but unmistakably acknowledge the applicability of the pollution exclusion."

ESBC, billing agent for the Fire Department, determined that each of the individual defendants owned a vehicle involved in a collision to which the Fire Department responded and each had insurance coverage, and billed response costs incurred for each collision. The defendants refused to pay and ESBC sought a declaration that defendants were liable under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601. Under CERCLA, the owner of a “facility” from which hazardous substances have been released is responsible for response costs that result from the release. Insurer-defendants counterclaimed for injunctive relief from ESBC’s billing practices and alleging violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692, unjust enrichment, unlawful fee collection, fraud, constructive fraud, and insurance fraud. The district court granted defendants judgment on the pleadings and dismissed counterclaims without prejudice. The Seventh Circuit affirmed. Motor vehicles for personal use fall under the "consumer product in consumer use” exception to CERCLA’s definition of facility

Plaintiffs' insurance policy indemnifies them against liability under several federal environmental protection laws or the state-law equivalents. They attempted to invoke their policy for up to $10 million in coverage following an explosion on one of their vessels that resulted in an oil spill in the Chicago Sanitary and Ship Canal. The district court granted the insurer judgment on the pleadings that: it owed $5,000,000 per vessel, per incident and had fully honored the policy with respect to one vessel; it owed no coverage for either two others for in rem liability. It granted the insureds summary judgment on their breach of contract claim, finding that the insurer owed $5,000,000 in coverage for a vessel, was obligated to pay defense costs up to that amount, and had breached its contract by not doing so. It denied summary judgment on a claim of breach of the duty of good faith and fair dealing. The Seventh Circuit affirmed.

Kivalina, a native community located on an Alaskan barrier island, filed a lawsuit (Complaint) in a California district court against The AES Corporation, a Virginia-based energy company, and numerous other defendants for allegedly damaging the community by causing global warming through emission of greenhouse gases. Steadfast Insurance, which provided commercial general liability (CGL) to AES, provided AES a defense under a reservation of rights. Later AES filed a declaratory judgment action, claiming it did not owe AES a defense or indemnity coverage in the underlying suit. The circuit court granted Steadfast's motion for summary judgment, holding that the Complaint did not allege an "occurrence" as that term was defined in AES's contracts of insurance with Steadfast, and that Steadfast, therefore, did not owe AES a defense or liability coverage. The Supreme Court affirmed, holding that Kivalina did not allege that its property damage was the result of a fortuitous event or accident, but rather that its damages were the natural and probable consequence of AES's intentional actions, and such loss was not covered under the relevant CGL policies.

This dispute emerged from state and federal litigation over liability for damages and defense costs in certain environmental tort suits. At issue was an action for damages that appellants brought in federal court and a declaratory judgment action that appellee brought in state court, which appellants later removed to federal court. The district court dismissed the former and remanded the latter in light of a related third action that had been pending for several years in state court. The court held that the district court did not abuse its discretion by deciding that the parties' claims should be resolved in a more comprehensive action (Vulcan Action). The court also held that the district court had discretion under Wilton v. Seven Falls Co. and Brillhart v. Excess Ins. Co. of Am. to remand the removed action. The court further held that the district court's concerns about piecemeal litigation and interfering with the progress made in the Vulcan Action supported dismissal under Colorado River Water Conservation Dist. v. United States. Therefore, the court affirmed the judgment of the district court.

Jefferson Block submitted a claim under the London OPA Insurance Policy for Offshore Facilities (OPA Policy) for indemnification of the removal costs it incurred in responding to a pipeline leak. Underwriters denied the claim and Jefferson filed suit against Underwriters in district court, alleging that Underwriters wrongfully refused to indemnify it for oil pollution removal costs. The court held that the district court erred when it refused to apply the contra-insurer rule where the OPA Policy was ambiguous with respect to the issue of coverage for Jefferson Block's 16-inch pipeline and extrinsic evidence in the record did not conclusively resolve this ambiguity. Therefore, the court held that, since Jefferson Block offered a reasonable interpretation of the policy and did not completely draft the ambiguous provisions of the OPA Policy, the contra-insurer rule should apply and the ambiguity should be resolved in favor of the insured, Jefferson Block.