A Massachusetts company learned the hard way that you need to pay close attention to policy endorsements when you negotiate them. In Market Forge Industries, Inc. v. Indian Harbor Insurance Company, the Appeals Court of Massachusetts held, in an unpublished decision, that a Pollution and Remediation Legal Liability Policy did not cover the costs of cleaning up certain pollution because the “Pollution Conditions” were not specifically listed in the “Known Conditions” endorsement. This despite the fact that the policy was intended to cover known pollution conditions and the policyholder had… More
Category Archives: Environmental Insurance
The battle over the scope of the absolute pollution exclusion in general liability policies continues to be fought in the context of defective drywall manufactured in China. An earlier blog entry discussed a Virginia court that had concluded that there was no coverage for defective drywall claims, rejecting decisions from a number of states that had ruled that the absolute pollution exclusion should be limited to industrial pollution claims, particularly Superfund claims.
In Probuild Holdings, Inc. v. Travelers Property Casualty Company of America, a Colorado court relying on Massachusetts and Florida law recently took the other side from the Virginia court. The Colorado court… More
Do Liability Policies, Particularly Pollution Liability Insurance Policies, Exclude Coverage for All Injunctions? The Fifth Circuit Says No.
The Fifth Circuit handed down an important decision last week, Louisiana Generating LLC v. Illinois Union Insurance Company, clarifying the scope of coverage under a Premises Pollution Liability Insurance Policy. The policyholder sought coverage for a Clean Air Act suit by the United States alleging unpermitted major modifications that resulted in increased emissions of sulfur dioxide and nitrogen oxide. The insurer disputed coverage on the ground that the government under the Clean Air Act was seeking not remediation costs or compensatory damages but an injunction to repair emission control equipment to comply with regulatory standards. According to the insurer,… More
Sometimes you read a decision and it’s hard to understand how there really were two plausible sides to the dispute. Arrowood Indemnity Company v The Lubrizol Corporation is one such a decision. There, a policyholder sold back its liability coverage for claims “arising out of” certain named environmental sites. When the policyholder subsequently received a PRP notice letter for a site that included a property that had allegedly been contaminated by waste migrating from one of the named environmental sites, the policyholder contended that it was entitled to coverage since the PRP notice letter did not expressly mention any of the named… More
The Intersection of Subrogation and Environmental Law — The Ninth Circuit’s Tyranny of Logic over Common Sense
In a decision that exalts casuistry over common sense, the Ninth Circuit recently held that an insurer who reimbursed $2.4 million in CERCLA response costs to its policyholder had no subrogation rights against the potentially responsible parties that actually caused the contamination in the first place. That holding turns upside down the most basic principles of insurance law.
Chubb Custom Insurance Company v. Space Systems/Loral involved an assisted-living facility which was built on a former manufacturing facility that had been operated and allegedly contaminated with VOCs by Ford. After buying the property, the owner of the assisted-living facility, Taube-Koret, was ordered by California regulators to clean up the contamination,… More
In some jurisdictions, an environmental claim under a liability policy with a “sudden and accidental” pollution exclusion has the same prospect of success as a due process claim under the strict scrutiny standard — strict in theory, fatal in practice. In Massachusetts, however, sudden and accidental pollution exclusions have sometimes been less fatal, as evidenced by the recent decision in Narragansett Electric Company v. American Home Assurance Company. In that case, a New York court found Massachusetts law to require an insurer to defend an environmental claim even though the policy contained a sudden and accidental pollution exclusion. The claim had been brought by the… More