Arbitration & Mediation

More on Stringfellow, Environmental Liabilities and the Policies that Did or Did Not Cover Them

By Victoria Pynchon

What's the best thing about my tenure litigating environmental liability insurance coverage cases?  Besides the great intellectual puzzle they proved to be?  Besides the lasting friendships formed with members of joint defense teams?  Besides the chance they gave me to appear before some of the best Judges in the State (Judge Carolyn Kuhl, for instance, in the Los Angeles Complex Court)? The way these cases irritated my justice-sensors and led me into a career as a mediator? 

No, none of those.  What then?

My husband, of course!  Steve Goldberg, author of the following article (excerpted with a link to the pricey L.A. Daily Journal) about the case that sent at least two generations of young people to university, graduate and professional school - Stringfellow.

I understand, by the way, that the California Supreme Court has just accepted for review the companion case - State of California v. Continental also referenced in the article below.

  

Sorting Out a Liability Mess

FOCUS COLUMN

By Stephen N. Goldberg

In State of California v. Allstate Insurance Company, 2009 DJDAR 3425 (March 9, 2009), the California Supreme Court reversed a trial court's grant of summary judgment for a handful of insurance carriers who refused to defend the state against and indemnify it for liabilities arising from an infamous toxic waste site - the Stringfellow Acid Pits. Neither this opinion, nor another in the same matter handed down by the 4th Appellate District in January, finally resolves the state's claims. Instead, both courts sent two groups of insurance carriers back to the trial court for further proceedings. In both, the insurers lost significant battles but will no doubt continue the fight on yet another day.

The Stringfellow Acid Pits began operations in 1956, six years before Rachel Carson's "Silent Spring" presaged the modern environmental movement. More than 30 million gallons of industrial waste were deposited there between its first day of operation and its closure by state authorities in 1972. Eight years later, the federal government enacted the Comprehensive Environmental Response, Compensation and Liability Act to clean up industrial pollution and require potentially responsible parties to reimburse the government for its efforts.

Stringfellow was the first major industrial site placed on the Environmental Protection Agency's National Priority "Superfund" List in 1982. The following year, the Department of Justice, on behalf of the EPA, joined with the state to file a federal court suit against many companies that had disposed of toxic waste at the site. Those companies cross-claimed against the state, asserting that it was liable for the entirety of the government's investigation and remediation expenses. Sixteen years later, in 1998, the federal court held the state responsible for all contamination at the site based on findings that it had been negligent in its selection and construction as well as in its failure to prevent, investigate, and remediate pollution there.

While the state, the EPA and waste generation and disposal companies were fighting it out in federal court, the state asked its insurers to defend and indemnify it against the waste companies' cross-claims. The insurers denied coverage for those claims and the state brought suit in state court in 1993.

Allstate should not be confused with the other recent decision involving the state's attempt to obtain insurance coverage for its liabilities at the same Superfund site in the same litigation, State of California v. Continental Insurance Co., 2009 DJDAR 755 (4th App Dist, Jan. 5 2009). Continental rejected the arguments of a different group of the state's insurers, holding that a policyholder is entitled to "stack" (i.e., add together) the limits of insurance policies in effect over multiple years that apply to a single loss spanning those years. Continental also sets forth the analytical framework for determining the number of occurrences that would determine how the carriers' coverage limits would be applied.

Allstate resolves different issues than litigated in Continental. The two decisions together are important not simply for the road map they lay out for lawyers making insurance claims and carriers adjusting them but also as an historic record of the development of two relatively recent and important areas of law - the law governing the protection of the environment from toxic substances and the obligations of insurers to provide coverage for environmental liabilities. Together, these two decisions resolve numerous and complex bodies of jurisprudence.

Continue reading here.

And while I'm on the topic, check out the Corporate Insurance Blog (coverage from the policy holders point of view) maintained by my husband's partner, Scott Godes. 

You can follow Scott on twitter here:  @insurancecvg.

Full post as published by Settle It Now Negotiation Blog on March 19, 2009 (boomark / email).