Paul C. Steck, Author at The Insurance & Reinsurance Report

August 7, 2013 Environmental

Insurer’s Environmental Subrogation Claims Under CERCLA §107(a) Dismissed

Chartis Specialty Ins. Co. v. United States Of America
(U.S.D.C. Northern District of California, July 19, 2013)

This environmental coverage action arises from a dispute as to whether an insurer can maintain an action under CERCLA’s subrogation provisions against the United States government where it is alleged the government is responsible for environmental contamination at a site in which the plaintiffs have been paying clean-up costs. Specifically, the plaintiffs, Whittaker Corporation, and its insurer, Chartis, brought claims under §107(a) of CERCLA seeking to recover all …

July 16, 2013 Life, Health, Disability & ERISA

It’s Only Temporary: Employee Hired to Meet Short-Term Workload Conditions on Indefinite Basis Is “Temporary Worker” Under Policy

Central Mut. Ins. Co. v. True Plastics, Inc.
(Mass. Ct. App. July 10, 2013)

A Massachusetts appellate court recently held that the phrase “short-term workload conditions” as used in a liability policy’s definition of “temporary worker” was unambiguous and could include workers hired on an indefinite basis.

The claimant was injured while operating a molding machine at the insured’s plant. The claimant was not an employee of the insured company (a manufacturer of plastic components), but rather had been assigned to work at the insured …

July 8, 2013 Environmental

Pollution Policy’s Late Notice Requirement In Buy-Back Provision Upheld Regardless Of Prejudice

Starr Indemnity & Liability Co. v. SGS Petroleum Service Corp.
(5^th Cir., June 18, 2013)

This environmental coverage action arises from a dispute on as to the notice provision involving a pollution occurrence and whether the policyholder was required to show prejudice before denying coverage as required by a pollution buy-back provision in the policy.

Specifically, Starr’s excess coverage policy contained an absolute pollution exclusion clause. However, the parties negotiated a buy-back provision which deleted the original pollution exclusion and replaced it with a …

July 1, 2013 Environmental

Transfer of PCB-Laden Oil From Tanker To Holding Tank Does Not Trigger A “Pollution Condition” Under The Policy

Colonial Oil Industries, Inc. v. Indian Harbor Ins. Co.
(Second Cir., June 25, 2013)

This environmental coverage action arises from an alleged breach of a duty to defend and indemnify the policyholder resulting from costs associated with the transfer of contaminated fuel oil.

Specifically, the policyholder is a company whose business involves the transportation, storage and sale of fuel oil. In the course of its business, Colonial received a large delivery of oil from a third-party distributor that unknowingly contained polychlorinated biphenyl (PCB’s) and that …

June 13, 2013 Arbitration

Supreme Court Affirms Arbitration Ruling Under Limited Review Authorized Under §10(a)(4) of the Federal Arbitration Act

Oxford Health Plans v. Sutter
(United States Supreme Court, June 10, 2013)

This action arises from an arbitrator’s decision on whether a contract authorizes class arbitration and whether the arbitrator’s decision survives the judicial review allowed by §10(a)(4) of the Federal Arbitration Act (FAA).

Specifically, a physician entered into a contract with the insurer and agreed to provide medical care to members of the insurer’s network. The physician, on behalf of himself and a proposed class, sued the insurer, alleging that the insurer had failed …

May 9, 2013 Environmental

Court Rules Policyholder Arguments Do Not Hold Water

Grinnell Mut. Reinsurance Co. v. Hubbs
(Appellate Court ofIllinois, Third District, April 24, 2013)

This water resource/environmental coverage action arises from an underlying dispute involving the interference and damages from the divergence or obstruction of streams or surface water between landowners. Specifically, plaintiff insurer brought a declaratory judgment action against landowners who alleged damages to crop land caused by the policyholder’s alleged alteration of the flow and level of surface and groundwater following the policyholder’s construction of a holding pond on the property.

The insurer …

March 22, 2013 Environmental

Ninth Circuit Denies Insurer’s CERCLA Subrogation Claims

Chubb Custom Ins. Co. v. Space Systems/Loral, Inc.
(9^th Cir., March 15, 2013)

This environmental coverage/subrogation action arises from CERCLA clean-up of a contaminated site owned by Chubb’s insured, but formerly operated by Ford Aerospace, among others, resulting in volatile organic soil and groundwater contamination. Chubb issued an environmental insurance policy to its insured, Taube-Koret covering remediation costs related to the former pollution releases at the property. Eventually, Chubb paid its insured $2.4 million as reimbursement of the cleanup costs.

Thereafter in 2009, Chubb …

March 7, 2013 Environmental

Fifth Circuit Reverses District Court, Holds BP Was Entitled to Additional Insured Coverage Under Insurer’s Policy for Environmental Claims

In Re: Deep Water Horizon; Ranger Ins. Ltd. v. TransOcean Offshore Deepwater Drilling, Inc. et. al. (5^th Cir., March 1, 2013)

This environmental coverage action arises from the explosion and sinking of Transocean’s Deepwater Horizon oil platform in April 2010. At issue were the obligations of Transocean’s primary and excess liability insurer to cover BP’s pollution-related environmental liabilities resulting from the ensuing oil spill. Transocean owned the subject offshore oil platform and at the time of the incident and was engaged in exploratory drilling …

January 15, 2013 Reinsurance

To [Follow] or Not to [Follow] – That is the Question: NY Court of Appeals Hears Important Case on Follow-the-Fortunes

The weather in Albany, New York might have been cold on January 2, but the New York Court of Appeals’ bench was scorching during the oral argument for the appeal in United States Fid. & Guaranty v Am. Re-Ins. Co. The five-judge bench fired question after question at counsel concerning important issues concerning the reinsurance industry.

The appeal concerns a reinsurance dispute. More specifically, the appeal concerns whether follow-the-fortunes applies to the post-allocation phase of an insurance payout and whether bad faith serves as an …

January 11, 2013 Environmental

Eleventh Circuit Denies Coverage For Drywall Claims Based On Pollution Exclusions

Granite State Ins. Co. v. American Building Materials, Inc.
(11^th Cir, January 3, 2013)
This environmental coverage dispute arises out of Chinese Drywall claims and the interpretation of coverage under six separate policies issued by the plaintiff. Here, an insured alleged that another insured, American Building, supplied it with defective gypsum drywall manufactured in China for installation in residential homes in Florida. It was determined that the drywall was emitting unusual amounts of sulfide gases.

The court of appeals held that the damages …