On April 26, 2013, Chubb Insurance Co. submitted a motion requesting an en banc rehearing of a ruling which was handed down by the Ninth Circuit in March 2013. The ruling held that an insurer was not permitted to recover environmental cleanup expenses through subrogation under the Comprehensive Environmental Response Compensation and Liability Act (CERLCA) aka Superfund.
In the initial lawsuit, Chubb brought an action in California Federal District Courtto recover money it had paid for the cleanup of hazardous substances in the soil and groundwater surrounding a retirement home that it insured. Chubb brought the action against the former owners of the polluted site and other businesses in the surrounding area, claiming that those parties were responsible for the pollution, not the retirement home.
The California District Court dismissed the case multiple times and Chubb appealed to the Ninth Circuit in 2011. In March, 2013, the Ninth Circuit affirmed the District Court dismissals of the case finding that Chubb did not have a subrogation-cost recovery right of action under section 107 of CERCLA. Under CERCLA section 107, the retirement home would have been permitted to recover its own costs under CERCLA, but the Ninth Circuit found that Chubb wan not entitled to step into the retirement home’s shoes and collect the costs it had paid on behalf of the retirement home. Instead Chubb is forced to attempt to recover under section 112, which imposes significant hurdles to recovery. The Ninth Circuit case was decided on a 2-1 ruling, with a strong dissent.
Chubb filed the motion for a rehearing arguing that the question presented is an exceptionally important and complex issue which divided the Ninth Circuit panel that needs to be fully resolved. Chubb argued that the hearing conflicts with the primary goals o fCERCLA, US Supreme Court findings, and CERCLA provisions. Namely, Chubb argued that the ruling “erects barriers to the recovery of response costs from those responsible for the pollution.”