American
Commercial Lines LLC v. Water Quality Ins. Syndicate
(United States
District Court, Southern District of New York, March 29, 2010)
This coverage action addressed
the extent to which the insurer’s policy covers the insured’s investigation and
defense costs involving a maritime accident and oil spill on the Mississippi River in July 2008. Specifically, the
accident occurred when an unmanned barge sank and released approximately
300,000 gallons of fuel oil into the river.
As a result of the accident
the insured, as owner of the barge, was sued for the clean-up costs.
The policy issued by WQIS
required the insurer to (1) indemnify ACL for “such amounts as it shall have
become liable to pay and shall have paid for pollution response or damages” as
owner or operator of the barge, and (2) reimburse ACL for “certain other costs
and expenses” including costs associated with the discharge of oil (Coverage
A), the discharge of hazardous substances (Coverage B), and investigation and
defense (Coverage C). In ruling against the insurer,
the court held that the policy language was unambiguous and that the provision,
on its face, contained no temporal or quantitative limit on the reimbursement
obligation.
Thus, the insurer’s argument that its obligation to make
payments for investigation and defense costs under Coverage C ended because
payments under coverages A& B met the policy limits was deemed meritless.
As such, the court ordered that
the insurer was obligated under the policy to reimburse ACL for costs incurred
in the investigation and defense of all claims asserted against it regardless
of whether other indemnity limits under the policy have been reached.
A copy of the decision click here
Paul Steck and Tom Segalla
https://www.goldbergsegalla.com/attorneys/Steck.html
https://www.goldbergsegalla.com/attorneys/Segalla.html