Category: Blog

BY: KRISTEN DRAKE

On May 24, 2022, New York Governor, Kathy Hochul, signed the Adult Survivors Act (ASA) into law.  The ASA creates a one-year ‘Lookback Window’ which opened on November 24, 2022, to allow survivors who were adults (18 and older) at the time they were sexually abused and assaulted to sue their abusers – regardless of when the offenses occurred.

In 2019, the state of New York enacted the Child Victims Act (CVA) which opened a ‘Lookback Window’ to commence civil actions.  The CVA was extended another year due to the COVID-19 pandemic, and when the window closed in August of 2021, nearly 11,000 lawsuits had been filed. During the CVA lookback window, countless churches, schools, foster care agencies, and youth-based organizations were obliged to respond to the alleged abuses. An important differentiation between the CVA and the ASA, is the age of the survivor when the sexual abuse or assault occurred, although both fall under the broader category of reviver statutes. Prior to the ASA, reviver statutes focused primarily on abuses against children.  With this new law, it’s likely that different types of organizations will face allegations dating back decades, because the survivors were 18 and older when the sexual assault or abuses happened. This expansion may include accusations made regarding assaults at colleges, in the workplace, and/or health care facility abuses – to name a few.

DECADES-OLD OCCURRENCE-BASED GENERAL LIABILITY POLICIES CAN HELP
When states enact these lookback windows, removing or reducing the statute of limitations for sexual abuse civil suits, organizations that were proximal to alleged abuses can get caught in the crossfire between plaintiffs and alleged offenders. Occurrence-based Commercial General Liability (CGL) policies issued during the policy periods in which the alleged abuse occurred can respond to these new claims – even if the alleged abuse happened in the 1960s.

DEFENDANT ORGANIZATIONS SHOULD CONSIDER INSURANCE ARCHEOLOGY
As more organizations are compelled to identify and locate their decades-old liability policies to help pay damages, they are oftentimes disheartened to learn how difficult it can be. Since the time of interest in reviver statute claims is oftentimes at least 40 years ago, many records could be lost, destroyed by fire or flood, or purposely purged.

Upon receiving notice that a lawsuit has been filed against them under a reviver statute, defendant organizations should contact their attorneys, who typically suggest contact with their current insurance agents and brokers. Because of standard document retention practices, these companies quickly learn their current agent/broker has no information dating back decades. It’s at this point, or perhaps following a fruitless internal archive search, that defendant organizations should consider Insurance Archeology.

Insurance Archeology is the practice of locating and retrieving proof of the existence, terms, conditions, and limits of lost or destroyed insurance policies. PolicyFind’s expertise is finding and bringing to light old insurance coverage for our clients. Under current and future reviver statutes across the country, historical CGL policies issued to businesses, schools, churches, and other organizations, are the first line of assets to be explored to pay for claims against them.

Contact PolicyFind today to learn more about your organization’s historical liability insurance portfolio.

LEARN HOW CASE LAW MAY BE FAVORABLE FOR POLICYHOLDERS FACING ENVIRONMENTAL LIABILITY IN NEW MEXICO

BY: DRU CARLISLE

Case law could be poised to become more favorable for Policyholders in New Mexico who are facing challenges related to Environmental Liability. In nearly every state in the country (with Indiana as an exception), courts have agreed that the Absolute Pollution Exclusion bars coverage for addressing environmental contamination. Typically, this would mean that most general liability policies written after 1985 would not provide a defense to the Policyholder related to environmental cleanup.

In Indiana, a ruling in 2010 determined that the Absolute Pollution Exclusion was considered “ambiguous,” making it possible for many Policyholders to use their insurance policies up until around the mid-2000s.

WHAT COULD THIS MEAN FOR YOU?

Hypothetically, let’s say that you’ve been operating a drycleaning business since 1988 in Santa Fe, New Mexico. You’ve recently discovered, after attempting to sell your property and performing a Phase II, as required by the lender, that there is perchloroethylene contamination within the groundwater. Previously, the General Liability policies that you procured for your business would not provide coverage for remediation because of the Absolute Pollution Exclusion. However, if this ruling were to move forward as expected, you could now have applicable insurance coverage.

Even though this ruling could open a larger opportunity for policyholders to seek coverage from their past insurers on more recent policies, the policies that would be responding to these types of claims could have been issued more than 20 years ago, or earlier. If you don’t know anything about your old occurrence-based general liability policies, contacting an Insurance Archeologist is the best way to find them and bring them to bear.

For over 20 years, PolicyFind has helped business owners and property owners alike, as they navigate expensive environmental contamination cleanup efforts, by finding lost or misplaced General Liability insurance policies that can respond to such claims. PolicyFind will continue to watch this ruling unfold in New Mexico and will provide updates as they arise.

Contact PolicyFind today to learn more about how we can help you find evidence of your organization’s historical coverage.

 

THE U.S. DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO HAS FOUND THE TERM “POLLUTANTS” TO BE AMBIGUOUS IN CERTAIN GENERAL LIABILITY POLICIES ISSUED IN THAT STATE. 

BY: DAVID A. O’NEILL, JD

The U.S. District Court for the District of New Mexico has ruled that this ambiguity renders the absolute pollution exclusions featured in these policies ineffective, reinstating coverage. That is the takeaway from the Court’s recent Memorandum Opinion supporting its summary judgment rulings in the case of Chisolm’s Village Plaza, LLC v. Travelers Commercial Insurance Co., et al., 2022 WL 3369202.

The City of Las Cruces and Dona Ana County had filed complaints against a shopping mall and dry cleaner, among others, seeking cost recovery and contribution under CERCLA for responses to releases and expected releases of hazardous substances at the Griggs & Walnut Superfund Site. The New Mexico Environment Department had detected PCE contamination in four city water wells. The resulting lawsuit was a diversity case in which the U.S. District Court was required to apply New Mexico law. Reviewing New Mexico court decisions, the District Court determined that this was a case of first impression. While New Mexico’s Supreme Court had determined that the qualified pollution exclusion was ambiguous in United Nuclear, 285 P.3d 644 (2012), no ruling had been made by that court regarding the absolute pollution exclusion. Further, while the Tenth Circuit Court of Appeals had ruled on the absolute pollution exclusion, these were rulings based on Colorado, Kansas, Oklahoma, and Utah law, not New Mexico law.

Encountering this lack of precedent relating to the absolute pollution exclusion, the District Court conducted an exhaustive review of various state supreme court decisions to determine how the Supreme Court of New Mexico would rule. In doing so, it grouped the decisions into three “camps”: (1) the literal approach, (2) the situational approach, and (3) the Indiana approach. The literal camp was comprised of opinions that apply the exclusion as “clear and unmistakable.” The situational camp was comprised of opinions that apply the exclusion only in situations of “traditional environmental pollution.” The Indiana camp was comprised of the Supreme Court of Indiana’s ruling in the case styled State Auto v. Flexdar 964 N.E.2d at 850-851.

The District Court predicted that the New Mexico Supreme Court would find enough similarity in Flexdar’s and United Nuclear’s approach to ambiguity to construe the absolute and qualified pollution exclusions in the same manner as Indiana has construed them. Like Indiana, the District Court expects that New Mexico will “require that the insurer specify what falls within its pollution exclusion.” It will find Flexdar persuasive because “its approach is the least tolerant of contractual ambiguity and provides the most protections for the insured.”

To learn more about what this could mean for those facing environmental liability in New Mexico, read U.S. District Court Finds Absolute Pollution Exclusion Ambiguous; What This Could Mean for Drycleaners/Industrial Sites in New Mexico.

An ineffective absolute pollution exclusion in New Mexico may be expected to create exposure for insurers under standard general liability policies issued to commercial businesses from 1985 through the present.

Contact PolicyFind today to learn more about how we can help you find evidence of your organization’s historical coverage.

 

THE PROCESS OF REGULATING PFAS CONTAMINATION IS HEATING UP

BY KRISTEN DRAKE 

Perfluoroalkyl and polyfluoroalkyl substances (PFAS) are part of a very broad chemical group that have found their way into commercial and industrial use due to their unique chemical properties that repel oil and water and resist temperature, chemicals, and fire. This means PFAS are everywhere. Also, PFAS are known as “forever chemicals”, which means concerns surrounding PFAS will not be going away anytime soon. Federal and state regulators are looking closely at PFAS exposure, and several studies are being conducted that will result in additional regulations.

As an emergent contaminant resistant to degradation and requiring substantial remediation, PFAS are currently the subject of increased scrutiny by environmental regulators, private party plaintiffs, manufacturers, and the insurance industry. Currently, the federal government has no enforceable environmental regulations of any kind that address PFAS chemicals, but recently, the federal government has issued interim health advisories about the human health effects of PFAS chemicals. As the federal government narrows in on acceptable screening levels, the EPA is preparing to propose new mandatory standards for PFAS chemicals in the fall.

Several states aren’t waiting for federal regulations concerning PFAS in the environment and are pushing forward with demands to sample environmental media for PFAS at some active remediation sites. Now, is the time to address PFAS exposures and seek out coverage.

HISTORICAL COMMERCIAL GENERAL LIABILITY INSURANCE SHOULD BE TENDERED TO PAY FOR PFAS INVESTIGATION, CLEANUP, REMEDIATION, AND LEGAL DEFENSE

Those who used or interacted with PFAS during their business operations can face a variety of exposures due to PFAS including product liability, bodily injury, and environmental cleanup claims. Insureds should be ready to use their commercial general liability (CGL) policies written prior to 1986 to pay for the investigation, remediation, and legal defense of PFAS.

Three reasons why PFAS related damages fit into the pollutant pre-exclusion:

1. Older CGL policies typically apply to an “occurrence” rather than “claims-made basis”, which means the policies in place when there was property damage during the policy period should continue to apply, even if the liability does not appear until decades later. So, for substances now seen as “emerging contaminants” that have been in the soil, groundwater, or otherwise since the 1960s, 1970s, or 1980s, CGL policies from those years can pay for environmental investigation, cleanup, and legal defense. This means older CGL policies insure business owners against claims for property damage like contamination and bodily injury. Similar claims involving PFAS should be no different.

2. Older CGL policies, prior to 1986, did not include the absolute pollution exclusion (including PFAS). This means older CGL policies can cover long-tail claims, such as environmental, investigation, cleanup, and legal counsel fees. Again, similar claims involving PFAS should be no different.

3. Applicable CGL insurance policies never expire. PFAS claims don’t change this fact.

If you feel that you or your business may gain liability from the formal regulation of PFAS chemicals as hazardous substances, contact PolicyFind as soon as possible to get your historical CGL portfolio in order.

PolicyFind is watching the development of insurance coverage related matters regarding PFAS and very closely, not only for bodily injury claims but also for property damage claims related to the investigation and cleanup of subsurface contamination. Significant rulings and opinions will be shared in future blog posts. For questions or more information, please contact us.

 

LAW ELIMINATES STATUTE OF LIMITATIONS ON SEXUAL ASSAULT FOR ONE YEAR 

BY: KRISTEN DRAKE

On May 24, 2022, New York Governor, Kathy Hochul, signed the Adult Survivors Act (ASA) into law.  The ASA creates a one-year ‘Lookback Window’ which opens on November 24, 2022, to allow survivors who were adults (18 and older) at the time they were sexually abused and assaulted to sue their abusers – regardless of when the offenses occurred. 

In 2019, the state of New York enacted the Child Victims Act (CVA) which opened a ‘Lookback Window’ to commence civil actions.  The CVA was extended another year due to the COVID-19 pandemic, and when the window closed in August of 2021, nearly 11,000 lawsuits had been filed. During the CVA lookback window, countless churches, schools, foster care agencies, and youth-based organizations were obliged to respond to the alleged abuses. An important differentiation between the CVA and the ASA, is the age of the survivor when the sexual abuse or assault occurred, although both fall under the broader category of reviver statutes. Prior to the ASA, reviver statutes focused primarily on abuses against children.  With this new law, it’s likely that different types of organizations will face allegations dating back decades, because the survivors were 18 and older when the sexual assault or abuses happened. This expansion may include accusations made regarding assaults at colleges, in the workplace, and/or health care facility abuses – to name a few. 

DECADES-OLD OCCURRENCE-BASED GENERAL LIABILITY POLICIES CAN HELP
When states enact these lookback windows, removing or reducing the statute of limitations for sexual abuse civil suits, organizations that were proximal to alleged abuses can get caught in the crossfire between plaintiffs and alleged offenders. Occurrence-based Commercial General Liability (CGL) policies issued during the policy periods in which the alleged abuse occurred can respond to these new claims – even if the alleged abuse happened in the 1960s.   

DEFENDANT ORGANIZATIONS SHOULD CONSIDER INSURANCE ARCHEOLOGY
As more organizations are compelled to identify and locate their decades-old liability policies to help pay damages, they are oftentimes disheartened to learn how difficult it can be. Since the time of interest in reviver statute claims is oftentimes at least 40 years ago, many records could be lost, destroyed by fire or flood, or purposely purged.   

Upon receiving notice that a lawsuit has been filed against them under a reviver statute, defendant organizations should contact their attorneys, who typically suggest contact with their current insurance agents and brokers. Because of standard document retention practices, these companies quickly learn their current agent/broker has no information dating back decades. It’s at this point or perhaps following a fruitless internal archive search, that defendant organizations should consider Insurance Archeology.

Insurance Archeology is the practice of locating and retrieving proof of the existence, terms, conditions, and limits of lost or destroyed insurance policies. PolicyFind’s expertise is finding and bringing to light old insurance coverage for our clients. Under current and future reviver statutes across the country, historical CGL policies issued to businesses, schools, churches, and other organizations, are the first line of assets to be explored to pay for claims against them. 

Contact PolicyFind today to learn more about your organization’s historical liability insurance portfolio. 

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Kristen Drake brings more than a decade of research and managerial experience in broadcast journalism to the field of insurance archeology. Since joining the PolicyFind team in 2015, Mrs. Drake has successfully documented liability insurance programs on behalf of municipalities, manufacturers and dry cleaners. She continues to translate her expertise in source procurement and digital fact-finding, performing insurance research activities at a very high level, providing on-time execution of contracted performance goals.

ON MARCH 24, 2022, THE APPELLATE DIVISION OF THE SUPREME COURT OF NEW YORK, FIRST DEPARTMENT, ISSUED A NOTEWORTHY RULING IN CERTAIN UNDERWRITERS AT LLOYD’S, LONDON, ET AL. V. NL INDUSTRIES, INC., 2022 NY SLIP OP 02056.

BY: JOSEPH  M. JUNFOLA, CPCU

The case is noteworthy for a few reasons in terms of the interpretation of insurance coverage and issues like the fortuity doctrine, expected/intended consequences, legal damages versus equitable relief, and the definitions of bodily injury and property damage. 

Another notable aspect of this case, and one that should never be underestimated, is the asset value of historical insurance policies. In this case, this value is in the tens of millions of dollars. 

But first, a little background. 

LEAD ABATEMENT AND INSURANCE COVERAGE IN CALIFORNIA 

In March 2000, Santa Clara County filed a class-action lawsuit against manufacturers and promoters of Dutch Boy lead-based paints. NL Industries, a defendant, allegedly promoted the use of interior residential lead paint with knowledge of the danger to children. 

Eleven years later, the case evolved into the Government Plaintiffs (including Santa Clara County) filing a fourth amended complaint asserting a claim for representative public nuisance on behalf of the People. Tried in Summer, 2013, the Court found in favor of the People and, in March 2014 filed an amended statement of that ruling requiring the defendants to pay $1.15 billion into an abatement fund. 

After appeal from the defendants and remand, in July 2019 the Court approved a $305 million settlement. NL’s share was $101.6 million and, as of that date, had already paid $25 million. 

The Court of Appeal affirmed that the plaintiffs must, and did, establish the defendants’ actual knowledge of the hazards of lead paint, including childhood lead poisoning, to sustain a claim for representative public nuisance. And the defendants knew this as early as the 1920s.  

As to the remedy, the abatement of the representative public nuisance alleged on behalf of the People is equitable in nature and does not provide for a damages remedy. The defendants argued, unsuccessfully, that the abatement was “a thinly disguised damages award.”  Had the defendants succeeded, the claim would likely have been defeated since only equitable relief is available for a representative public nuisance claim. 

This is significant because equitable relief is arguably not covered in a CGL policy, one of the arguments that the insurers made in the subsequent coverage action. 

LEAD ABATEMENT AND INSURANCE COVERAGE IN NEW YORK 

The carriers pursued a coverage action in New York and in late December 2020, Certain Underwriters at Lloyd’s, et al. v. NL Industries, Inc., 2020 NY Slip Op 34331 (U), applying New York law, ruled against the carriers’ position that NL’s liability in the California action was not covered. 

In support of their motion for summary judgment, the carriers argued: 

1. Because of NL’s knowledge of the danger of lead paints, it was held liable for the intentional and affirmative promotion of hazardous lead paint for interior residential use, giving way to expected or intended consequences and, therefore, is not covered. 
2. Only “damages” or “damages and expenses” are covered. The abatement remedy was neither, as it constituted equitable relief only as the California court explicitly ruled. 
3. Even if the abatement remedy could somehow be damages, it must be “because of” property damage or bodily injury as provided for in the policies and neither were “elements of the claim.” 

The first argument failed. The Court ruled that, as to the expected/intended argument, in New York there is a distinction between knowledge of the risk of hazardous consequences as to one’s behavior and the intention to cause harm. The carriers failed to make a prima facie case that NL’s action was uninsurable. Furthermore, as to intent, the carriers failed to demonstrate that the alternative to expected/intended, i.e., the codified fortuity doctrine, precluded coverage. 

The second argument failed as well. While the abatement remedy did not constitute damages in California, but instead was an equitable remedy, the New York court found for insurance coverage purposes, “that the abatement fund was not strictly intended to prevent harm, but was monies paid to the government, depleted by its ongoing efforts to remediate the longstanding contamination of houses and buildings by lead paint in California. It, therefore, qualifies as damages under the applicable policies.” 

Finally, the New York Court ruled that while it agreed that property damage and bodily injury are not elements of the People’s representative public nuisance claim, there was a “connection between the lead poison injuries to the children residing in the buildings containing the lead paints promoted by NL and the property damage to those buildings as a result of NL’s promotion of lead paint.” 

The carriers’ motion for summary judgment was denied and they appealed, bringing us to March 24, 2022, and the Appellate Division of the Supreme Court of New York, First Department’s ruling that the Supreme Court correctly denied the motion. Noteworthy is the Appellate Division’s concurrence that despite the ruling by the California court that abatement payments were not damages, they, “had a compensatory effect, which qualified them as damages under the applicable law and insurance policies.” 

THE VALUE OF OLD POLICIES 

On July 24, 2019, the Superior Court issued an Order and Judgment approving a $305 million settlement, of which NL’s share is $101.6 million, and of which NL had already paid $25 million.  

According to NL, Insurers issued or subscribed to 320 policies for NL between 1949 and 2000. More specifically, “between 1949 and 1997, approximately $1.285 billion (43%) in coverage was bought while NL was headquartered in New York, while approximately $1.690 billion (57%) in coverage was negotiated and delivered to NL at its Texas headquarters.” 

In a footnote, it is pointed out that NL believes it purchased policies from the insurers as far back as 1946 but has not located them. Given the ages of the policies, NL was fortunate to have found the policies it did.  The value of old policies as financial sources in long-tail liability claims cannot be stressed enough.  

Contact PolicyFind today to learn more about how we can help you find evidence of your organization’s historical coverage. 

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Joseph Junfola’s insurance claim career spans 43+ years with experience managing, directly or in a supervisory capacity, commercial and personal lines of insurance claims. For the last 29 years, he has specialized in commercial long-term exposure or continuous property damage, bodily injury and personal injury claims on a national basis primarily involving construction defect, environmental, toxic tort, product liability, and design professional liability claims. He frequently collaborates with underwriting professionals to draft and redraft policy language. His experience also includes construction accident claims, particularly third-party-over actions in New York.

LEARN ABOUT REVIVER STATUTES THAT ARE CROPPING UP ACROSS THE COUNTRY AND HOW INSURANCE ARCHEOLOGY IS FINDING APPLICABLE INSURANCE COVERAGE FOR THESE CLAIMS

BY: KRISTEN DRAKE

Churches, school districts and youth-based organizations across the country continue to face new claims of childhood abuse or molestation from survivors, due to increasing legislation in certain jurisdictions related to ‘reviver’ or ‘window’ statutes. Although named more specifically in each applicable state, reviver statutes in general are intended by lawmakers to give victims more time to make such allegations, outside of established statute of limitations parameters. Amidst the high-profile news stories of abuse claims against the American Gymnastics Association, The Boy Scouts of America, and the Roman Catholic Church, an increasing number of claims are also being made by abuse survivors against much smaller institutions. PolicyFind has been assisting survivors and these institutions across the country by conducting Confidential Insurance Archeology® and finding applicable insurance coverage from the past.

NEW YORK’S CHILD VICTIMS ACT (CVA)
An early and well-known reviver statute in the State of New York is called the Child Victims Act (CVA), which was enacted in August of 2019. The CVA was crafted by lawmakers to allow victims of childhood sexual abuse a one-year lookback window to commence civil actions, previously time-barred, against public and private institutions. The CVA was ultimately extended an additional year due to COVID-19. The Child Victims Act window closed on August 14, 2021, with nearly eleven thousand lawsuits filed.

SIMILAR ‘REVIVER’ OR ‘WINDOW’ STATUTES IN OTHER STATES
Another state that was early to enact a reviver statute was New Jersey. The legislation (S-477) was enacted on December 1, 2019 and extended the civil statute of limitations for survivors of child sexual abuse. This extension opened a two-year window for those alleging abuse and sunset in December of 2021. 

Earlier in 2021, Colorado’s governor signed into law a three-year look-back window that eliminates the civil statute of limitations for sexual assaults to include both minors and adults. This law provides that civil suits can be made for abuse claims dating back to 1960, it limits damages that can be awarded depending on the defendant type.

Most recently, on August 1, 2021, Louisiana opened a three-year window for survivors of childhood sexual abuse to seek damages in civil court; and, in Maine, a permanent revival window has opened to include all expired claims of child sexual abuse.

HOW INSURANCE ARCHEOLOGY CAN BE VALUABLE DURING REVIVER STATUTE PROCEEDINGS
As reviver statutes become more prevalent, smaller institutions and organizations, like schools, churches, and foster care agencies, are facing civil actions with allegations dating back decades.  Occurrence-based CGL policies issued during the time period in which the alleged abuse occurred are being triggered by the policyholding institutions with increasing frequency. Since the time of interest in reviver statute claims is oftentimes at least 40 years ago, the tricky part is actually finding those old CGL policies.

While the respective windows to file civil lawsuits in New York and New Jersey have closed, many institutions still need to locate their historical occurrence-based general liability policies to respond to claims. Many school districts and churches have attempted to locate this information, without assistance, and have come up empty-handed, with strict deadlines still looming. 

Insurance Archeology is the practice of locating and retrieving proof of the existence, terms, conditions, and limits of lost or destroyed insurance policies. PolicyFind’s expertise is the location and recovery of historical CGL policies issued to school districts, churches, and other youth-based organizations, to pay for current claims against them.

Contact PolicyFind today to learn more about how we can help you find evidence of your organization’s historical coverage.

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Kristen Drake brings more than a decade of research and managerial experience in broadcast journalism to the field of insurance archeology. Since joining the PolicyFind team in 2015, Mrs. Drake has successfully documented liability insurance programs on behalf of municipalities, manufacturers and dry cleaners. She continues to translate her expertise in source procurement and digital fact-finding, performing insurance research activities at a very high level, providing on-time execution of contracted performance goals.

LIQUIDATION AND COMPANIES AFFECTED

According to the Pennsylvania Insurance Department, on March 11, 2021, Pennsylvania Commonwealth Court placed Bedivere Insurance Company, formerly known as OneBeacon Insurance Company, into liquidation. Bedivere’s liquidation affects the following companies: Lamorak Insurance Company – formerly known as OneBeacon America Insurance Company, Potomac Insurance Company, and Employers Fire Insurance Company. By way of historical succession and merger, property and casualty carriers American Colonial, General Accident Insurance Company of America, and Commercial Union Insurance are also impacted within this liquidation.

IMPACT
This liquidation action has a potentially far-reaching impact in the world of long-tail, toxic tort, and latent injury claims, which are typically covered by general liability policies formerly written by companies like those under Bedivere. In these instances, historical insurance portfolios that include an allocated share to a Bedivere company could be missing a key piece of the coverage equation; thereby putting a financial burden on policyholders and other participating carriers alike

CLAIMS DEADLINE
If you believe you have a claim or a subrogation to file with the Bedivere Insurance Company, a deadline of December 31, 2021 has been set for a receipt of claims. If claims are not submitted by that date, your claim may be denied or considered at a ‘lower priority level’.

LEARN MORE
For more information about the liquidation action, frequently asked questions, and filing deadlines, please visit the Pennsylvania Insurance Department here: https://www.insurance.pa.gov/Regulations/LiquidationRehab/Pages/Bedivere-Insurance-Company.aspx

If you’re facing a long-tail liability, toxic tort, or latent injury claim and the carrier names listed in this post sound familiar, please contact PolicyFind. There is still time for our team to help you locate and present your evidence of coverage and to submit Proof of Claim, ahead of the Claims Bar Date set for the end of this year.

By David A. O’Neill JD

POLICYFIND’S CO-FOUNDER & DIRECTOR OF INVESTIGATION, DAVID O’NEILL, JD, EXPLAINS THE DECISION IN COLONY INSURANCE COMPANY V. BUCKEYE FIRE EQUIPMENT CO.

The U.S. District Court for the Western District of North Carolina ruled on October 19, 2020 that the “hazardous materials” exclusion in a 2008 CGL policy did not apply to relieve the insurer of its duty to defend a manufacturer of fire suppressant foam against allegations of bodily injury from direct product exposure. The court’s decision appears to be the first of several hundred cases consolidated in North Carolina alleging bodily injury and property damage from exposure to products containing perfluoroctane sulfanate (PFOS) and/or perfluorooctanic acid (PFOA).

In Colony Insurance Company v. Buckeye Fire Equipment Co., Colony sought the Court’s declaration that its “hazardous exposure” exclusion applied to bar its duty to defend in a case where a firefighter was significantly exposed to elevated levels of PFOS and PFOA in his demonstration and application of Buckeye’s products. The Colony policy defined “hazardous materials” in part as “pollutants” and defined “pollutants” as “any solid, liquid, gaseous irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

Looking to North Carolina law, the District Court cited a 1991 case styled West American Insurance Co. v. Tufco Flooring East, Inc. in which the state court of appeals found a duty to defend despite the presence of a pollution exclusion. The Tufco court characterized the terms used in the pollution exclusion as “environmental terms of art” and reasoned that any “discharge, dispersal, release or escape of pollutants” therefore needed to be into the environment to trigger the pollution exclusion and deny coverage to the insured.

Further, the District Court found that the Tufco rule had been applied in a 4th Circuit Court of Appeals case styled Auto-Owners Insurance Co. v. Potter where the insured was sued for bodily injury based on contact with contaminated water. That court had determined that “under North Carolina law, an insurer may not deny coverage to an insured based on a pollution exclusion, or any variation thereof, if the occurrence and the resulting injury and property damage allegedly suffered….are not the prototypical environmental harms that a pollution exclusion clause is generally intended to protect against.”

Applying the Tufco rule to the Colony Insurance Company case, the District Court determined that the firefighter’s bodily injury complaint did not allege the “prototypical environmental harm” that the pollution exclusion was intended to protect against. Hence, the exclusion was ineffective to bar the insurer’s duty to defend.

LOOKING FORWARD
This decision by the U.S. District Court for the Western District of North Carolina is expected to be indicative of its future decisions in the underlying cases as it applies the law of the various states to issues identified here concerning the use of firefighting products containing PFOS and PFOA. The underlying cases include those from Maryland, Washington and New Hampshire – all states where courts have found personal injury can result from exposure to pollutants. Also, this North Carolina decision did not determine whether the insurer had the duty to indemnify, only that it had the duty to defend. That issue remains to be decided in the various cases.

PolicyFind is an insurance archeology firm and the nation’s leader in locating historical insurance coverage that applies to latent injury claims.

If you represent clients whom are impacted by direct exposure injury claims, contact us for a confidential consultation.

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David A. O’Neill, Director of Investigations

David O’Neill has over 20 years of experience in claims recovery on behalf of corporate policyholders involving environmental property damage and toxic tort and asbestos exposure claims. He is an accomplished insurance archeologist with extensive experience in locating and retrieving insurance coverage evidence on behalf of potentially responsible parties responding to environmental investigation and remediation demands. Mr. O’Neill is also an experienced PRP investigator with knowledge of CERCLA/SARA requirements, having conducted over thirty PRP searches at Superfund hazardous waste sites for PRP defense counsel and previously for USEPA Regions V and VIII. Mr. O’Neill was formerly Insurance Research Manager for Risk International Services, Inc. He graduated from Case Western Reserve Law School in 1986.