ATTORNEY AT LAW PLLC. Focus on Potential Sources of Funding Available to Private & Public Parties:

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Melina Miller
8 years ago
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1 Paying for Cleanup of Contaminated Land: Damages, Cost Recovery, Contribution Claims; Coverage Under Thomas M. Kilbane Attorney at Law 8164 NE Yeti Lane Bainbridge Island, WA Overview Focus on Potential Sources of Funding Available to Private & Public Parties: Claims/Actions for Damages, Cost Recovery, and/or Contribution Pursuit of Coverage for Environmental Claims Under 1

2 Potential Claims Primary Sources/Types of Claims: Contract Tort Federal and State Cleanup Laws Contract Claims Under Real Estate Purchase & Sale / Other Acquisition Agreements: Breach of contract Breach of representation & warranty Failure to disclose Hold harmless, defense, indemnity Holdback/escrow portion of price 2

3 Contract Claims Potential Pitfalls: Failure to Survive Closing As-Is Clause Waiver and/or Release Time Limits Insufficient Reserves Other Potential Defenses Tort Claims Potential Common Law/Statutory Claims: Trespass Nuisance Negligence Other Potential Defenses and Other Considerations 3

4 CERCLA = The Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C et seq., a/k/a the federal Superfund law MTCA = The Model Toxics Control Act, Chapter D RCW, a/k/a the Washington state Superfund law CERCLA and MTCA impose liability for: A Release Of a Hazardous Substance At or from a Facility 4

5 CERCLA & MTCA liability is generally: Strict Joint and Several Retroactive CERCLA potentially responsible parties / MTCA potentially liable persons include: Current Owner or Operator Past Owner or Operator at time of release Arrangers for Disposal/Generators Transporters to TSD facility they selected 5

6 Private parties may bring claims against other PRPs/PLPs for: Recovery of remedial action costs incurred Contribution toward remedial action costs Remedial action is defined broadly to include any action or expenditure to identify, eliminate, or minimize any threat to human health or the environment resulting from the actual or threatened release(s) of any hazardous substance(s) Potential Recovery of Attorneys Fees Under CERCLA: Attorneys fees and expenses as such are not recoverable Fees and expenses incurred in non-litigation cleanuprelated activities may be recoverable remedial action costs Under MTCA: Recoverable remedial action costs shall include reasonable attorneys fees and expenses The prevailing party shall recover its reasonable attorneys fees and costs 6

7 Potential Defenses and Exemptions: Act of God, act of war, act or omission of unrelated third party Contiguous property exclusion (CERCLA); groundwater migration exclusion (MTCA) Innocent purchaser defense Bona fide prospective purchaser settlement Lender and fiduciary liability exemptions Other Potential Pitfalls and Considerations Overview/Key Points: Historical insurance policies may provide coverage for environmental claims Focus on Comprehensive/Commercial General Liability policies issued before Such policies may provide funds for investigation and cleanup as well as other defense costs and/or indemnity Investigate and identify historical insurance coverage and search for policies/evidence of policy terms Provide timely notice and tender of claim to insurers 7

8 Types of policies that may provide coverage for environmental claims: Comprehensive/Commercial General Liability (CGL) policies Other primary liability policies Umbrella policies Excess policies Vintages of CGL policies more likely to provide coverage: Policies issued before about 1970, when policies began to include qualified pollution exclusion Policies issued before about , when policies began to include so-called absolute pollution exclusion 8

9 Types of parties whose old CGL policies may provide coverage: Current and former property owners and tenants (named insureds) Current and former landlords required to be named as additional insureds Other potentially responsible parties (e.g., neighboring landowner whose contamination migrated onto property) Basis for coverage of environmental claims under old CGL policies: Broad grant of coverage subject to bargained for limits of liability Further limited by numerous definitions, exclusions, conditions, and endorsements, which Washington courts have often found ambiguous and construed against insurers 9

10 Coverage applies in the event of an occurrence that results in property damage during the policy period (vs. claims made during the policy period), which the insured neither expected nor intended Pre-1970 policies typically do not exclude property damage resulting from pollution that otherwise falls within the scope of coverage Policies issued from 1970 to 1986 typically contain a qualified pollution exclusion that excludes property damage arising out of the discharge of pollutants, but which does not apply if the discharge was sudden and accidental Washington courts have held the phrase sudden and accidental to be ambiguous and interpreted those terms to mean unexpected and unforeseen 10

11 Liability insurance policies generally include both: A duty to defend the insured if there is any potential for coverage, and A duty to indemnify the insured if coverage is established The duty to defend is generally broader than the duty to indemnify, but perhaps not always: Compare Weyerhaeuser Co. v Aetna Cas. & Sur. Co., 123 Wn.2d 891, 874 P.2d 142 (1994) with Gull Industries, Inc. v State Farm Fire & Cas. Co., Wn. App., P.3d, 2014 WL (Div. I, June 2, 2014) Elements potentially needed to trigger duty to defend and/or duty to indemnify: Strict liability imposed by CERCLA or MTCA on the insured for remedial action costs incurred to comply with such law A claim against the insured, or its functional equivalent A suit against the insured, or its functional equivalent An occurrence resulting in unexpected and unintended damage to another s property during the policy period Timely notice to insurer of any occurrence and tender of any claim or suit to insurer for defense and/or indemnity 11

12 Conclusion Questions or Comments? Please hold for Q & A/discussion period following presentations See me after and/or give me your business card Contact me by phone ( ) or (tom@kilbanelaw.com) Thank you! 12

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