Bituminous Casualty Corp. v. Vacuum Tanks, Inc.
Citation: 23 ELR 20215
No. No. 91-2709, 975 F.2d 1130/(5th Cir., 10/22/1992)
The court holds that an insurer does not have the duty to defend a policyholder against a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) claim where evidence of the policies' existence is available, but where evidence of the policies' terms was not presented despite a good-faith effort to produce them. Although the evidence showed that the insurer issued comprehensive general liability insurance policies to the insured for coverage during the time in which the U.S. Environmental Protection Agency (EPA) found the insured partially responsible for improper waste disposal, neither party could find the policies at the time of trial. The court holds that the district court erred in failing to apply Texas law, which requires insureds to prove the terms of insurance policies to establish coverage. Texas case law additionally provides that evidence of the existence of policies is not evidence of the terms of those policies for determinations of coverage. The court holds that there was no indication of bad faith on the part of the insurer in its failure to locate the lost policies. The court holds that it was error to use the specimen policy was admitted for the limited purpose of demonstrating the insurer's good faith in attempting to find the lost policies. No opinion was expressed by the court as to how the enforcement of CERCLA, which often involves claims brought decades after insurance policies lapse, will affect the issue of an insurer's good faith in the routine destruction of expired policies. The court remands the case for further proceedings to determine whether the insurer falls within the provisions of a Texas law exempting certain insurers from payment of attorneys fees in declaratory judgment actions.
[Counsel not available at print date.]
Before JOHNSON, GARWOOD, and WIENER, Circuit Judges.