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Maryland Casualty Co. v. Armco, Inc.

Citation: 17 ELR 20143
No. No. Y-85-1396, 643 F. Supp. 430/24 ERC 1980/(D. Md., 09/08/1986)

The court holds that an insurance company's contractual duty to defend the insured from suits seeking "damages" does not include lawsuits alleging liability for response costs under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) § 107(a)(4)(A). The court first notes that it applies Maryland law, which provides that if an insurance contract is ambiguous, the ambiguity is to be resolved against the company who prepared the policy and in favor of the insured; however, the word "damages" in the insurance context unambiguously does not include claims for equitable relief.

The court next rules that suits for response costs are equitable causes of action and not suits for "damages." The court observes that suits for response costs under CERCLA § 107(a)(4)(A) are not triable before a jury because they are analogous to equitable claims for restitution. Noting that the lawsuit could have been brought for natural resource damages, but was not, the court concludes that the insurance contract creates an obligation to defend lawsuits which are actually brought, not hypothetical ones.

[Decisions in the underlying litigation are published at 12 ELR 20238; 14 ELR 20207, 20809; 16 ELR 20193; and 17 ELR 20158.]

Counsel for Plaintiff
Jonathan D. Smith, Stephen J. Immelt
Piper & Marbury
36 S. Charles St., Baltimore MD 21201
(301) 539-2530

Counsel for Defendant
Mark R. Engel, Benjamin Rosenberg
Venable, Baetjer & Howard
1800 Mercantile Bk. & Trust Bldg., 2 Hopkins Plaza, Baltimore MD 21201
(301) 244-7400