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Aetna Casualty & Sur. Co. v. Gulf Resources & Chem. Corp.

Citation: 19 ELR 21063
No. Nos. 87-3043, -3082, 709 F. Supp. 958/30 ERC 1787/(D. Idaho, 03/31/1989)

The court holds that the Environmental Protection Agency's (EPA's) notification that an insured is a potentially responsible party (PRP) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) does not trigger an insurer's duty to defend. The policies at issue state that the insurer has the duty to defend any suit against the insured on account of covered property damage. The court first holds that because no complaint has been filed, there is no suit and thus the insurer's duty to defend has not been triggered. The court then holds that the policies do not provide coverage for either CERCLA response costs or natural resource damages. The response costs sought by EPA are equitable in nature and thus are not damages under the policies. More basically, CERCLA liability for response costs is not dependent on the occurrence of property damage, but the policies at issue legally obligate the insurers to pay only property damages. Moreover, response costs are simply a government-imposed cost of doing business for firms that release hazardous substances, and such costs are not covered by these policies any more than the costs of complying with health and safety regulations are covered. Finally, the court holds that even though CERCLA natural resource damage liability would likely be covered by the type of policies at issue, no such liability exists under the policies because CERCLA §107(a)(4)(C) precludes recovery of damages occurring prior to CERCLA enactment in 1980, and the policies all expired prior to 1980.

Counsel for Plaintiffs
R. B. Kading Jr., Warren E. Jones
Eberle, Berlin, Kading, Turnbow & Gillespie
300 N. Sixth St., P.O. Box 1368, Boise ID 83701
(208) 344-8535

Counsel for Defendants
Stephen W. Greiner, Richard Mancino
Willkie, Farr & Gallagher
One Citicorp Ctr., 153 E. 53d St., New York NY 10022
(212) 935-8000