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Gahagen Iron & Metal Co. v. Transportation Ins. Co.

Citation: 23 ELR 21091
No. No. 91-F-1984, 812 F. Supp. 1106/(D. Colo., 09/30/1992)

The court holds that an insurance company must defend and indemnify its insured in a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) liability case brought in Nebraska, but applies the law of Colorado, the principal location of the insured risk, to interpret the insurance contracts. The court first holds that a federal court in a diversity case is required to apply the conflict of laws principles of the forum state. The court finds that, in this case, Colorado is the state with the most significant relationship to the litigation because the insurance contract was solicited, negotiated, and executed in Colorado to cover property damages for a Colorado domiciliary. The court holds that it is the parties' understanding at the time the insurance policies were issued that determines which state's law shall govern. The court also holds that the fact that the plaintiff sold batteries to a Nebraska company that recycled them in Nebraska creating CERCLA liability in Nebraska is insufficient evidence to prove that the parties, at the time the policies were issued, understood Nebraska to be the principal location of the insured risk.

Counsel for Plaintiff
Edward J. McGrath, William D. Watson, Robert Tuchman
Holme, Roberts & Owen
1700 Lincoln St., Ste. 4100, Denver CO 80003
(303) 861-7000

Counsel for Defendant
Thomas L. Roberts, John L. Wheeler, Susan Speichinger
Pryor, Carney & Johnson
6200 S. Syracuse La., Ste. 400, Englewood CO 80111
(303) 771-6200