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Maryland Casualty Co. v. Wausau Chem. Corp.

ELR Citation: 23 ELR 21395
Nos. No. 91-C-479-C, 809 F. Supp. 680/(W.D. Wis., 12/08/1992)

The court holds that an insurance company must indemnify a chemical company for Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) response costs incurred pursuant to a consent decree with the U.S. Environmental Protection Agency (EPA). The court holds that response costs incurred by the chemical company pursuant to the consent decree qualify as "damages" under standard form comprehensive general liability insurance policies, and that groundwater contamination in and around a chemical site qualifies as "property damages" for purposes of determining whether CERCLA response costs incurred under the consent decree were covered by the policies. The court also holds that when chemicals released on the insured's property contaminate the groundwater below, an owned-property exclusion will not defeat insurance coverage. The court holds that the insurers are precluded from denying coverage based on late notice, even if unreasonably late, because the chemical company's failure to notify them of every individual occurrence and each step in the negotiating process with EPA was not prejudicial. The court holds that CERCLA response costs incurred pursuant to the consent decree are not "voluntary" payments excludable from coverage, considering the penalties that could be assessed on the chemical company for failing to negotiate with EPA, and the insured's intention to remain uninvolved and deny coverage.

Counsel for Plaintiffs
Richard A. Hollern
Stafford, Rosenbaum, Rieser & Hansen
Three S. Pinckney St., Ste. 1000, P.O. Box 1784, Madison WI 53701
(608) 256-0226

Counsel for Defendants
Michael, Best & Friedrich
Steven P. Means
Firstar Plaza
One S. Pinckney St., P.O. Box 1806, Madison WI 53701
(608) 257-3501