Jump to Navigation
Jump to Content

Grisham v. Commercial Union Ins. Co.

ELR Citation: 22 ELR 20655
Nos. No. 89-1481, 951 F.2d 872/(8th Cir., 12/09/1991) Vacated & aff'd as amended

The court, on petition for rehearing, replaces its opinion at 21 ELR 20913, and holds that under Arkansas law, cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) are not "damages" under a comprehensive general liability (CGL) insurance policy. After affirming the summary judgments entered by the district court in favor of appellee insurers, appellants filed a petition for rehearing contending that the U.S. Supreme Court's intervening decision in Salve Regina College v. Russell, 111 S. Ct. 1217 (1991), which requires courts of appeals to review de novo district courts' determinations of state law, compels a result different from the court's earlier decision. The court first notes that it is bound by its decision in Continental Insurance Co. V. Northeastern Pharmaceutical & Chemical Co. (NEPACCO), 18 ELR 20819, until overruled by the Eighth Circuit en banc. In NEPACCO, the court reviewed decisions of the Missouri courts involving similar principles embodied in Arkansas law. The court concludes that the Supreme Court of Arkansas would resolve this case in the same way as the court resolved NEPACCO, based on the court's reading of the Arkansas Supreme Court's decision in Home Indemnity Co. v. City of Marianna, 727 S.W.2d 375 (1987). The court holds that because none of the state and federal actions involved at the Arkwood site involved in this case sought the payment of money to a government agency, or the payment of any kind of compensation, reading the phrase "all sums which the insured shall become legally obligated to pay as damages" to cover all litigation costs and other ordered relief would ignore the limiting language in the insurance policies at issue. To extend coverage beyond the legal damages specified in the insurance contract would run counter to the Arkansas Supreme Court's pronouncement that the terms of an insurance contract are not to be rewritten to bind the issuing company to a risk that is plainly excluded and for which it was not paid.

Counsel for Appellants
Stephan G. Weil, Jerold Oshinsky, Leon B. Kellner
Anderson Kill Olick & Oshinsky
2000 Pennsylvania Ave. NW, Washington DC 20006
(202) 728-3100

Counsel for Appellees
Roger E. Warin
Steptoe & Johnson
1330 Connecticut Ave. NW, Washington DC 20036
(202) 429-3000

Walter B. Cox, Tim E. Howell
Davis, Cox & Wright
19 E. Mountain St., P.O. Drawer 1688, Fayetteville AR 72702
(501) 521-7600

Before ARNOLD, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and WOLLMAN, Circuit Judge.