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Associated Indem. Corp. v. Fairchild Indus.

ELR Citation: 22 ELR 20811
Nos. No. 91-9137, 961 F.2d 32/(2d Cir., 04/03/1992)

The court holds that the district court abused its discretion by imposing sanctions under Federal Rule of Civil Procedure 11 on an insured company that sought coverage from a secondary insurer for environmental cleanup liabilities. Based on the district court's own findings, the insured could reasonably have argued that its environmental liabilities might exceed $25 million, thereby triggering the secondary insurer's coverage. The district court ignored the significant range of potential error in the U.S. Environmental Protection Agency's cleanup estimates, and the estimates do not account for inflation, which has increased the cost of remediation.

Counsel for Defendant-Appellant
Robert M. Rader, Richard C. Browne, Tracy M. Getz
Winston & Strawn
1400 L St. NW, Washington DC 20005
(202) 371-5700
James I. Serota, Michael Guararra
Huber, Lawrence & Abell
605 3rd Ave., 27th Fl., New York NY 10158
(212) 682-6200

Counsel for Defendant-Appellee
Marian S. Hertz
Sheft & Sheft
11 Broadway, New York NY 10004
(212) 344-7788

McLaughlin, J. (before Van Graafeiland and Walker, JJ.)