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Olin Corp. v. Insurance Co. of Am.

ELR Citation: 22 ELR 20940
Nos. No. 91-9155, 966 F.2d 718/(2d Cir., 06/01/1992)

The court holds that a manufacturer of dichloro-diphenyl-trichloroethane (DDT) is not entitled to reimbursement from its primary insurance carrier for defense costs and indemnification for losses stemming from lawsuits alleging damages from DDT released from the manufacturer's Alabama facility, because the manufacturer failed to provide the insurer with timely notice of occurrence. Although a suit was filed against the DDT manufacturer in July 1979, the manufacturer did not notify its primary carrier until November 1981. The manufacturer settled most of the lawsuits and was subsequently sued by numerous other plaintiffs in a second wave of actions. In 1983, the manufacturer filed an action for indemnification and cost recovery against its primary and excess insurance carriers. One primary carrier had issued two comprehensive general liability (CGL) policies to the manufacturer containing notice of occurrence and notice of claim or suit provisions, which required the manufacturer to notify the insurer of any occurrence, claim, or suit for which coverage was provided as soon as practicable. The district court granted the insurer summary judgment as to the second wave lawsuits.

The court holds that the manufacturer's obligation to notify the insurer of the occurrence was triggered at the latest by July 1979, and the two-and-one-half-year delay between the July 1979 filing of the first DDT-related lawsuits against the manufacturer and the November 1981 notification by the manufacturer to the primary carrier of the occurrence, was unreasonable as a matter of law. Contrary to the manufacturer's position that the notice-of-occurrence obligation as to the second wave lawsuits was not triggered until the first second-wave lawsuit was filed in 1983, the existence of the first-wave claims made the second-wave claims inevitable. Under the policies, all exposure to substantially the same general conditions existing at or emanating from each premises location is deemed one occurrence. Thus, the district court correctly determined that July 1979 was the latest possible date for complying with the notice-of-occurrence obligation, and properly denied the manufacturer's attempt to raise the second-wave argument for the first time in a motion for modification filed two months after the district court decision. Finally, the court holds that the manufacturer is not excused for the delay in notifying the insurer of the occurrence. The manufacturer knew of the DDT contamination flowing from its plant and of health concerns about DDT years prior to 1979. Moreover, the court rejects the manufacturer's claim that it should be excused from its obligation to notify the insurer of the occurrence because it did not discover the primary carrier policies until 1981. It is the responsibility of the insured, not the insurance company, to keep track of which carriers have provided it with liability insurance. The court holds that a lack of knowledge of an insurance policy does not excuse a delay in notification of an occurrence.

Counsel for Defendants
James J. Harrington & Assoc.
437 Madison Ave., New York NY 10022
(212) 308-5900

Counsel for Defendant-Appellee
Dale C. Christensen Jr.
Seward & Kissel
One Battery Park Plaza, New York NY 10004
(212) 574-1200

Before Feinberg and Altimari, JJ.