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Metro Wastewater Reclamation Dist. v. Continental Casualty Co.

ELR Citation: 24 ELR 20473
Nos. No. 89-C-895, 834 F. Supp. 1254/(D. Colo., 09/23/1993)

The court holds that the insurers of a local sewage authority are not required to defend the authority against claims brought by the U.S. Environmental Protection Agency (EPA) under §122 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in connection with the authority's disposal of sewage sludge at the Lowry Bombing Range in Colorado. The court first holds that jurisdiction is based on diversity of citizenship and, accordingly, the insurance policies must be interpreted under Colorado law. The court holds that the insurers do not have a duty to defend the sewage authority, because EPA enforcement action is not a "suit" within the meaning of the policies. Dictionaries consistently define "suit" as a process or action in a court, and there is no allegation here of a process or action in a court. Furthermore, all the policies at issue allow the insurer to make investigations and settlements "of any claim or suit." Were the duty to defend triggered by submission of EPA claims and demands alone, the use of the word "claim" would be superfluous.

The court next holds that CERCLA response costs that EPA seeks are "damages" within the meaning of the insurance policies. Dictionary definitions of the word indicate that the plain meaning of the term would include response costs, and defendants, as drafters of the policies, should have used clear, explicit language to exclude coverage for equitable relief if they so intended. Finally, finding genuine issues of material fact, the court denies motions for summary judgment on whether plaintiff's notice to the insurers was unreasonably late; an "occurrence" took place; and the sewage sludge disposed of was "waste materials or other irritants, contaminants, or pollutants" within the meaning of the policies' pollution exclusion clauses.

Counsel for Plaintiff
Joel Moritz
Inman, Flynn, Biesterfield & Crabtree
1600 Lincoln St., Ste. 1700, Denver CO 80264
(303) 861-5300

Counsel for Defendants
Robert Carlson
White & Steele
1225 17th St., Ste. 2800, Denver CO 80202
(303) 296-2828