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State v. CNA Ins. Cos.

ELR Citation: 31 ELR 20881
Nos. No. 99-276, 779 A.2d 662/(Vt., 07/20/2001)

The court affirms in part and reverses in part a trial court decision that the insurance policies of the Vermont Department of Corrections (DOC) did not provide coverage for an administrative proceeding brought against it by the state environmental agency for contamination at a former prison site, but that the insurance policies covered the DOC in a civil suit brought against it by a state school district. The trial court held that the administrative proceeding was not a suit and, thus, not covered under the policies. The court first holds, however, that the policies do not define "suit," and, therefore, any ambiguities must be interpreted in favor of the insured. Here, the proceedings were sufficiently coercive and adversarial in nature to constitute a suit. The court next holds that the state's hazardous waste statute was intended to be enforced by the environmental agency against other state agencies. The fact that both entities are state agencies does not violate any notion of separation of powers or transform the proceeding into a collusive first-party claim. The trial court, therefore, erred in concluding that the policy did not cover the administrative proceeding. The court further holds that although the trial court properly held that, for purposes of the civil suit, there was property damage and that any damage was covered by an "occurrence," it erred in holding that the damages occurred during the policy periods. There is no evidence as to what happened at the prison site when the policies were in effect. Therefore, it was error for the trial court to infer that the damage occurred during the policy periods.

The full text of this decision is available from ELR (13 pp., ELR Order No. L-387).

Counsel for Plaintiff
William E. Griffin, Chief Ass't Attorney General
Attorney General's Office
Pavilion Office Bldg.
109 State St., Montpelier VT 05609
(802) 828-3171

Counsel for Defendants
James E. Preston
Pierson, Wadhams, Quinn & Yates
253 S. Union St., Burlington VT 05401
(802) 863-2888