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Dow Chem. Co. v. Fireman's Fund Ins. Co.

Citation: 33 ELR 20028
No. No. 96-75832, 217 F. Supp. 2d 816/(E.D. Mich., 08/28/2002)

The court holds that insurance companies may have a duty to indemnify a chemical company that was sued by municipalities for groundwater contamination. The insurance companies provided the chemical company with comprehensive general liability coverage from 1956 through 1976 under a series of six policies. Although the chemical company manufactured the pesticide that caused the groundwater contamination at issue in the 1950s, the contamination was not discovered until 1979. Nevertheless, the court holds that the insurance companies may have to indemnify the chemical company because the injury giving rise to the underlying suit may have occurred during the policy period. Under the injury-in-fact approach to determining whether coverage is triggered, insurance coverage is triggered when there is actual property damage. Further, the policies are unambiguous and the chemical company's interpretation in favor of coverage is reasonable. Thus, insurance coverage is triggered if the chemical company can show at trial that the groundwater was tangibly injured by the pesticides and that this injury gave rise to liability. The court also holds that coverage is not limited by the scope of the underlying claims. Coverage is triggered by property damage that occurs within the policy period that gives rise to liability even if that liability arises after the policy period. The court further holds that the policies do not require that the injured tangible property belong to the municipalities, which own the right to extract the contaminated water but not the water itself.

Counsel for Plaintiff
Harold J. Blanchet Jr.
Braun, Kendrick & Finkbeiner
4301 Fashion Square Blvd., Saginaw MI 48603
(989) 498-2100

Counsel for Defendants
Ronald W. Rice
Law Offices of Ronald W. Rice
40 Oak Hollow St., Southfield MI 48034
(248) 351-7477