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California Dep't of Toxic Substances Control v. Chico, Cal., City of

ELR Citation: 34 ELR 20011
Nos. No. CIV. S-02-442 LKK/DAD, (E.D. Cal., 01/04/2004)

The court holds that an insurer of a potentially responsible party (PRP) may not seek to impose joint and several liability against defendant PRPs under §107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). CERCLA allows those who "pay compensation" to another for damages or costs resulting from a release of a hazardous substance to recover those expenses by bringing a subrogation action. Such actions are the traditional means by which insurance companies may recoup. While an insurer can bring a subrogation action as provided in CERCLA, it may not also bring a §107 action as a separate and distinct basis for recovery. A PRP cannot bring a §107(a) action to hold other PRPs jointly and severally liable. It thus follows that in a subrogation action, the insurer cannot divorce itself from its insured's status as a PRP, and being limited to its insured's rights and claims, cannot impose joint and several liability on the other PRPs. Further, if the insurer were allowed to bring a §107(a) action, it would not be limited to whatever rights the insured has, but would be able to hold other PRPs jointly and severally liable for its indemnification costs. It follows that if the subrogation and §107(a) actions were interpreted as cumulative remedies, liability insurers would always seek recovery pursuant to §107(a), thereby nullifying CERCLA's subrogation provision. The insured's claim for contribution under CERCLA §113 was likewise dismissed.

Counsel for Plaintiffs
Timothy Sullivan, Deputy Attorney General
Attorney General's Office
2101 Webster St., 12th Fl., Oakland CA 94612
(510) 286-4200

Counsel for Defendants
Francis M. Goldsberry
Goldsberry, Freeman, Guzman & Ditora
777 12th St., Ste. 250, Sacramento CA 95814
(916) 448-0448