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Sunoco, Inc. v. Illinois Nat'l Ins. Co.

ELR Citation: 37 ELR 20216
Nos. No. 04-4087, (E.D. Pa., 08/13/2007)

A district court held that certain consulting costs an oil company incurred in mitigating and remediating a methyl tertiary butyl ether spill in Fort Montgomery, New York, do not qualify as defense costs immediately reimbursable from its insurer. The court applied the New Jersey presumption that mandated cleanup costs are indemnity costs to be allocated to the indemnity provisions of an insurance policy. Policyholders may rebut that presumption by showing that the insurance company would derive an unjust benefit from such an allocation if it would relieve the insurance company of an expense that it would otherwise have incurred under its obligation to defend. Here, the oil company presented no factual basis that would rebut the presumption that the expenses associated with the consultant's work to remediate the site and mitigate liability were indemnity expenses.