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Goodstein v. Continental Cas. Co.

ELR Citation: 38 ELR 20007
Nos. No. 05-35805, (9th Cir., 12/03/2007)

The Ninth Circuit held that an insurance company had no duty to pay for the difference between the sale price received for polluted properties and the fair market value of the land had it been cleaned up prior to sale. The properties at issue were owned by two dissolved partnerships. A court-appointed receiver tasked with winding up the partnerships then sold the polluted properties as is. Because the properties were sold at a significantly reduced price due to the pollution, the receiver tendered a $5.3 million claim to the insurance company reflecting the difference between the appraised value of the sites if uncontaminated less the sales price of the sites in their contaminated states. The insurance company refused to pay, and the receiver filed the instant suit, seeking a declaration that the insurer owed a duty to indemnify and defend the receiver under the dissolved partnerships' comprehensive general insurance policy. Under Washington State law, the receiver's claim for the diminution in the sale value of the properties due to pollution was not covered under the policy. The receiver failed to ensure that the polluted properties would be cleaned up promptly. Rather, the receiver would have the insurance company compensate him when he has not taken any action to ensure that the pollution has been or will be remedied. However, the insurance company failed to meet its burden to warrant summary judgment as a matter of law on the receiver's breach of duty to defend claim. The insurer failed to establish that it was prejudiced as a matter of law by the receiver's late notice of the claim.