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Anderson Brothers, Inc. v. St. Paul Fire & Marine Insurance Co.

ELR Citation: 43 ELR 20206
Nos. 12-35346, -35454, (9th Cir., 08/30/2013)

The Ninth Circuit held that an insurance company breached its duty to defend a trucking equipment company when it refused to provide a defense after the company received letters from EPA notifying it of its potential liability under CERCLA for environmental contamination at the Portland Harbor Superfund site. One of the letters required the company to respond to questions that necessarily established its liability under CERCLA; a second letter identified the company as a PRP. Under the comprehensive general liability policies in question, the insurer has a duty to defend the company against "suits" for activities covered by the comprehensive general liability policies. The insurer did not consider the letters sent to the company to be "suits" because they were not filed in a court of law. In light of CERCLA's unique liability regime, which is designed to promote settlement with EPA instead of litigation, the lower court held that both letters were "suits," and the Ninth Circuit agreed. A "huge majority" of U.S. courts have held that a policyholder's receipt of a PRP notice from EPA is the "functional equivalent" of a suit. In addition, the letters satisfy the definition of a "suit" under the Oregon Environmental Cleanup Assistance Act. Accordingly, because the letters alleged facts sufficient to alert the insured to its potential liability for environmental contamination under CERCLA, the insurer breached its duty to defend.