Anderson Brothers, Inc. v. St. Paul Fire and Marine Insur
729 F.3d 923
9th Cir.2013Background
- Anderson Brothers, owner/tenant of property within the Portland Harbor Superfund Site, received two EPA letters: a CERCLA §104(e) information request (an 82-question questionnaire threatening civil penalties) and a later General Notice/PRP letter encouraging participation in PRP settlement discussions.
- Anderson tendered both letters to its general liability insurer, St. Paul, seeking defense and indemnity under standard-form comprehensive general liability policies that obligate the insurer to defend any “suit.”
- St. Paul refused, contending the EPA letters were not “suits” because they were not court-filed lawsuits and therefore did not trigger the duty to defend.
- Anderson sued for breach of the duty to defend; the district court granted partial summary judgment for Anderson, and Anderson obtained a judgment and an attorneys’ fee award; St. Paul appealed.
- Key statutory backdrop: CERCLA imposes retroactive, strict joint-and-several liability on PRPs and encourages early settlement; Oregon adopted the Oregon Environmental Cleanup Assistance Act (OECAA) defining when administrative EPA communications count as a “suit” for insurance-policy interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether EPA §104(e) information request is a “suit” under the policy/OECAA | The 104(e) letter is an administrative action that requests responses and compels cooperation under threat of civil penalties, thus functionally a “suit.” | Not a lawsuit; mere information request/demand that does not constitute a “suit.” | Held: The 104(e) letter is a “suit” under OECAA and Oregon law. |
| Whether EPA General Notice/PRP letter is a “suit” under the policy/OECAA | PRP notice initiates CERCLA legal process, pressures PRPs to join settlement talks, and therefore is the functional equivalent of a suit triggering a defense. | A PRP letter is only a pre-litigation demand/claim, not a court suit; policies distinguish claims from suits. | Held: The General Notice Letter is a “suit” under OECAA and Oregon law. |
| Whether the letters allege conduct covered by the Policies (thus triggering duty to defend) | The letters allege facts which, if proven, could impose liability for releases/disposal of hazardous substances covered by the policies. | Letters do not demand payment of damages or expressly seek covered relief, so they do not trigger the duty to defend. | Held: Allegations in the letters were sufficient to put Anderson on notice of potentially covered CERCLA liability and triggered the duty to defend. |
| Whether applying OECAA to interpret “suit” impairs contracts (Contracts Clause) | OECAA merely codifies Oregon common-law construction of ambiguous “suit” in environmental contexts; no constitutional impairment. | Statutory definition retroactively alters contractual obligations and violates Contracts Clauses. | Held: No Contracts Clause violation; OECAA applies where policy ambiguity leaves no contrary intent, and courts otherwise construe ambiguities against insurers. |
Key Cases Cited
- Aetna Cas. & Sur. Co. v. Pintlar Corp., 948 F.2d 1507 (9th Cir. 1991) (PRP notice is functional equivalent of a suit and triggers duty to defend)
- Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (2009) (describing EPA authority to compel PRP cleanup and CERCLA remedial scheme)
- Schnitzer Inv. Corp. v. Certain Underwriters at Lloyd’s of London, 104 P.3d 1162 (Or. Ct. App. 2005) (Oregon appellate court finds “suit” ambiguous; administrative agency communications can trigger duty to defend)
- Underwriters at Lloyd’s London v. Mass. Bonding & Ins. Co., 230 P.3d 103 (Or. Ct. App. 2010) (reaffirming Schnitzer and applying broad construction of “suit” in environmental cases)
- Ledford v. Gutoski, 877 P.2d 80 (Or. 1994) (insurer has duty to defend if complaint alleges facts that could impose liability covered by the policy)
- McCormick & Baxter Creosoting Co. v. St. Paul Fire & Marine Ins. Co., 870 P.2d 260 (Or. Ct. App. 1994) (administrative communications that establish agency’s view of insured’s liability can constitute a “suit")