Asarco LLC v. Superintendent of Financial Services of the State
151 A.D.3d 624
| N.Y. App. Div. | 2017Background
- Claimant ASARCO LLC sought indemnification from its insurer Midland for amounts paid to the EPA and other agencies to remediate lead-contaminated residential soils in Omaha, Nebraska.
- Midland issued excess policies containing a pollution exclusion barring coverage for property damage from discharge of pollutants unless the release was "sudden and accidental."
- It was undisputed that soil contamination caused by ASARCO's lead emissions (a pollutant) fell within the pollution exclusion.
- ASARCO argued it was entitled to indemnification for cleanup costs attributable solely to chipping and flaking of lead-based paint (lead paint damage), which prior cases treated as outside pollution exclusions.
- The EPA’s CERCLA action sought response costs and imposed potential joint-and-several liability, leading ASARCO to pay remediation costs that covered soil contamination where lead paint and emissions effects were intermixed.
Issues
| Issue | Claimant's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether cleanup costs attributable to lead-based paint are covered despite a pollution exclusion that bars pollutant-caused soil contamination | Lead paint damage is not a "pollutant" and prior case law distinguishes lead paint claims from pollution exclusions, so those discrete costs should be covered | The EPA action and CERCLA liability required ASARCO to pay for remediation of soil contamination caused in part by emissions (a pollutant); the pollution exclusion therefore bars the entire claim because contamination sources are not readily divisible | Held for defendant: entire claim barred by pollution exclusion because emissions (excluded) and paint effects combined to contaminate the same soil and CERCLA liability made ASARCO pay for the whole remediation |
| Whether apportionment among causes (paint vs. emissions) can save part of ASARCO’s claim | ASARCO sought allocation isolating non-pollution (paint) costs | Liquidator argued the damages were indivisible and tied to pollution-triggered remediation obligations under CERCLA | Court found the contamination and remediation were not readily divisible; did not reach method for allocating among policies |
Key Cases Cited
- Westview Assoc. v. Guaranty Natl. Ins. Co., 95 N.Y.2d 334 (court recognized lead-paint-only damage can fall outside pollution exclusions)
- Herald Square Loft Corp. v. Merrimack Mut. Fire Ins. Co., 344 F. Supp. 2d 915 (same principle applied in district court)
- Sphere Drake Ins. Co. v. Y.L. Realty Co., 990 F. Supp. 240 (same principle applied in district court)
- United States v. Alcan Aluminum Corp., 315 F.3d 179 (explains CERCLA joint-and-several liability)
- Town of Harrison v. National Union Fire Ins. Co. of Pittsburgh, Pa., 89 N.Y.2d 308 (coverage exclusions not defeated by damage partly caused by third parties)