Century Indemnity Co. v. Marine Group, LLC
2012 U.S. Dist. LEXIS 9822
D. Or.2012Background
- TPPs (The Marine Group, Northwest Marine, Inc., Northwest Marine Iron Works, and BAE Systems San Diego Ship Repair) seek defense/indemnity from four insurers (Great American, INA, St. Paul) for CERCLA claims at Portland Harbor.
- Century Indemnity filed a declaratory-judgment action seeking a defense/indemnity duty from those four insurers.
- Policies span 1954–1982 with NWMIW as named insured; INA and Great American have deductible endorsements; St. Paul policy has no deductible endorsement.
- NWMIW’s corporate form changed over time; 1997 SPA spun NWMIW assets/liabilities to TMG; 1997 SPA Excluded Liabilities included Northwest Marine liabilities; SWM later became BAE.
- Agency communications (104(e) CERCLA requests, PRP notices, NRDA letters, and General Notice Letters) identified TMG/BAE as potentially liable and sought information, triggering potential defense obligations.
- OECAA defines suit broadly for environmental claims and was challenged as applied; court grants/denies specific issues accordingly, upholding constitutionality as applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a CERCLA-related agency communication constitute a suit that triggers the duty to defend? | TPPs contends agency notices/104(e) letters and PRP designations equivalent to a suit. | Defendants argue no suit; administrative actions require an adversarial claim or formal designation of liability. | Yes; agency communications can trigger a duty to defend. |
| Do deductible endorsements extinguish the duty to defend? | Deductible endorsement does not alter the duty to defend; defense costs may be allocated after settlement/judgment. | Deductible endorsement and claims-servicing provision can extinguish or limit the duty to defend. | Deductible endorsement does not extinguish the duty; claims-servicing exclusion may apply if an agreement exists. |
| Is there corporate succession of insurance coverage to the alleged successors (BAE, TMG)? | Evidence shows potential succession from NWMIW to BAE and/or TMG, entitling defense. | Succession is disputed; documents are ambiguous; anti-assignment clauses and lack of clear transfer create genuine issues of fact. | Genuine issues of material fact remain; summary judgment on succession denied. |
| Is OECAA’s construction of ‘suit’ constitutional as applied here? | OECAA’s rules of construction properly define suit to ensure defense in environmental matters. | Constitutionality is challenged as applied; risk of contract impairment and overreach. | OECAA as applied is constitutional. |
Key Cases Cited
- Ledford v. Gutoski, 319 Or. 397 (1994) (duty to defend depends on complaint and policy; ambiguity resolved in insured's favor)
- Fred Shearer & Sons, Inc. v. Gemini Insurance Co., 237 Or. App. 468 (2010) (extrinsic evidence may establish insured identity)
- Schnitzer Investment Corp., 197 Or. App. 147 (2005) (DEQ communications can trigger duty to defend when they impose liability)
- Aetna Casualty & Surety Co., Inc. v. Pintlar Corp., 948 F.2d 1507 (9th Cir. 1991) (PRP notices and CERCLA processes trigger insured rights early)
- Northern Insurance Co. of NY v. Allied Mut. Ins. Co., 955 F.2d 1353 (9th Cir. 1992) (liability transfer concepts influence insurance coverage transfer)
- Massachusetts Bonding & Insurance Co. v. Zidell, 235 Or. App. 99 (2010) (DEQ/104(e)-like notices can constitute a suit under insurance policies)
- B.S.B. Diversified Co., Inc. v. American Motorists Ins. Co., 947 F. Supp. 1476 (W.D. Wash. 1996) (precedent on transfer of insurance benefits with successor liability)
- Quemetco Inc. v. Pacific Automobile Insurance Co., 24 Cal. App. 4th 494 (1994) (discusses transfer of insurance benefits when liability transfers by succession)
- Northern Insurance Co. of NY v. Allied Mut. Ins. Co., 955 F.2d 1353 (9th Cir. 1992) (an asset purchase can transfer liability and insurance benefits by operation of law)