Century Indemnity Company v. Liberty Mutual Insurance Company, 1:09-cv-00285

This is a Rhode Island federal case addressing equitable contribution between insurers for Emhart Industries’ defense costs at the Centerdale Manor Superfund Site.
Emhart sued Liberty Mutual and Century for defense/indemnity obligations related to EPA-remedial actions; Liberty Mutual settled with Emhart for $250,000 while Century proceeded to trial.
This court found Century owed a duty to defend Emhart, and Liberty Mutual owed a duty to defend under certain conditions; later, the court allowed discovery on related questions.
Century sought equitable contribution from Liberty Mutual for Emhart’s defense costs; Liberty Mutual sought declarations that it owed nothing or that its obligations were satisfied by its settlement.
The core dispute became how to allocate pre- and post-settlement defense costs between the two coinsurers given a long-term progressive injury with overlapping and successive policies.
The court ultimately held that Liberty Mutual’s post-settlement defense obligations were not extinguished, and it chose a time-on-the-risk allocation for defense costs, with Century recovering 86.87% of the defense costs from Liberty Mutual.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Effect of Liberty Mutual’s settlement on its equitable contribution	Century argues settlement does not bar contribution.	Liberty Mutual argues settlement extinguishes further contribution.	Settlement had no effect on Liberty Mutual’s post-settlement duty to defend Century.
Appropriate method to allocate defense costs between successive coinsurers	Century supports time-on-the-risk allocation.	Liberty Mutual argues equal-shares allocation.	Time-on-the-risk allocation chosen as fair and consistent with Rhode Island law.
Allowance of pre- and post-judgment interest	Century seeks interest as part of costs.	Liberty Mutual disputes, relies on defense cost allocation.	Liberty Mutual responsible for pre- and post-judgment interest.

Maryland Cas. Co. v. W.R. Grace & Co., 218 F.3d 204 (2d Cir. 2000) (equitable contribution principles apply when settling insurer seeks recovery from others)
Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127 (Utah 1997) (settlement impact on contribution assessed for fairness and unjust enrichment)
Peloso v. Imperatore, 434 A.2d 274 (R.I. 1981) (pro rata defense cost allocation among concurrent insurers; proration by policy limits if same risk)
Forty-Eight Insulations, Inc., 633 F.2d 1225 (6th Cir. 1980) (time-on-the-risk justification for defense-cost allocation in progressive injury cases)
Wooddale Builders, Inc. v. Maryland Cas. Co., 722 N.W.2d 283 (Minn. 2006) (duty to defend broader than indemnity; defense costs allocation supports equal shares in some contexts)