Certain Underwriters at Lloyd's, London v. Southern Natural Gas Co.
142 So. 3d 436
Ala.2013Background
- Sonat sued LMI for breach of umbrella and excess-liability policies over PCB and mercury-remediation costs tied to Sonat’s pipeline compressor and mercury-metering sites.
- Phase-based trial: Phase I addressed two sites (Tarrant and Reform); Phase II addressed 11 additional PCB sites; Phase III addressed mercury sites and related costs.
- Juries found PCB remediation constituted a single occurrence and damages were recoverable; Phase II extended those determinations to remaining sites; multiple interrogatories tracked site-specific costs.
- Trial court allocated damages pro rata across policy years; 54(b) judgments were previously dismissed as non-final; Phase III summary judgment sought to limit mercury-site evidence to aggregate costs.
- LMI argued lack of attachment, owned-property exclusions, and non-recoverability of voluntary remediation; court held owned-property exclusion did not bar groundwater cleanup costs and that damages could include voluntarily incurred remediation.
- LMI appealed and Sonat cross-appealed challenging the Phase III summary judgment and other rulings; this Court affirmed the trial court’s judgment as to Phase III outcomes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Phase I findings bind Phase II jury on occurrence | Sonat integral-pipeline operation yields a single occurrence | LMI contends Phase II should review Phase I findings anew | Phase I findings binding; no reversible error in applying them to Phase II |
| Whether PCB remediation constitutes a single occurrence across sites | Remediation across sites stems from one proximate cause (Pydraul) | Different sites/times may create multiple occurrences | Single occurrence under policy definitions; no intervening cause to split occurrences |
| Whether owned-property exclusion bars remediation costs | Remediation costs for groundwater are damages not barred by owned-property exclusion | Exclusion precludes on-site groundwater remediation | Owned-property exclusion does not bar groundwater remediation costs when threat to third parties exists or groundwater is targeted |
| Whether costs were recoverable as damages when remediation was voluntary | Remediation costs incurred under legal obligation or government/consent contexts are damages | Costs voluntary and not legally obligated may be non-recoverable | Remediation costs recoverable where there was legal obligation or regulatory mandate; not limited to third-party liability actions |
| Whether CU 1887 annual attachment point was properly determined and whether Phase III could proceed | CU 1887 ambiguous; attachment determined to allow recovery | CU 1887 unambiguous; no attachment to pay unless underlying limits exceeded | CU 1887 ambiguity preserved; jury could decide attachment point; Phase III upheld proceedings |
Key Cases Cited
- Alabama Plating Co. v. United States Fidelity & Guaranty Co., 690 So.2d 331 (Ala. 1996) (remediation costs deemed damages; owned-property exclusion does not bar cleanup costs)
- Safeco Insurance Co. v. United States Fire Insurance Co., 444 So.2d 844 (Ala. 1983) (one-occurrence theory; proximate cause governs single vs multiple occurrences)
- United States Fire Insurance Co. v. Safeco Insurance Co., 444 So.2d 844 (Ala. 1983) (definition of occurrence and causation under policy terms)
- St. Paul Fire & Marine Insurance Co. v. Christiansen Marine, Inc., 893 So.2d 1124 (Ala. 2004) (deductible and occurrence analysis in marine policies; causation guidance)
- Weyerhaeuser Co. v. Aetna Casualty & Surety Co., 123 Wash.2d 891 (Wash. 1994) (liability to cleanup before suit can fall within policy coverage; focus on obligation imposed by law)