106 F. Supp. 3d 892
W.D. Mich.2015Background
- Decker operated the Albion-Sheridan Township Landfill (ASTL); Travelers insured Decker from Jan 1, 1973 to Jan 1, 1977 (48 months).
- The dispute concerns allocation of remediation and defense costs for groundwater contamination allegedly caused by landfill leachate.
- Travelers moves for partial summary judgment, asking the court to apply the pro rata time-on-the-risk formula and limit its share to the fraction of its time on the risk over the total period of property damage.
- Travelers agrees to an allocation period of June 1967 to September 1999 (387 months, 32.25 years), yielding a Travelers share of 48/387 = 12.40%.
- Experts for both sides agree groundwater was impacted by about one year after landfill use began and contamination continued until the landfill cap was installed in 1999; Decker stipulated property damage occurred through 1999.
- Decker advances alternative allocation bases (period of landfill use only, or end in 1981 when landfill closed) and contends years after 1977 without CGL pollution coverage should be excluded.
Issues
| Issue | Plaintiff's Argument (Decker) | Defendant's Argument (Travelers) | Held |
|---|---|---|---|
| Proper allocation method | Use time-on-risk but denominate by period Decker used site (max 15.25 years) or from one year after opening (14.25 years), producing ~26–28% for Travelers | Use pro rata time-on-the-risk with denominator equal to period contamination occurred (June 1967–Sept 1999, 387 months) | Court applies pro rata time-on-the-risk using contamination period; Travelers = 12.40% |
| End date for allocation period | Contamination ended in 1981 when landfill operations ceased; no increase/spread or EPA-ordered groundwater treatment after 1981 | Contaminants continued passive leaching until cap in 1999; property damage includes continuing passive migration | Court holds allocation period runs through 1999 because contamination continued until capping; 1981 is not the end date |
| Whether years without CGL pollution coverage should be excluded | Years after 1977 lacked pollution coverage; those years should be removed from denominator (insured bears less) | Insured must bear pro rata share for periods it had no coverage unless it shows insurance was not reasonably available in the marketplace | Court rejects Decker’s unsupported assertion of unavailability; Decker must self-insure uncovered years; denominator unchanged |
| Allocation of defense costs | Defense costs may be treated differently because duty to defend is broader than indemnify | Defense costs should be apportioned the same as indemnity under time-on-the-risk precedent | Court holds defense costs are apportioned on the same pro rata time-on-the-risk basis |
Key Cases Cited
- Olin Corp. v. Certain Underwriters at Lloyd’s London, 468 F.3d 120 (2d Cir. 2006) (allocation must run over all years in which property damage occurred)
- Pennsylvania National Mutual Casualty Insurance Co. v. Roberts, 668 F.3d 106 (4th Cir. 2012) (each insurer liable for period it was on risk compared to entire period damages occurred)
- Arco Industries Corp. v. American Motorists Insurance Co., 594 N.W.2d 61 (Mich. Ct. App. 1998) (once scope of progressive injury is determined, damages are allocable among triggered policies)
- Fireman’s Fund Ins. Co. v. Ex-Cell-O Corp., 685 F. Supp. 621 (E.D. Mich. 1987) (insurer liable for defense costs in proportion to period on risk relative to total period of alleged exposure)
- Forty-Eight Insulations, Inc. v. Ins. Co. of North America, 451 F. Supp. (E.D. Mich.) (costs of defense must be apportioned over period alleged injuries occurred)
- Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp., 73 F.3d 1178 (2d Cir. 1995) (declining to prorate to insured where insurance became unavailable in marketplace)
- Domtar, Inc. v. Niagara Fire Ins. Co., 563 N.W.2d 724 (Minn. 1997) (each insurer liable for period it was on risk compared to entire period of damages)