Olin Corp. v. American Home Assurance Co.
704 F.3d 89
| 2d Cir. | 2012Background
- Olin seeks indemnity from American Home for Morgan Hill, CA environmental damage (1957–1987) caused by perchlorate plumes.
- Two American Home excess policies at issue cover 10% of up to $10M in damages in excess of $30.3M, each with a prior/continuing coverage structure.
- Contamination spread created a $102M remediation cost; plume reached equilibrium around 1987, extending roughly 31 years of damage.
- The 1966–69 and 1969–72 policies followed Lloyd’s forms with Condition C (other insurance interplay) and a broad definition of property damage/occurrence.
- District court granted summary judgment to American Home, holding attachment points not reached under pro rata allocation; Olin appeals.
- This court vacates and remands, adopting Condition C’s continuing coverage interpretation to extend liability across post-policy years.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Condition C obligates continuing coverage beyond policy termination | Olin: Condition C requires continuing coverage for ongoing damage | American Home: Condition C does not extend coverage past termination for pre-existing years | Yes; Condition C applies to continuing damage across post-policy years |
| Whether damage should be allocated pro rata or under Condition C | Olin: pro rata across 31 years; each policy is reached | American Home: pro rata only if no continuing coverage; otherwise, Condition C governs | Condition C governs extending liability; pro rata alone not controlling here |
| Whether the prior insurance provision limits recovery between two policies at same level | Olin: priOr insurance reduces only to same-level prior policy | American Home: prior insurance reduces liability only to same-level prior policy | Prior insurance provision applies only to same-level prior coverage; cannot reduce one policy below its level |
| Whether the plaintiff can attribute years of damage across policy periods for attachment | Olin: 22 years (1966–1987) to 1966–69 policy and 19 years to 1969–72 policy | American Home: attachment points not reached under year-by-year view | Yes; liability extended over years within Condition C; attachment points exceeded |
| Whether the district court erred in summary judgment by not considering Condition C | Olin: district court misapplied the language of Condition C | American Home: correct under prior rulings | District court erred; remand allowed to consider facts under Condition C |
Key Cases Cited
- Olin I, Corp. v. Insurance Co. of North America, 221 F.3d 307 (2d Cir. 2000) (allocation of progressive environmental injury; pro rata default rule)
- Olin II, Corp. v. Certain Underwriters at Lloyd’s London, 468 F.3d 120 (2d Cir. 2006) (definition of property damage; continuing damage across periods)
- Consolidated Edison Co. v. Allstate Ins. Co., 774 N.E.2d 687 (N.Y. 2002) (state law on allocation for progressive environmental injury; pro rata favored absent contract language)
- World Trade Ctr. Props., L.L.C. v. Hartford Fire Ins. Co., 345 F.3d 154 (2d Cir. 2003) (interpretation of complex insurance contracts; contract interpretation principles)