Travelers Casualty & Surety Co. v. Alabama Gas Corp.
117 So. 3d 695
Ala.2012Background
- Alagasco faced a CERCLA-based contamination claim with EPA asserting PRP status; insurers were Travelers’ predecessors (St. Paul Fire/Marine, etc.).
- The policy language required defense for suits arising from occurrences during the policy period; CERCLA context informs interpretation of “suit.”
- Huntsville MGP site history: operations shifted from gas to propane to natural gas, with site later redeveloped; the site is tied to Alagasco’s predecessors.
- Energen (Policyholder) notified Travelers in 1998–1999 of potential environmental claims, leading to a private confidentiality agreement to negotiate coverage.
- EPA sent a PRP letter in June 2009 identifying Alagasco as a potentially responsible party; Alagasco tendered defense and coverage demands shortly thereafter.
- The federal district court certified Alabama Supreme Court to decide whether a PRP letter constitutes a “suit” under CGL policies; Alabama Supreme Court proceeded to answer the certified question.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a PRP letter from the EPA qualify as a ‘suit’ under CGL policies? | Alagasco argues PRP letter initiates a ‘suit’ triggering defense. | Travelers argues PRP letter is not a formal suit or claims notice under policy terms. | Yes; PRP letter is the functional equivalent of a suit and triggers defense. |
Key Cases Cited
- Michigan Millers Mut. Ins. Co. v. Bronson Plating Co., 445 Mich. 558 (1994) (definition of ‘suit’ ambiguous, includes nonjudicial actions)
- Hazen Paper Co. v. United States Fidelity & Guaranty Co., 407 Mass. 689 (1990) (EPA processes can be coercive and trigger duty to defend)
- Dutton-Lainson Co. v. Continental Ins. Co., 279 Neb. 365 (2010) (PRP letters can be ‘suits’ triggering defense under CERCLA context)
- Anderson Development Co. v. Travelers Indem. Co., 49 F.3d 1128 (6th Cir. 1995) (PRP letters may constitute initiation of suit under policy)
- Aetna Cas. & Sur. Co. v. Pintlar Corp., 948 F.2d 1507 (9th Cir. 1991) (PRP notice may initiate insurer’s duty to defend)
- Spangler Constr. Co. v. Industrial Crankshaft & Eng’g Co., 326 N.C. 133 (1990) (environmental compliance orders can be treated as ‘suits’ for coverage)
- A.Y. McDonald Indus., Inc. v. Insurance Co. of N. Am., 475 N.W.2d 607 (Iowa 1991) (broad interpretation of ‘suit’ consistent with CERCLA context)