Plaintiff Leadville, a Colorado corporation, brought this action seeking indemnification and defense costs from defendant United States Fidelity and Guaranty Company (USF & G), a Maryland corporation, under a series of comprehensive general liability policies. Defendant counterclaimed for $64,614 it had advanced plaintiff for plaintiffs defense costs. The district court granted defendant summary judgment both on plaintiffs claims and on defendant’s counterclaim, and plaintiff now appeals. We have jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.
I
This is an insurance coverage case. The sole question is whether defendant must indemnify plaintiff and pay plaintiffs defense costs incurred as a result of its liability for environmental damage to a site in Colorado known as California Gulch.
On December 7, 1983, the State of Colorado filed a complaint against Asarco, one of several mining companies operating in an area near the Yak Tunnel in Colorado. The State asserted that Asarco was liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601-9615, for the damage done to California Gulch by the discharge of acid mine water through the Yak Tunnel. At the time of the discharge, plaintiff owned various mining claims located at the head of the Yak Tunnel.
On January 7, 1985, Asarco filed a third-party complaint against plaintiff and other individuals and entities, seeking contribution for any CERCLA liability arising from the contamination of California Gulch. On August 6, 1986, the Environmental Protection Agency (EPA) initiated its own CERCLA action against plaintiff, Asarco, and eleven other individuals and entities involved in the California Gulch site. The two actions were eventually consolidated (the “underlying action”).
In late 1986 or early 1987, plaintiffs secretary-treasurer, Daniel Nibler, discussed
Plaintiff did not formally notify defendant of its potential CERCLA liability in writing until June 22, 1989. At that time, plaintiff also requested that defendant provide a defense in the underlying action, contending that its general liability policies with USF & G imposed on defendant a duty to defend. Defendant disagreed and denied any such obligation. After the Colorado Supreme Court’s decision in Hecla Mining Co. v. New Hampshire Ins. Co.,
Plaintiff then brought this action in federal district court seeking indemnification and payment of its defense costs. Jurisdiction was based on the parties’ diversity of citizenship pursuant to 28 U.S.C. § 1332. Plaintiff moved for partial summary judgment on the issue of defendant’s duty to defend. Defendant moved for summary judgment based on two alternative grounds: (1) that plaintiff failed to comply with the policy’s notice provisions, and (2) that certain policy exclusions preclude coverage of the underlying action.. Defendant also moved for summary judgment on its counterclaim, seeking the defense costs it had previously advanced plaintiff. The district court granted defendant’s motion for summary judgment and ordered plaintiff to reimburse defendant for the $64,-614 advance. Plaintiff now appeals.
II
We review a district court’s grant of summary judgment de novo and apply the same legal standard used by the district court. Wood v. Eli Lilly & Co.,
The district court concluded that defendant was entitled to summary judgment because plaintiff failed to provide timely notice of the underlying action.
Under Colorado law, “[t]he rights of parties to an insurance policy are contractual and are measured by a reasonable and natural construction of the terms and conditions of the policy.” Hansen v. Barmore,
Plaintiff posits several arguments why its delay in giving defendant formal written notice should not preclude coverage. First, plaintiff contends that the proper date for measuring its notice to defendant is not June 22, 1989, when it finally provided written notice. Rather, plaintiff contends that it notified defendant in late 1986 or early 1987, when Nibler discussed with Helzer plaintiff’s coverage for any potential CERCLA liability under the USF & G policies.
Under no circumstances, however, could Nibler’s oral notification to Helzer of the underlying action have satisfied either of the policy’s notice provisions. While the first provision permits that notice may be made to “any of [defendant’s] authorized agents,” it also mandates that the notice be “written.” And the second notice provision requires both that the insured forward any summons or process and that the forwarding be “to the Company.” Thus, under the terms of the contract, plaintiff did not provide notice until June 22, 1989.
Plaintiff next contends that the policies’ “notice provisions are ambiguous when read in the context of a CERCLA case.” Unlike an automobile accident, an “occurrence” giving rise to CERCLA liability for damage to the environment is not reducible to a single, definable moment. Plaintiff accordingly argues that, because the time at which it became obligated to notify defendant was unclear, its notice should be considered timely.
Even assuming arguendo that the first notice provision is ambiguous in the context of CERCLA liability, there is no ambiguity in the policy’s second notice provision. It requires the insured to “immediately forward to the Company every demand, notice, summons or other process” once suit has been brought against the insured. Colorado law commands that “[insurance contracts are to be construed according to the general rules for construction of contracts,” Marez v. Dairyland Ins. Co.,
Plaintiff also contends that its delay in notifying defendant is legally relevant only if defendant was thereby prejudiced. The Colorado Supreme Court, however, has expressly rejected the proposition that the legal significance of an insured’s failure to provide notice turns on its prejudice to the insurer. Marez,
Finally, plaintiff argues that its delay in notifying defendant should be excused because it reasonably believed that (a) “it would have no liability with respect to the Yak Tunnel” or “the California Gulch Superfund site,” and (b) its policies with defendant did not cover liability under CERCLA. Plaintiff asserts that its understanding of the policies’ coverage was supported by the advice of its insurance broker, Robert Helzer, who told plaintiffs secretary-treasurer, Daniel Nibler, that he did not think that the policies covered its CERCLA liability. Plaintiff contends that these reasonable beliefs excuse its failure to notify defendant until June 1989.
Colorado courts have consistently held that provisions in an insurance policy requiring an insured to notify its insurer “may be set aside for substantial justification.” Hansen,
With respect to plaintiffs belief that it had no liability for the environmental damage to California Gulch, its understanding was no longer reasonable after the EPA filed its complaint in August 1986. At that point, as plaintiff concedes, Leadville was aware that it might be liable under CERCLA for the discharge from Yak Tunnel. Thus, plaintiffs belief that it was not liable in the underlying action could not excuse the delay in giving written notice until June 1989.
The reasonableness of plaintiffs belief that its policies with defendant did not cover CERCLA liability requires a bit more analysis. In Colard v. American Family Mut. Ins. Co.,
Unlike Colard, the facts of this case belie plaintiff’s contention that it acted with reasonable prudence. First, the person who advised plaintiff that it was not covered, Robert Helzer, represented plaintiffs own interests in its dealings with defendant. As Daniel Nibler, the plaintiff’s representative in its interactions with Helzer, acknowledged in his deposition, he expected both Helzer and Alexander & Alexander to act as plaintiffs advocates in negotiations for plaintiffs coverage and premiums with insurance companies, including USF & G. Second, plaintiff had reason to believe that Helzer’s opinion was not well-informed. Specifically, Nibler stated that when he sought Helzer’s opinion, he did not advise Helzer of the details of the underlying action and that he could not remember providing Helzer with copies of the complaints filed against plaintiff. Finally, there is no evidence that plaintiff sought the advice of an attorney on the coverage question until April 1989. While plaintiff retained counsel for representation in the underlying action, nothing in the record indicates that plaintiff pursued legal advice concerning its coverage under its policies with defendant until shortly before plaintiff gave defendant written notice in 1989.
The only other evaluation of plaintiffs coverage for CERCLA liability that plaintiff points to as a basis for its reasonable belief in noncoverage is the assessment done by plaintiffs general superintendent, Douglas Christopherson. The record indicates, however, that Christopherson did not evaluate the relevant policy provisions in any detail until 1988. Thus, Christopherson’s opinion on the matter could not have contributed to plaintiffs belief that it was not covered until roughly two years after the EPA action had been filed. Moreover, Christopherson admitted in his deposition that making such evaluations was not part of his job duties.
Under these circumstances, we find that plaintiff did not act with reasonable prudence in determining whether its policies with defendant covered its CERCLA liability. As a result, plaintiffs failure to notify defendant until June 1989 was not “substantially justified” under Colorado law. And “an unex-eused delay in giving notice or forwarding
In sum, we find no merit in plaintiffs allegations of error by the district court. The policy obligated plaintiff to forward any court papers immediately and to notify the company in writing as soon as it learned that it was being sued. Plaintiffs failure to notify defendant in writing until almost three years after the EPA filed its complaint was a material breach of its obligations under the insurance contract. Under Colorado law, defendant is accordingly absolved of its duty to defend or indemnify plaintiff for its liability in the underlying action.
Ill
For the aforementioned reasons, the order of the district court granting defendant summary judgment, both on plaintiffs indemnity and defense costs claims and on defendant’s counterclaim for $64,614, is AFFIRMED.
Notes
. The facts giving rise to plaintiff's liability for the damage to California Gulch are discussed in Hecla Mining Co. v. New Hampshire Ins. Co.,
. The district court also held that, even if plaintiff had provided defendant timely notice, certain policy exclusions precluded coverage for plaintiff’s CERCLA liability. Because the notice issue is dispositive of plaintiff's claims, we do not address this part of the district court’s order.
. At least three Colorado Court of Appeals decisions have held that substantial justification exists when the insurer receives actual notice of the occurrence or legal action. See Hansen,