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COA: Insurers have no duty to defend in environmental case

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The Indiana Court of Appeals reversed the decision by an Indiana court relying on Maryland law that granted summary judgment and defense costs to a business whose product led to perchlorate contamination in California and Indiana.

Perchlorate had been discovered in water samples in California and Peru, Ind., where Standard Fusee Corp. had facilities. The company makes highway and marine signal/safety flares, in which an essential ingredient is perchlorate. Standard Fusee notified its comprehensive general liability insurance carriers, including Chubb Custom Insurance Co. and GAN North American Insurance Co., about the claims at the facilities and sought defense and indemnification. Both insurers rejected their duty to defend and refused indemnification based on pollution exclusions.

The trial court, relying on Maryland law because that is where Standard Fusee is headquartered, ruled in favor of the company and awarded more than $2 million in defense costs. The judge held that the total pollution exclusion clause in the policies is not applicable to Standard Fusee’s liability for the release of the contaminate, thereby triggering the duty to defend and indemnify.

In Chubb Custom Insurance Company, et al. v. Standard Fusee Corporation, 49A02-1301-PL-91, the insurers claim that if the release of perchlorate is defined as traditional environmental pollution, Maryland law enforces the application of the pollution exclusion clause in the insurance contract and coverage is precluded.

Guided by the principles of Maryland’s contract interpretation, the Court of Appeals concluded that perchlorate is included within the usual, accepted meaning of “pollutant.” Judge Patricia Riley noted the continuous discharge of perchlorate over multiple years went beyond the routine commercial hazard of an occasional spill.

“Based on the facts before us, we conclude that Standard Fusee’s claim is based on a hazardous pollution contamination, resulting from the cumulative effect of numerous releases which occurred on an ongoing basis during the regular course of business over an extended period of time, up to the point where the pollution became concomitant to Standard Fusee’s regular business activity,” she wrote.

“We expect that, our decision notwithstanding, interpretation of the scope of pollution exclusion clauses likely will continue to be ardently litigated throughout state and federal courts. We are also aware that courts may arrive at divergent decisions from our own within the specific context of perchlorate contamination. Yet, guided by Maryland’s rules for interpreting insurance contracts, we conclude that the total pollution exclusion clause applies and relieves Appellants of their duty to defend and indemnify the Standard Fusee in the underlying action,” she wrote.
 

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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