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Insurer doesn’t have to cover cleanup of California sites

December 6, 2012

Relying on California law and a case from 2006, the Indiana Court of Appeals affirmed that an insurer of former film-processing sites has no obligation to indemnify Thomson Inc. for the remediations of three California locations.

Thomson acquired the assets of Technicolor Inc., which included three contaminated former film-processing sites in Hollywood, North Hollywood and West Drayton, Calif. Local environmental authorities ordered Thomson to cleanup the sites. Remediation has already cost more than $6.5 million for the sites.

Thomson sought indemnification from Continental, which insured Technicolor from 1969 to 1974. It claims the umbrella policy from Continental covers losses from orders from administrative agencies; Continental claimed the policy is limited to losses resulting from courtroom litigation.

Marion Superior Judge Michael Keele agreed with Continental’s argument, which the Court of Appeals upheld. Relying on California insurance law and CDM Investors v. Travelers Cas. & Sur. Co., 139 Cal. Rptr. 3d 669, 674 (Cal. Ct. App. 2006), the judges found that the policy’s definition of “ultimate net loss” does not expand the general definition of “damages” so that administrative orders are covered.

“Following the California Court of Appeal’s decision in CDM Investors, we conclude that the Umbrella Policy limits Continental’s indemnity obligations to ‘damages.’ Consequently, Continental has no obligation to indemnify Thomson for the remediations of the Hollywood, North Hollywood, and West Drayton sites as a matter of law,” Judge Cale Bradford wrote in Thomson, Inc., n/k/a Technicolor USA, Inc., Technicolor, Inc., and Technicolor Limited v. Continental Casualty Co.; Travelers Casualty & Surety Co. & Travelers Property Casualty Co. of Am., et al., 49A05-1201-PL-24. 

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