7th Circuit affirms Michigan law applies to Visteon pollution claims

A federal court in Indianapolis properly dismissed a lawsuit Visteon Corp. filed against its insurer seeking to recover damages resulting from toxic pollution at its former Connersville plant that also contaminated neighboring properties.

The auto-parts plant closed in 2007 and litigation followed due to pollution from the toxic solvent TEC. The cost to remediate and compensate others affected by the hazard ran in the millions of dollars.

The 7th Circuit Court of Appeals Friday affirmed Chief Judge Richard Young’s ruling in Visteon Corp. v. National Union Fire Insurance Company of Pittsburgh, Pa., 14-2725. Young ruled that Indiana law applied to the dispute, and that under Indiana’s “uniform-contract-interpretation approach,” Michigan law enforcing general pollution-exclusion terms governs, because that is the state in which Visteon had more insured sites than any other.

“That approach would bind us even if we didn’t think it sensible. But we think it eminently sensible,” Circuit Judge Richard Posner wrote. “Visteon manufactures and sells its automotive parts all over the world; and any of its plants, or for that matter any of its products, can give rise to liabilities against which it wants to insure.

“We note finally that the pollution-exclusion clause is unambiguous, and therefore National Union had no duty to defend Visteon against the suits brought against it by neighboring landowners who experienced losses because of the leak of TCE from Visteon’s Connersville plant,” Posner wrote for the panel.

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