Oregon Federal District Court Gives Insurer Partial Win in Superfund Case

In Siltronic Corp. v. Employers Ins. Co. of Wausau, No. 3:11-cv-1493, 2014 U.S. Dist. LEXIS 153275 (D. Or. Oct. 28, 2014), an Oregon federal court granted partial summary judgment for the insured Siltronic Corp. (Siltronic), finding the insurer Employers Insurance Company of Wausau (Wausau) had a duty to defend against claims related to the cleanup of a Superfund site.  The district court, however, denied Wausau had a duty to pay any pre-tender defense costs.

The coverage dispute arose from one of seven policies issued by Wausau to Siltronic between 1978 and 1986.  The EPA and Oregon Department of Environment Quality (DEQ) had found Siltronic liable for contamination caused by manufactured gas product (MGP) and trichloroethene (TCE). They had ordered a clean up.  Siltronic tendered its defense to Wausau three years after it received a Notice of Potential Liability from the EPA. Having covered costs related to TCE contamination under the six policies covering the 1980-86 period, and contending those policies were exhausted by indemnity payments, Wausau refused to cover costs related to MGP contamination under the 1978-79 policy.

Granting Siltronic’s motion in part, the district court found that Wausau’s duty to defend under the 1978-79 policy was triggered. The district court reasoned that DEQ had found Siltronic responsible for the cleanup of the hazardous substances and that satisfied, for purposes of the duty to defend, the policy’s requirement of “property damage” caused by an “occurrence” within the policy period.

Pursuant to the voluntary payments provision in the 1978-79 policy, the district court, however, disallowed Siltronic to recover defense costs related to MGP contamination paid before it tendered its defense in 2003.

This case is not yet over.  Stay tuned for further updates.

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