January 15, 2013

The Firm recently won an important victory when the Second Circuit Court of Appeals ruled that insurers of client Olin Corp. could be liable for millions of dollars of environmental cleanup costs associated with an Olin signal flare plant in Morgan Hill, California.  In the long-running case, Olin is seeking indemnification from insurer American Home Assurance Co. for environmental remediation at the site, which Olin began operating in 1956.  The two excess policies at issue covered the years 1966 to 1969 and 1969 to 1972.  Although the damage – a 10-mile plume of potassium perchlorate that developed in groundwater supplies – reached its maximum extent in 1987, Olin argued that the American Home policies were triggered by a contract provision that “in the event ... property damage arising out of an occurrence covered hereunder is continuing at the time of termination of this policy, underwriters will continue to protect [Olin] for liability.” 

The court rejected American Home’s argument that the post-policy damage was new, rather than continuing damage, and wrote that “New York law does not preclude parties from contracting to indemnify the insured for damage allocated to years after the termination of the policy.  This is precisely what American Home’s policies do here with [the continuing damage provision].”  The decision vacated a New York federal court ruling and remanded it for further proceedings.  

The Firm team representing Olin is led by Partner Craig C. Martin and includes Partner Peter J. Brennan and Associate Matthew E. Price.  The decision was reported in a Law 360 article titled “2nd Circ. Puts Olin Insurer on Hook for Plant’s Enviro Harm.”