December 07, 2009

In a significant victory for Jenner & Block client Olin Corporation, a federal appeals court on September 18 affirmed an approximately $40 million judgment for Olin in an insurance coverage dispute over pollution remediation costs at several sites in New York, validating Olin’s position with respect to the nature and timing of the property damage, and several other legal issues.

The court’s ruling marks the first significant appellate opinion that affirms Olin’s claims relating to excess insurance coverage in the matter, which has spanned 25 years. 

At issue in this portion of the case was environmental clean up costs related to a former Olin pesticide plant in Niagara Falls, New York that was destroyed in an explosion in 1956. Olin remediated the area of the former plant and at related nearby sites in the 1980s, and submitted claims to its insurers in accordance with excess general liability insurance in policies sold to Olin by the insurer from 1950 to 1970. 

Olin went to court to force its insurer to honor the excess policy obligations, and after a first trial in 2005, a jury issued a verdict in favor of Olin. On appeal to the Second Circuit, a new trial was ordered by the court.  At a 2007 re-trial, Olin produced numerous experts that testified that the actual contamination of the sites occurred in the 1950s and 1960, the period of time in which the insurer was providing excess coverage to Olin. The insurer contended that the contamination had occurred over a longer period of time. The District Court entered judgment for Olin in September 2008. The insurer appealed to the Second Circuit, alleging among other things that the district court erred in allowing the 2007 retrial to occur, that it improperly instructed the jury, that the jury misunderstood the polices at issue and that Olin allegedly provided late notice to the insurer. 

Closely tracking the Firm’s arguments, the Second Circuit rejected each of insurer’s attacks on the judgment. The appeals court held that the district court proceeded properly when it held a new trial. The court also rejected the insurer’s argument that the jury was not properly instructed on the definition of “property damage,” holding that the instructions adequately communicated the applicable legal rule to the jury.

The court also rejected the assertion that jury had not been given adequate instruction on the task of allocating property damage.  Following the Firm’s arguments, the court wrote, “reasonable estimation, it seems to us, allocates property damage ‘as nearly as possible’ to the actual amount of damage incurred in a given year – especially when much of the damage occurred a half century ago.”

The Second Circuit also ruled that the multi-year policies at issue required only one deductible, and that as a matter of law the insurer waived its defense to coverage on the grounds of Olin's alleged late notice. 

The Second Circuit also rejected Olin's cross-appeal, concluding that the district court did not err in failing to require the insurer to reimburse Olin for defense costs incurred prior to Olin's settlement with its primary insurer, because those costs were covered by other valid and collectible insurance.

The Jenner & Block team was led by Craig C. Martin, Co-Chair of the Firm’s Litigation Department, who argued the case before the Second Circuit. The Firm’s team also included Partners Peter J. Brennan, Elaine J. Goldenberg and Lorelie S. Masters and Associates Jessica Ring Amunson, Brian S. Scarbrough and Michaelene R. Martin. Former Partner Ian Heath Gershengorn also made significant contributions. Also representing Olin was Dickstein Shapiro LLP and Hush & Eppenberger. Opposing counsel was Mendes & Mount LLP, and John McAndrews argued.