Allegations of Negligent Phase II Site Assessment

Acknowledgement to XL Environmental

An environmental consultant insured by XL was retained by the then owner of a parcel of land to prepare Phase I / Phase II Site Assessments in support of the sale of this land. Following the sale of the property, litigation was filed against our insured and its client by the new property owner. The allegations against our insured were that the site assessments were negligently prepared and misleading in that: (1) the reports failed to advise of the extent of the contamination on the property prior to purchase, (2) failed to conform to the requirements of applicable ASTM standards in effect at the time, and (3) had the new property owner (buyer) been advised of the extent of the contamination, they would not have purchased the property to redevelop for residential usage. Damages in excess of $1,000,000 were alleged.

XL’s environmental claims counsel retained local defense attorneys to defend the allegations of the lawsuit against our insured. The claims counsel worked with defense counsel and our insured to investigate the allegations made. The XL claims counsel also retained an expert environmental consultant to review the insured’s work on the project and provide an opinion with respect to that work. The insured’s expert and defense counsel ultimately felt that the insured’s work did not meet the recognized standard of care for Phase I and Phase II Site Assessments in place at that time, including conforming to the technical aspects of the ASTM standards. Thus, an early resolution of the claim would be in the insured’s best interests.

XL’s environmental claims counsel worked with the insured and defense counsel to settle the case on the insured’s behalf early on to avoid additional litigation costs that would further reduce our insured’s available policy limits under their Professional and Contractor’s Pollution Legal Liability Policy. A settlement was reached with the new property owner for the reduced amount of $250,000.

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