Court affirms Conrail not entitled to pollution coverage

Court affirms Conrail not entitled to pollution coverage

Source:, February 27, 2018
By: Judy Greenwald

A Pennsylvania state appeals court has affirmed a lower court ruling and held the Consolidated Rail Corp. is not entitled to pollution coverage under policies issued by a Berkshire Hathaway Group unit and Continental Insurance Co.

The ruling by the Superior Court of Pennsylvania in Harrisburg in Consolidated Rail Corp. v. ACE Property & Casualty Insurance Co. is the latest in a long-running pollution liability case that originally involved 55 insurers, according to Monday’s ruling.

The case involved efforts by Philadelphia-based Consolidated Rail, commonly referred to as Conrail, to obtain indemnification for contamination remediation, cleanup costs and other expenses related to toxic spills and releases at various geographic sites, according to the ruling.

“Conrail argues the insurance policy language is ambiguous and can be reasonably read to provide coverage for Conrail’s liability for pre-existing contamination, regardless of whether Conrail actively contributed to that contamination.”

The appeals court upheld a ruling by the Court of Common Pleas of Philadelphia County in Philadelphia in favor of Omaha-based Berkshire Hathaway unit Stonewall Insurance Co. and Columbus, Ohio-based Continental Insurance Co.

“The court determined that the insurance policy required the insurers to reimburse Conrail only for the damages arising out of an ‘occurrence’ (i.e., environmental contamination) that was caused by or grew out of Conrail’s operations at the time,” said the ruling.

“In other words, the policies provided coverage to Conrail only if Conrail could prove it had discharged some of the pollutants during the policy terms for which it had incurred liability,” said the ruling.

The lower court determined facts for some of the sites insured by Continental, and for the site Stonewall insured, indicated that pollutants had been discharged before Contrail took over operations, it said.

“We see no reason to disrupt the court’s sound analysis regarding the interpretation of the insurance policy language and the application of the language to the sites, in question,” said the ruling.

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