December 26, 2013

Insured’s settlement without consent bars coverage under OCIP

Source:, December 18, 2013
By: Brian Margolies, Traub Lieberman Straus & Shrewsberry LLP

In its recent decision in Perini/Tompkins Joint Venture v. Ace Am. Ins. Co., 2013 U.S. App. LEXIS 24865 (4th Cir. Dec. 16, 2013), the United States Court of Appeals for the Fourth Circuit, considering both Maryland and Tennessee law, had occasion to consider whether an insured’s settlement of an underlying construction defect claim, without its insurer’s consent, precluded its right to indemnification.

Perini/Tompkins Joint Venture (“PTJV”) qualified as a named insured under a primary and excess layer owner controlled insurance program (“OCIP”) issued by ACE American Insurance Company with respect to the construction of a $900 million hotel and convention center in Oxon Hill, Maryland. A collapse of the hotel’s atrium during the construction process resulted in significant property delays. Following completion of the project, PTJV sued the owner on various theories for approximately $80 million in unpaid work, and the owner brought a separate suit against PTJV based on various theories of negligence in connection with its construction management activities. The owner’s sought damages in the amount of $65 million. PTJV did not notify ACE of the countersuit, but later settled the litigation. Pursuant to the settlement, the owner paid PTJV approximately $42 million and PTJV credited $26 million back to the owner.

Some six months after the settlement, PTJV demanded that ACE pay the $26 million shortfall. ACE issued a reservation of rights on several grounds, including breach of the policies’ prohibition on settlements without ACE’s consent. Specifically, the policies contained clauses stating that “No insured will, except at that insured’s own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent.” In the ensuing coverage litigation, the United States District Court for the District of Maryland granted summary judgment in ACE’s favor on the issue of voluntary payment.…

December 20, 2013

Insured May Settle Claim Before Suit if Insurer Wrongfully Denies Coverage

Source:, December 18, 2013
By: Jill Berkeley, Neal, Gerber & Eisenberg LLP

In Selective Ins. Co. v. Cherrytree Cos., 2013 IL App (3) 120959, the Illinois Appellate Court for the Third District drove the final nail in the insurer’s “if there is no duty to defend, there is no duty to indemnify” coffin. Holding that an insured had the right to settle a claim for defective construction after the insurer wrongfully denied coverage, the court reaffirmed its previous ruling that Zurich Ins. Co. v. Carus Corp., 293 Ill. App. 3d 906 (1997) misstated and misconstrued the law when it held that “when there is no duty to defend, there will be no duty to indemnify.” The court explicitly ruled that a standard general liability policy does not require the filing of a “suit” before the insured is entitled to seek indemnification for damages it is legally obligated to pay to a third party.

Not only does the majority opinion bring a smile to my lips, but the dissent by Justice Schmidt articulates one of my other favorite rules that “whereas here, the insurer denies coverage, the insured is entitled to do what he or she can to cut his or her losses, and need not wait until suit is filed to once again make demand on the insurer.” Hooray, sanity reigns in the Third District.


December 10, 2013

New Rule in WV Regarding Fracking Waste

Read here about a new rule in West Virginia regarding fracking waste.


November 14, 2013

ND fire leads to oil & saltwater spill

Read here about an explosion in North Dakota that resulted in an oil and saltwater spill.


September 24, 2013

PRP letter triggered coverage–but delay precludes claim against insurers

Source:, September 18, 2013
By: Amy B. Briggs, David B. Killalea , Stephen T. Raptis, Robert H. Shulman and Susan P. White, Manatt Phelps & Phillips LLP

A letter sent by the EPA in 2001 pursuant to CERCLA warning Land O’Lakes that it could be a potentially responsible party (“PRP”) for cleanup of an old refinery site triggered Land O’Lakes’ insurers’ duty to defend, the Eighth Circuit Court of Appeals recently held. This is consistent with the majority rule nationally, and typically is the position advocated by policyholders. In the case of Land O’Lakes, however, this unfortunately meant that the statute of limitations applicable to breach of contract had run as a result of Land O’Lakes’ seven-year delay in challenging its insurers’ denials of coverage.

In 2001 the EPA sent a Special Notice Letter (or “PRP Letter”) to notify Land O’Lakes that the agency considered Land O’Lakes to be a PRP under CERCLA for an oil refinery acquired by Land O’Lakes and later declared a Superfund site. The PRP Letter demanded that Land O’Lakes reimburse the EPA for $8.9 million that it had spent cleaning up the site, and encouraged Land O’Lakes to enter into negotiations with the EPA regarding additional cleanup.

Land O’Lakes denied any responsibility, arguing that a prior owner of the refinery site legally was responsible for the costs. But Land O’Lakes notified two of its insurers, Employers Mutual Liability Insurance Company of Wausau and The Travelers Indemnity Company, about the PRP Letter and requested coverage under historical CGL policies they had issued to Land O’Lakes. Both insurers declined to defend Land O’Lakes.…

September 3, 2013

MarkWest settles federal air pollution charges at Javelina plant

Source: Global Data Point, August 31, 2013
Posted on:

MarkWest Energy Partners LP agreed to invest $650,000 to reduce flaring events at its Javelina gas processing plant in Corpus Christi, Tex., as part of a settlement of charges it violated the federal Clean Air Act, the US Environmental Protection Agency announced. The consent decree also requires the Denver gas midstream master limited partnership improve its community relations by installing a 24-hr hotline to answer questions about flaring events, and pay a $97,500 fine within 30 days, EPA’s Region 6 office in Dallas said on Aug. 29. The settlement addresses violations EPA inspectors found at the plant from Sept. 1, 2012, to Jan. 30, 2013, it indicated. The Javelina plant processes and fractionates off-gas from six local refineries, according to information at MarkWest’s web site.


June 4, 2013

Mines polluting WV waterways

Read here about mining sites in West Virginia that environmental activists say are polluting waterways.


May 31, 2013

Rainstorm Causes Grief

Source: Great American Environmental Division, May 2013

During a particularly heavy storm, rain water gathered in a puddle on the roof of an office building. Due to a clogged drain, the water level rose higher than the installed protective flashing and entered the drywall behind office furniture. Over time, mold began to grow in the obscured area and was not discovered until odors were noticed, leading to a costly clean up and the potential for bodily injury claims from tenants.…

April 2, 2013

Bill Could Ban Fracking Waste in CT

Read here about a bill in the Connecticut legislature that is advancing toward banning waste from fracking.…

April 1, 2013

Government to Clean Up Air Force Base Pollution

Read here about a Kansas Air Force base with toxic groundwater pollution that the federal government will pay the majority to clean up .