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Anderson Bros., Inc. v. St. Paul Fire & Marine Ins. Co.

United States Court of Appeals for the Ninth Circuit

May 9, 2013, Argued and Submitted, Portland, Oregon; August 30, 2013, Filed

No. 12-35346, No. 12-35454

Opinion

 [*926]  SUMMARY1

CERCLA / Insurance Law

The panel affirmed the district court's judgment in favor of an insured, holding that the insurer breached its duty to defend when it refused to provide a defense after the insured received letters from the Environmental  [**2] Protection Agency, notifying the insured of its potential liability under the Comprehensive Environmental Response, Compensation, and Liability Act for environmental contamination of the Portland Harbor Superfund Site.

The Environmental Protection Agency sent two letters to the insured: a letter issued pursuant to Section 104(e) of CERCLA requiring the insured to respond to questions that necessarily established its liability under CERCLA; and a General Notice Letter identifying the insured as a potentially responsible party. The panel held that both the 104(e) Letter and the General Notice Letter were "suits" under Oregon law within the meaning of the policies' duty to defend. The panel also held that the letters alleged facts sufficient to alert the insured to its potential liability for environmental contamination under CERCLA. The panel held that the insurer breached its duty to defend, and affirmed the attorney's fee award in the insured's favor.

OPINION

REINHARDT, Circuit Judge:

] The Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. ("CERCLA"), establishes a retroactive strict liability regime that imposes joint and several liability upon  [**3] past and current landowners or operators of properties or facilities from which hazardous substances have been released or disposed into the environment. Plaintiff-Appellee Anderson Brothers, Inc., ("Anderson") received two letters from the Environmental Protection Agency ("EPA") notifying Anderson of its potential liability under CERCLA for environmental contamination of the Portland Harbor Superfund Site. The first letter required Anderson to submit an extremely detailed response to a questionnaire about its activities at its properties, under threat of severe civil penalties. The questionnaire required Anderson to respond to questions that necessarily established its liability under CERCLA. The second formally identified Anderson as a potentially responsible party ("PRP") and "encourage[d]" it to participate in settlement negotiations with other PRPs.

Anderson's general liability insurer, Defendant-Appellant St. Paul Fire and Marine Insurance Co. ("St. Paul"), declined to provide Anderson with a legal defense. Under the comprehensive general liability policies in question, St. Paul has a duty to defend Anderson against "suits" for activities  [*927]  covered by the comprehensive general liability  [**4] policies. St. Paul did not consider the letters sent to Anderson to be "suits" because they were not filed in a court of law. In light of CERCLA's unique liability regime, which is designed to promote settlement with the EPA instead of litigation, the district court held that both letters were "suits."

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729 F.3d 923 *; 2013 U.S. App. LEXIS 18156 **; 43 ELR 20206; 2013 WL 4615055

ANDERSON BROTHERS, INC., an Oregon corporation, Plaintiff-Appellee, STATE OF OREGON, Intervenor-Appellee, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Minnesota Insurance Company, Defendant-Appellant.ANDERSON BROTHERS, INC., an Oregon corporation, Plaintiff-Appellee, STATE OF OREGON, Intervenor-Appellee, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Minnesota Insurance Company, Defendant-Appellant.

Prior History:  [**1] Appeal from the United States District Court for the District of Oregon. D.C. No. 3:11-cv-00137-MO, D.C. No. 3:11-cv-00137-MO. Michael W. Mosman, District Judge, Presiding.

Evraz Or. Steel Mills, Inc. v. Cont'l Ins. Co., 2009 U.S. Dist. LEXIS 133186 (D. Or., Jan. 13, 2009)

Disposition: AFFIRMED.

CORE TERMS

Notice, insured, letters, Site, Policies, duty to defend, Environmental, suits, hazardous substance, contamination, settlement, courts, triggered, costs, demand letter, communications, ambiguous, comprehensive general liability policy, legal process, parties, disposal, cleanup, damages, entity, cases, environmental contamination, potential liability, legal defense, take action, cooperation

Environmental Law, Enforcement, Potentially Responsible Parties, Operators & Owners, Successors, Cost Recovery Actions, Strict Liability, Defenses, Innocent Landowners, CERCLA & Superfund, Cleanup Costs, Contribution Actions, General Overview, Insurance Law, Liability & Performance Standards, Notice to Insurers, Conditions Precedent, Claim, Contract & Practice Issues, Claims Made Policies, Notice Requirements, Business Insurance, Commercial General Liability Insurance, Duty to Defend, Obligations of Parties, Policyholders, Notice of Claims, Civil Procedure, Preliminary Considerations, Federal & State Interrelationships, Erie Doctrine, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Coverage Favored, Plain Language, Ordinary & Usual Meanings, Governments, Legislation, Interpretation, Constitutional Law, Congressional Duties & Powers, Contracts Clause, Application & Interpretation, Insurers, Allegations in Complaints

Environmental Law, Enforcement, Potentially Responsible Parties, Operators & Owners, Successors, Cost Recovery Actions, Strict Liability, Defenses, Innocent Landowners, CERCLA & Superfund, Cleanup Costs, Contribution Actions, General Overview, Insurance Law, Liability & Performance Standards, Notice to Insurers, Conditions Precedent, Claim, Contract & Practice Issues, Claims Made Policies, Notice Requirements, Business Insurance, Commercial General Liability Insurance, Duty to Defend, Obligations of Parties, Policyholders, Notice of Claims, Civil Procedure, Preliminary Considerations, Federal & State Interrelationships, Erie Doctrine, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Coverage Favored, Plain Language, Ordinary & Usual Meanings, Governments, Legislation, Interpretation, Constitutional Law, Congressional Duties & Powers, Contracts Clause, Application & Interpretation, Insurers, Allegations in Complaints