Reed Smith Client Alert

Authors: John N. Ellison Luke E. Debevec

In January, we reported on developments in Wiseman Oil Co. v. TIG Insurance, a case pending in the United States District Court for the Western District of Pennsylvania involving interpretation of the "pollution exclusions" located in Wiseman Oil’s insurance policies. On January 22, 2013, Chief Magistrate Judge Lisa Pupo Lenihan issued a Report and Recommendation that the insurance company owed a defense to its policyholders for environmental contamination claims brought under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), despite the pollution exclusion. This was a significant opinion in the realm of insurance coverage for historic industrial contamination claims involving Pennsylvania sites or Pennsylvania companies, because it recognized that insurers may not merely point to a pollution exclusion and refuse to defend a complaint alleging environmental contamination by a policyholder merely because it involves pollution.

Most recently, on March 19, 2013, the Report and Recommendation was confirmed by District Court Judge Joy Flowers Conti, despite lengthy written objections from the insurance company. Judge Conti wrote an opinion and entered a summary judgment order denying the insurance company’s motion concerning the pollution exclusion, entering summary judgment in Wiseman Oil’s favor concerning the duty to defend, and ruling that the issue of regulatory estoppel was moot because the defense question had already been resolved in Wiseman Oil’s favor. The court rejected the insurance company’s arguments concerning the duty to defend because the CERCLA complaint, on its face, did not exclude the possibility of coverage.

This opinion further confirms the breadth of the duty to defend and the real possibility of insurance coverage in Pennsylvania under many insurance policies for the costs of defending against alleged environmental liabilities involving unexpected and unintended pollution.

Reed Smith’s insurance coverage attorneys have successfully litigated these and numerous other issues involving the "sudden and accidental" pollution exclusion and other forms of the pollution exclusion, in Pennsylvania and other states. Additionally, the authors of this article assisted Wiseman Oil’s attorneys with research and evidence from prior litigations involving the same issues. If you have faced or are currently facing environmental liabilities or coverage denials from your insurance carriers, please contact the authors of this Alert, or the Reed Smith attorney with whom you routinely work.


Client Alert 2013-084