RSR Corporation v. International Insurance

Jul 26: In the U.S. Court of Appeals, Fifth Circuit, Case No. 09-10405. In this somewhat complicated CERCLA cost recovery case, the Appeals Court provides a summary of the background and proceedings. Accordingly, from 1972 until 1983, Quemetco, Inc. (Quemetco), a subsidiary of RSR Corporation, operated a lead smelter on Harbor Island, near Seattle, Washington. During that time, Harbor Island suffered substantial environmental damage. In December 1982, U.S. EPA announced that it planned to place Harbor Island on its National Priorities List (NPL). In 1986, the EPA determined that Quemetco was a potentially responsible party for the pollution. On May 22, 2000, the EPA filed an action under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) seeking recovery from RSR Corporation for the costs it had expended in cleaning up Harbor Island, as well as for expected future costs.

 

    Meanwhile, on February 2, 2000, International Insurance Company (International) sued RSR Corporation, Quemetco, Quemetco Metals Limited, Inc., and Quemetco Realty, Inc. (collectively, RSR), seeking a declaratory judgment that International had no obligations to RSR under four Environmental Impairment Liability (Environmental) policies which International's predecessor in interest had sold to RSR in 1981. An initial jury trial was held to resolve certain coverage issues, while other coverage and

damages issues were reserved for future resolution. At the conclusion of this initial trial, the district court entered judgment for RSR, holding that International's Environmental policies obligated it to indemnify RSR for remediation costs incurred by the EPA at Harbor Island, to the extent those costs were not excluded by the policies. The Appeals Court affirmed the district court's judgment on September 19, 2005. Int'l Ins. Co. v. RSR Corp., 426 F.3d 281, 286–89 (5th Cir. 2005).

RSR and International were realigned on July 12, 2007. Afterwards, 2

 

    International raised additional defenses which had been unavailable to it at the time of the prior judgment or which had been reserved in the initial jury trial. On October 22, 2008, both parties filed motions for summary judgment. The district court granted International's motion and dismissed RSR's claims, holding that RSR could not recover from International (1) because an "other insurance" clause in International's Environmental policies limited RSR's recovery to sums it had already received from settlement agreements with several other insurance companies and (2) alternatively, because Texas's "one recovery" rule barred RSR from collecting money from International when it had already been fully compensated for its Harbor Island liability through its settlement agreements with other insurance companies. RSR appealed the district court's grant of summary judgment. The Appeals Court affirmed the "take-nothing judgment" of the district court.

 

    The Appeals Court said, "The CGL [Comprehensive General Liability] settlements yielded over $76 million in proceeds, all of which must be allocated to the Harbor Island liabilities before RSR could collect on its Environmental policies. Because the Harbor Island alleged liabilities only totaled $13.1 million, RSR can take nothing under the Environmental policies. Therefore, we hold that the district court did not err in finding that Condition 8 ["other insurance" clause] barred all recovery on the Environmental policies."

 

    Access the complete opinion (click here).