Chubb Custom Insurance Co. v. Space Systems/Loral Inc.

Monday, March 18, 2013

Chubb Custom Insurance Co. v. Space Systems/Loral Inc.

Mar 15: In the U.S. Court of Appeals, Ninth Circuit, Case No. 11-16272. Appeal from the United States District Court for the Northern District of California. In this split decision, the majority indicates that Plaintiff-Appellant Chubb Custom Insurance Company (Chubb) filed a subrogation suit against Defendants-Appellees for recovery of insurance payments made to its insured, Taube-Koret Campus for Jewish Life (Taube-Koret), for environmental response costs Taube-Koret incurred in cleaning up pollutants released on its property. In the operative Third Amended Complaint (TAC), Chubb asserted subrogated claims under sections 107(a) and 112(c) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

Chubb also brought subrogated claims under state law. The district court dismissed Chubb's TAC with prejudice under Federal Rule of Civil Procedure 12(b)(6). Chubb appealed the dismissal. The majority concluded that "Chubb has no standing to bring suit under CERCLA section 107(a) because it did not incur any 'costs of response' related to the removal or remediation of a polluted site, and because the common law principle of subrogation does not apply to section 107(a); Chubb cannot bring a subrogation claim under section 112(c) because it did not allege that Taube-Koret was a 'claimant'; and Chubb's state law claims are time-barred. Accordingly, we affirm the district court."

In its conclusion, the majority said, "CERCLA was not enacted to benefit insurance companies; rather, it was enacted to promote the timely cleanup of contaminated waste sites, impose liability on those responsible for polluting the environment, and to encourage settlement through a complex statutory scheme. An expansive application of subrogation to sections 107(a) and 112(c) is inconsonant with those overall goals. If Congress wishes to change CERCLA's statutory scheme, it may certainly do so. But it is not the province of the courts to rewrite the statute. CERCLA sets limits and provides express guidance by which a party must abide. The statute of limitations under state law also required Chubb to file suit in a timely manner if it desired relief under state law. Chubb failed to do so here."

The dissenting justice said, "The majority provides a reasoned explication of why statutory subrogation under section 112(c), 42 U.S.C. § 9612(c), does not apply. But the majority's analysis of section 107(a), 42 U.S.C. § 9607(a), does not honor Chubb's right to equitable subrogation, which allows Chubb to stand in the shoes of Taube-Koret."

Explaining further, the dissent said, "Taube-Koret paid cleanup expenses that should have been borne in part by Ford, Chevron, Sun Microsystems, Inc., and others who polluted and contaminated the property. The majority reasons that because Chubb reimbursed Taube-Koret's cleanup expenses and did not directly incur those costs, it does not meet the definition of "any person" under section 107(a). 42 U.S.C. § 9607(a). But the regime of law mandated by the majority is contrary to CERCLA's intent to make polluters pay. . . Here, Chubb is left with the bill while the polluters pay nothing."

Access the complete opinion and dissent (click here). [#Remed, #CA9]

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