Friday, May 17, 2013

Illinois Union Insurance Co. v. NRG Energy Inc

May 16: In the U.S. Court of Appeals, Fifth Circuit, Case Nos. 12-30651, 12-30877 & 12-30879. Appealed from the United States District Court for the Middle District of Louisiana. The case concerns whether Illinois Union Insurance Company (ILU) has a duty to defend Louisiana Generating LLC (LaGen) in an underlying suit filed against it by U.S. EPA and the Louisiana Department of Environmental Quality (LDEQ) for alleged Clean Air Act (CAA) and state environmental law violations. The district court held that under the insurance policy at issue, there is a duty to defend. The Appeals Court affirmed the district court decision.

    In part, the Appeals Court rules, ". . .the underlying EPA suit includes allegations and prayers for relief that could potentially result in covered remediation costs. Government agencies acting under the authority of environmental laws allege that LaGen violated those laws, resulting in increased emissions of pollutants into the atmosphere, and seek to require LaGen to mitigate and remediate those emissions. The EPA complaint clearly alleges a covered 'pollution condition' at BCII when it asserts that 'significant amounts of NOx and SO2 pollution each year have been, and still are being, released [from BCII] into the atmosphere.' The policy states that ILU 'agrees to pay . . . [c]laims, remediation costs, and associated legal defense expenses' as a result of a pollution condition. 'Claims' and 'remediation costs' are thus two bases for coverage under the policy. In addition, a covered 'claim' includes 'government action(s) . . . alleging responsibility or liability on the part of [LaGen] for. . . remediation costs as a result of' a pollution condition. 'Remediation costs' are thus unquestionably covered, whether they are the relief sought by a claim or whether they are incurred independent of a claim, and ILU agreed to pay 'associated legal defense expenses' with regard to either situation. 'Remediation costs' are defined very broadly to include expenses incurred to redress pollution in compliance with environmental law, including, inter alia
, costs associated with investigating, mitigating or abating pollution. . . These requests for mitigation, offsetting and remediation suggest a reasonable possibility of coverage under the policy. . . Because part of the suit is 'potentially within the protection purchased, the insurer is obligated to defend.'"
    Access the complete opinion (click here). [#Air, #CA5]
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