Jury Could Decide Whether Insurer Must Pay $5 million for PCB
By org jforward wisbar Joe Forward, Legal Writer,
State Bar of Wisconsin
Sept. 25, 2012
– A jury could decide whether a corporation or its insurer must
pay $5 million for releasing toxic chemicals into the Fox River through
1971, under a state appeals court decision.
NCR Corporation, which owned paper mills along the Fox River, became
partially responsible for polychlorinated biphenyl (PCB) pollution
during a 16-year period through 1971 under the federal Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA).
NCR is under
federal court orders to continue remediation efforts that began in
2009. In state court, NCR filed coverage actions against 25 insurers on
more than 80 insurance policies issued between 1953 and 1985, including
a $5 million policy issued by Transport Insurance Co. in 1983.
Most insurers settled, but Transport argued that NCR is not covered
under the 1983 policy, which only covered accidents or events causing
personal injury or property damage that was “neither expected nor
intended from the standpoint of the insured.”
NCR should have expected that discharged PCBs would eventually
cause damage when the policy was issued in the mid-1980s, Transport argued. The circuit court
granted summary judgment to NCR, concluding that pollution damage was
neither expected nor intended.
Corp. v. Transport Ins. Co., 2011AP192 (Sept. 25, 2012), a three-judge panel
for the District III Wisconsin Court of Appeals affirmed in part and
reversed in part.
It agreed with the circuit court’s conclusion that NCR’s
expectation of environmental damage must be evaluated at the time of the
act causing damage (not the date of policy inception), in this case the
discharge of PCBs through 1971.
However, the panel reversed on summary judgment, concluding that a jury
must decide whether NCR expected environmental damage to occur when it
In the early 1970s, the appeals panel explained, there was
some information that PCBs could cause
environmental damage, but no state or federal laws regulated PCB
discharges. It noted that NCR, at some point, should have expected that
PCBs would cause environmental damage if
discharged, but that point is unclear. Thus, material facts are still in
“Therefore, it is appropriate for a jury to determine what NCR
actually knew or expected and when it gained that knowledge or
expectation,” wrote Judge Michael Hoover.
The panel also rejected Transport’s argument that Ohio law, not
Wisconsin law, should apply under a choice-of-law analysis, in part
because NCR is headquartered in Ohio. Unlike Wisconsin law, Ohio law
would preclude coverage for NCR’s liability, Transport asserted.
However, ruling that Wisconsin law applies, the panel largely relied on
the location of the conduct and injury.