Judge Marco Hernandez recently issued his rulings
after a bench trial in the long-running Ash Grove Cement Co v. Liberty
Mutual et al. environmental coverage litigation. In 2008 Ash Grove
became embroiled in the Portland Harbor Superfund Site when it received a
“104(e)” information demand from the EPA. When Ash Grove’s insurers
(including Liberty and Travelers) refused to pay for Ash Grove’s defense, it
sued. In 2010, Ash Grove prevailed
on the issue of whether the “104(e)” letter triggered the duty to defend – an
issue of first impression under Oregon law – meaning that Ash
Grove’s insurers were held liable for defense costs. Of course since 2008 a
lot has happened at the Harbor, including the commencement of an ADR process
involving all the major players at the site. At the March, 2013 trial on
Ash Grove’s damages, the insurers argued that even if (as the Court had already found) they are required to pay
for the response to the “104(e)” letter, Ash Grove’s costs to participate in
the ADR process are not a reasonable and necessary part of the defense to the "104(e)" letter. In effect, the insurers were trying to pick apart
the defense obligation into discrete parts. Ash Grove argued that in a
complicated, fluid, non-traditional situation like a Superfund dispute such an
approach makes no sense. Judge Hernandez’s Findings and Conclusions,
available here,
adopted Ash Grove’s argument. In so doing he established an important
precedent (on that issue, and others) for all of the other policyholders who
are currently suing their insurers to cover costs of defense associated with
the Harbor. The insurers have pledged to appeal.
