A great win last month for the Zidell real-estate group (owner of much land in the South Waterfront area of Portland, including a historic ship-repair yard) in the longest-running environmental contamination case in Oregon history: a Multnomah County judge held that Zidell's carriers must pay for environmental remediation based on the "all sums" approach. (Click here for Zidell's reply brief in support of its motion for summary judgment, and here for the court's order granting Zidell's motion).
The case centers around costs that Zidell paid many, many years ago to clean up contamination portions of the Willamette River in downtown Portland upriver from the Portland Harbor Superfund Site. The dispute, which is between Zidell (or really its "ZRZ Realty" entity) and numerous carriers including various Lloyd's syndicates, is back in the trial court after its umpteenth trip into the appeals courts. Recently, the court was asked to decide (among other things) whether the insurance carriers could limit their indemnity obligations based on the so-called "time on the risk" approach, where each carrier only pays in proportion to the number of years that it issued policies to the insured, meaning that if the insured settled with other carriers, or was uninsured for any years, there could be large portions of the costs that are not reimbursed. The alternative is the "all sums" approach, in which the carrier is liable to pay for all of the property damage if there was property damage during any of its policy years, up the limit of its policies.
The Oregon Environmental Cleanup Assistance Act (OECAA) specifically wrote the "all sums" approach into law for certain policies, and, separately, there is Oregon case law endorsing the "all sums" approach. Zidell's carriers, however, argued that the OECAA's provisions could not apply to them, and that the "all sums" approach is unfair. The arguments on both sides are complex and detailed. Fortunately, the Multnomah County Circuit Court saw the light and rejected the carrier-side arguments, holding that the indemnity obligations will be resolved based on "all sums." This appears to be the first of hopefully many trial-court decisions adopting the "all-sums" approach in connection with indemnification for environmental liabilities in Oregon. As the date for issuance of the ROD in the Portland Harbor comes nearer (although several years away), decisions like this one (which will hopefully be affirmed on appeal) will help shape the resolution of hundreds of coverage disputes over paying the billion-plus tab to clean up the downstream portions of the Willamette.
