Environmental Law Developments 1989

JurisdictionConnecticut,United States
Publication year2021
CitationVol. 64 Pg. 114
Pages114
Connecticut Bar Journal
Volume 64.

64 CBJ 114. ENVIRONMENTAL LAW DEVELOPMENTS 1989

ENVIRONMENTAL LAW DEVELOPMENTS 1989

By GEORCE S. GOODRIDGE(fn*)

I. ENVIRONMENTAL CASES

Cases involving environmental matters decided by the local and Federal courts in Connecticut during 1989 follow the general trends in the United States upholding the powers of the Department of Environmental Protection and construing environmental statutes broadly to further their remedial goals. Many of the cases cited refer to the "Superfund" or CERCLA."(fn1) liabilities against various insurance companies by a Connecticut based corporation. There were no decisions in 1989 construing either the "Superlien"(fn2) or the Transfer Act, both areas of current interest, particularly for commercial real estate practitioners. The remainder of the cases covered a wide variety of environmental problems.

A. Superfund Insurance Claims.

Perhaps the most remarkable 1989 case was Union Carbide Corporation v. Aetna Casualty & Surety Co..(fn3) published on February 6, 1989. In this case, the court dismissed Union Carbide's suit for declaratory judgment against various insurance companies for coverage and reimbursement of Union Carbide's claimed liabilities at thirteen Superfund sites and two class actions alleging environmental damages against Union Carbide. While the decision to dismiss this action was based on a classic forum non conveniens analysis, the decision offers a glimpse into the environmental problems which large corporations face and also the titanic size of the resulting insurance claims arising from these problems. The thirteen "Superfund" sites and two class actions in the Union Carbide action (none of which was actually located in




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Connecticut) were not the corporation's total exposure for environmental liability.(fn4) Union Carbide asserted that more than 2,116 insurance policies covered these various sites. For example, at one site (Seadrift, Texas), Union Carbide claimed coverage to be governed by 237 policies between 1954 and 1986.(fn5)

While Union Carbide used the Aetna Casualty & Insurance Company as its primary carrier between 1944 and 1970, about 60 other insurers were responsible for excess or umbrella coverage along with 52 insurance underwriters. As the court noted, there were 115 defendants, promising an extremely complicated and lengthy trial.

The motion to dismiss was decided using equitable concepts, with specific reference to some unique environmental factors. The court considered private and public interest factors, including the availability of witnesses, administrative difficulties within the court and the advantages of having a court familiar with the controlling law of the state determine the merits of the controversy. Underlying the public and private interests, there were several explicit presumptions concerning the type and nature of these environmental cases. Some background is necessary to explore the court's assumptions.

With the passage of CERCLA and the attendant liability of potentially responsible parties ("PRPs"), disputes between the PRI's and their liability carriers have generated a number of massive lawsuits. The court referred to several of these lawsuits, particularly in New Jersey and Delaware. Typically, a larger corporation with liability at many Superfund sites and continuous insurance coverage has sued to determine by declaratory judgment the obligation of its insurance companies for payment of response and remedial costs associated with the various Superfund sites.

Most large insurance companies such as Aetna have consistently refused to indemnify for or defend these types of environmental claims, relying for their refusal upon typical exclusions in the "Comprehensive General Liability" policies such as the "pollution exclusion clause," the "owned property




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exclusion," whether there has been an "occurrence" and the time of such "occurrence."

Particularly burdensome from the standpoint of the insurance company are the claims made against older policies, and older policy years(fn6) in which there are few, if any, deductibles, self-insurance retentions or other devices designed to reduce first dollar insurance payments. This type of environmental liability was unanticipated and literally unknown at the time of policy issuance because CERCLA was not enacted until 1980. Further, the scope of total liabilities for Superfund liability is not known because the EPA continues to add Superfund sites to the National Priority List and also continues to raise its estimates of both the number of projected sites and the projected total costs for cleanups. With more than 1,200 sites currently listed by the EPA, and with average clean-up costs at the multi-million dollar level at most Superfund sites, the stakes are enormous. Consequently, both sides - the PRPs and the insurance carriers - view these cases as extremely important precedent-setting battles. In these circumstances, the choice of forum is obviously a major consideration for both the plaintiff PRPs and the defendant insurance companies.

The Union Carbide court noted that the courts in other states which bad rejected dismissal of other Superfund claims cases for forum non conveniens were "persuaded that the insurance coverage issues are legal in nature and could be resolved by the court with little factual discovery or evidence."(fn7) However, the Union Carbide opinion emphasized repeatedly that environmental pollution claims do not have uniform fact patterns, that site specific factual determinations are required to resolve the insurance coverage questions, that each situation is factually unique and may require not only a factual determination under the law of the court's jurisdiction but also under the law where the site is located.(fn8) The court's opinion gives a detailed discussion of the potentially troublesome factual determinations these types of cases must resolve.

Thus, the Union Carbide court explicitly rejected the notion that the case could be resolved on matters of law. Having reached




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this conclusion, the remaining public and private interest factors seemed to follow logically in favor of granting the motion. After discussing the many private and public interest factors, the court concluded that there was no strong reason to try the case in the courts of Connecticut even though the parties had proper in personam jurisdiction. In a brief opinion, the Connecticut Supreme Court affirmed the trial court's decision, noting that "site-specific" lawsuits for Union Carbide's claims were already proceeding in eight other jurisdictions.(fn9)

However correct this decision, it will be truly ironic if the courts of the state in which the "insurance capitol of the world" is located decline to consider the most important and most expensive insurance question of the new decade. Connecticut's significant public interest in insurance law was apparently not a factor argued or deemed important by the trial court. The court concluded that most public interest in a trial of this case will be where the waste sites are located.(fn10) However, the Union Carbide case will not determine ultimate remedies at the Superfund site - that will be determined in the usual manner between the PRPs, the EPA and various local interests - but rather a more basic issue: who will pay for the remedy. Therefore, one can argue that the citizens of the various states where the particular sites are located actually have little interest in whether Union Carbide or Aetna pays, as long as payment is made and the remedy is, in fact, carried out.

Connecticut courts should consider a Superfund insurance claim, possibly arising from one of the Connecticut's fourteen Superfund site cases, commenced by a Connecticut based corporation located more than a "few miles" from New York state as is Union Carbide. An obvious candidate for the insurance claim is Reichhold Chemicals, Inc. v. Hartford Accident and Indemnity Co. (fn11) An amended complaint was filed on March 9, 1989 seeking, in part, identical relief to that sought in Union Carbide. In Reichhold, none of the 51 "environmental actions," which include Superfund sites, administrative actions and lawsuits, is located in




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Connecticut, raising the possibility that this case is another candidate for a motion to dismiss based upon forum non conventens.

B. Judicial Deference to DEP Administrative Expertise.

Connecticut courts continue to uphold and expand the DEP's various powers. In Pac v. The Upjohn Company,(fn12) the defendant asserted that no civil penalties could be assessed by the DEP for Upjohn's failure to adhere to effluent limitations contained in an order issued by the DEP pursuant to C.G.S. § 22a-431. A referee determined that the defendant had violated a 1983 DEP order and assessed a civil penalty of $135,000 against Upjohn. Upjohn appealed the referee's order by claiming that an order to abate pollution under § 22a-431 could not contain enforceable effluent limitations because § 22a-431 contained no explicit or affirmative language authorizing effluent limitations.(fn13)

Both the Superior Court and the Appellate Court concluded that the DEP had implicit authority to set enforceable parameters in any orders issued under § 22a-431. The Appellate Court mentioned a "wide-ranging use of § 22a-431 orders" and concluded that the DEP's "broad mandate" would be frustrated if the statute were restricted. (fn14)Thus, Upjohn's attempt to have § 22a-431 construed in a restrictive manner was rejected. A similar fate is likely to befall other attempts at strict construction of the Connecticut environmental statutes.

In a similar vein, in Ridge Development, Inc. v. Carothers,(fn15) the court upheld the DEP's enforcement orders against Ridge Development ("Ridge"), requiring improvements to a detention basin...

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