Anderson Brothers, Inc., an Oregon corporation, Plaintiff-Appellee,
St. Paul Fire and Marine Insurance Company, a Minnesota Insurance Company, Defendant-Appellant. State of Oregon, Intervenor-Appellee, Anderson Brothers, Inc., an Oregon corporation, Plaintiff-Appellee, State of Oregon, Intervenor-Appellee,
St. Paul Fire and Marine Insurance Company, a Minnesota Insurance Company, Defendant-Appellant.
Argued and Submitted May 9, 2013—Portland, Oregon
Appeal from the United States District Court for the District of Oregon Michael W. Mosman, District Judge, Presiding D.C. No. 3:11-cv-00137-MO
Seth Row (argued), Parsons, Farnell, & Grein, LLP, Portland, Oregon, for Plaintiff-Appellee Anderson Brothers, Inc.
David B. Thompson (argued), Senior Assistant Attorney General, Salem, Oregon, for Intervenor-Appellee State of Oregon.
Thomas A. Gordon (argued) and Andrew Moses, Gordon & Polscer, LLC, Portland, Oregon, for Defendant-Appellant St. Paul Fire and Marine Insurance Company.
Laura A. Foggan, Wiley Rein LLP, Washington, D.C., for Amicus Curiae Complex Insurance Claims Litigation Association.
Before: Alex Kozinski, Chief Judge, and Stephen Reinhardt, and Marsha S. Berzon, Circuit Judges.
CERCLA / Insurance Law
The panel affirmed the district court's judgment in favor of an insured, holding that the insurer breached its duty to defend when it refused to provide a defense after the insured received letters from the Environmental Protection Agency, notifying the insured of its potential liability under the Comprehensive Environmental Response, Compensation, and Liability Act for environmental contamination of the Portland Harbor Superfund Site.
The Environmental Protection Agency sent two letters to the insured: a letter issued pursuant to Section 104(e) of CERCLA requiring the insured to respond to questions that necessarily established its liability under CERCLA; and a General Notice Letter identifying the insured as a potentially responsible party. The panel held that both the 104(e) Letter and the General Notice Letter were "suits" under Oregon law within the meaning of the policies' duty to defend. The panel also held that the letters alleged facts sufficient to alert the insured to its potential liability for environmental contamination under CERCLA. The panel held that the insurer breached its duty to defend, and affirmed the attorney's fee award in the insured's favor.
REINHARDT, Circuit Judge:
The Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. ("CERCLA"), establishes a retroactive strict liability regime that imposes joint and several liability upon past and current landowners or operators of properties or facilities from which hazardous substances have been released or disposed into the environment. Plaintiff-Appellee Anderson Brothers, Inc., ("Anderson") received two letters from the Environmental Protection Agency ("EPA") notifying Anderson of its potential liability under CERCLA for environmental contamination of the Portland Harbor Superfund Site. The first letter required Anderson to submit an extremely detailed response to a questionnaire about its activities at its properties, under threat of severe civil penalties. The questionnaire required Anderson to respond to questions that necessarily established its liability under CERCLA. The second formally identified Anderson as a potentially responsible party ("PRP") and "encourage[d]" it to participate in settlement negotiations with other PRPs.
Anderson's general liability insurer, Defendant-Appellant St. Paul Fire and Marine Insurance Co. ("St. Paul"), declined to provide Anderson with a legal defense. Under the comprehensive general liability policies in question, St. Paul has a duty to defend Anderson against "suits" for activities covered by the comprehensive general liability policies. St. Paul did not consider the letters sent to Anderson to be "suits" because they were not filed in a court of law. In light of CERCLA's unique liability regime, which is designed to promote settlement with the EPA instead of litigation, the district court held that both letters were "suits."
Anderson is an Oregon corporation that owned and leased property, falling within the boundaries of the Portland Harbor Federal Superfund Site ("the Site"). St. Paul issued two comprehensive general liability policies ("the Policies") to Anderson,  providing coverage for damages arising from "occurrences" that happened between January 1979–80 and January 1980–81, respectively. St. Paul's relevant obligations under the Policies, which include a duty to defend Anderson, are as follows:
The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of: . . . property damage to which this insurance applies, caused by an occurrence, and the Company shall have the right and duty to defend any suit against the Insured seeking damages on account of such . . . property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient . . . .
The EPA listed the Site as a "Superfund" site in December 2000. See 65 Fed. Reg. 75179, 75182 (Dec. 1, 2000). On or around January 18, 2008, Anderson received a letter from the EPA, issued pursuant to Section 104(e) of CERCLA, 42 U.S.C. § 9604(e) ("the 104(e) Letter"). The 104(e) Letter stated that the EPA "seeks [Anderson's] cooperation" in its investigation of the release of hazardous substances at the Site, and explained that EPA was seeking information from "current and past landowners, tenants, and other entities believed to have information about activities that may have resulted in releases or potential threats of releases of hazardous substances to the Site." The 104(e) Letter enclosed an extensive 82-question "Information Request" seeking, inter alia: information about Anderson's ownership of and operations at any property within the Site; specific physical, environmental, and structural descriptions of each property Anderson leased or owned within the Site; and detailed descriptions of Anderson's current and former activities at the Site, including its use of drainage and sewage lines, its handling and disposal of any hazardous substances and soils, and its use of groundwater. The 104(e) Letter also informed Anderson that "[w]hile EPA seeks your voluntary cooperation . . . compliance with the Information Request is required by law" and failure to respond could result in an enforcement action and civil penalties of $32, 500 per day of noncompliance.
Anderson tendered the 104(e) Letter to St. Paul, and requested that St. Paul provide a legal defense and indemnity pursuant to its contractual duty to ...