RECENT FEDERAL DECISIONS

January 2007

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Second Circuit Holds Property Damage Includes the Passive Migration of Contamination into Soil and Groundwater for Purposes of Insurance Coverage
Olin Corporation v. Certain Underwriters at Lloyd’s of London, ___F.3d___

Olin sued its primary and excess carriers for the reimbursement of its remediation costs. Olin settled with its primary carriers and only Lloyd’s liability under its excess policies was tried at the district court level. The District Court’s instruction regarding what constitutes “property damage” was at issue in this case. The instruction did not consider the passive spread of contamination as constituting new property damage, thereby precluding the allocation of remediation costs over the years in which contamination occurred as the result of migrating contaminants. The court agreed that this instruction was erroneous in that property damage includes the passive migration or spread of contaminants. The case was remanded back to the District Court.