UNITED STATES DISTRICT COURT DISTRICT of OREGON PORTLAND DIVISION EVRAZ INC., N.A., a Delaware Corporation, Plaintiff, V. the CO
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Case 3:08-cv-00447-AC Document 430 Filed 04/16/18 Page 1 of 15 UNITED STATES DISTRICT COURT DISTRICT OF OREGON PORTLAND DIVISION EVRAZ INC., N.A., a Delaware Case No.: 3:08-cv-00447-AC Corporation, FINDINGS AND Plaintiff, RECOMMENDATION v. THE CONTINENTAL INSURANCE COMPANY, a Pennsylvania Corporation; THE HARTFORD FIRE INSURANCE COMPANY, a Connecticut corporation; AMERICAN HOME ASSURANCE COMPANY, a New York Corporation; CENTRAL NATIONAL INSURANCE COMPANY OF OMAHA, a Nebraska Corporation; CENTURY INDEMNITY COMPANY, a Pennsylvania Corporation; GRANITE STATE INSURANCE COMPANY, a Pennsylvania Corporation; THE INSURANCE COMPANY OF PENNSYLVANIA, a Pennsylvania corporation; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH PA, a Pennsylvania company; RLI INSURANCE COMPANY, an Illinois corporation; STONEWALL PAGE 1 - FINDINGS AND RECOMMENDATION Case 3:08-cv-00447-AC Document 430 Filed 04/16/18 Page 2 of 15 INSURANCE COMPANY, a Nebraska corporation; WESTCHESTER FIRE INSURANCE COMPANY, a New York corporation; WESTPORT INSURANCE CORPORATION, a Missouri corporation; ZURICH-AMERICAN INSURANCE COMPANY, a New York corporation; Defendants, THE CONTINENTAL INSURANCE COMPANY, a Pennsylvania corporation, Defendant, Counterclaimant, and Third-Party Plaintiff, v. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, a foreign insurance company; and AMERICAN HOME ASSURANCE COMPANY, a foreign insurance company, TIG INSURANCE COMPANY, a foreign insurance company; FIREMAN’S FUND INSURANCE COMPANY; and DOES 1- 10, Defendants and Third- Party Defendants, THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, a foreign insurance company; and AMERICAN HOME ASSURANCE COMPANY, a foreign insurance company, Defendants, Third-Party Defendants, and Third- Party Plaintiffs, v. PAGE 2 - FINDINGS AND RECOMMENDATION Case 3:08-cv-00447-AC Document 430 Filed 04/16/18 Page 3 of 15 TIG INSURANCE COMPANY, a foreign insurance company; and DOES 1-10, Third-Party Defendants. ____________________________________ ACOSTA, Magistrate Judge: Introduction Plaintiff Evraz Inc., NA (“Evraz”),1 filed this action on April 4, 2008, seeking to enforce its right to defense for environmental claims under insurance policies issued by defendant The Continental Insurance Company, or its predecessors2 (“Continental”). Thereafter, Continental asserted counterclaims against Evraz and third-party claims against other insurance companies alleged to have issued insurance policies to Evraz covering the environmental claims. The third- party defendants in turn asserted third-party claims against additional insurance companies allegedly obligated to indemnify Evraz for the environmental claims. In the current version of the complaint, filed on April 16, 2014 (the “Complaint”), Evraz identifies Continental, American Home Assurance Company (“American”), Central National Insurance Company of Omaha (“Central”), Century Indemnity Company (“Century”), Granite State Insurance Company (“Granite”), The Insurance Company of of the State of Pennsylvania (“ICSOP”),3 National Union Fire Insurance Company of Pittsburgh, PA (“National Union”), RLI Insurance Company (“RLI”), Stonewall Insurance Company 1Evraz was formerly known as Evraz Oregon Steel Mills, Inc., and initiated this lawsuit under that name. 2Continental is the “successor by merger to The Fidelity and Casualty Company of New York and [the] successor in interest to certain insurance policies issued by Harbor Insurance Company.” (Scott Decl., ECF No. 409, Ex. 1 at 1.) 3ICSOP is also identified as The Insurance Company of Pennsylvania. PAGE 3 - FINDINGS AND RECOMMENDATION Case 3:08-cv-00447-AC Document 430 Filed 04/16/18 Page 4 of 15 (“Stonewall”), Westchester Fire Insurance Company (“Westchester”), Westport Insurance Corporation (“Westport”), and Zurich-American Insurance Company (“ZAIC”) as defendants.4 (Third Am. and Suppl. Compl., ECF No. 331 (“Am. Compl.”) at 1-2). Evraz seeks damages for breach of defendants’ primary and excess liability insurance policies arising out of the environmental claims and a declaration of the parties’ rights under such policies. (Am. Compl. ¶ 1.1.) Currently before the court is a motion to approve a settlement between Evraz, Continental, American, Central, Century, Granite, ICSOP, National Union, and Industrial Indemnity Company5 (“Settling Parties”) under OR. REV. STAT. 465.480(4) (the “Motion”). RLI, Stonewall, Westport, and ZAIC partially oppose the Motion. In the absence of arguments or evidence the settlement was entered in anything but good faith, the court recommends the settlement be approved under OR. REV. STAT. 465.480(4). Accordingly, the Motion should be granted.6 However, the non-settling insurers should retain their equitable offset rights; the right to argue the settlement, and the resulting contribution bar, is limited to the one occurrence at one property; and the right to enforce the terms of their excess insurance policies. 4Evraz also named The Hartford Fire Insurance Company (“Hartford”) as a defendant. This court approved Evraz’s unopposed motion to approve a settlement between Evraz and Hartford on November 5, 2015. 5Industrial Indemnity Company (“Industrial”) is identified as a party to the settlement agreement but is not identified as a party in this action. 6Stonewall requested oral argument in its response to the Motion and ZAIC requested oral argument in the docket entry related to its response to the Motion. The court finds the Motion appropriate for disposition without oral argument pursuant to LR 7-1(d)(1), and denies the requests. PAGE 4 - FINDINGS AND RECOMMENDATION Case 3:08-cv-00447-AC Document 430 Filed 04/16/18 Page 5 of 15 Background In the Complaint, Evraz alleges it owns, or previously owned, leased, or occupied, real property at 14400 N. Rivergate Boulevard, 4950, 5034, and 5200 NW Front Avenue, and 6161 NW 61st Avenue, in Portland Oregon, and that these properties are near or adjacent to areas designated by the United States Environmental Protection Agency (the “EPA”) as the Portland Harbor Superfund Site (the “Superfund Site”). (Am. Compl. ¶ 5.1.) “In 2000, the EPA identified Evraz as a potentially responsible party with respect to obligations to perform or pay for remedial investigation and remedial action concerning the Superfund Site, and notified Evraz that it may be liable to pay for damages to, destruction of, or loss of natural resources.” (Am. Comp. ¶5.2.) Additionally, Evraz alleges it is a third-party defendant in an lawsuit filed in the United States District Court for the Western District of Washington and is alleged to have buried contaminated material at a shipyard in Vancouver, Washington, which it once owned. (Am. Compl. ¶¶ 5.3, 5.4.) The plaintiff in that action seeks contribution from Evraz under the federal Comprehensive Environmental Response, Compensation and Liability Act. (Am. Compl. ¶ 5.4.) Evraz alleges some Defendants have a duty to defend the claims against Evraz, and all of the Defendants have an obligation to indemnify Evraz for liabilities resulting from the claims. (Am. Compl. ¶¶ 6.2-6.8.) Effective July 25, 2017, the Settling Parties “agreed to resolve, compromise, and settle certain disputes, claims, and controversies between and among them related to the Underlying Claims, and the claims referred to or contemplated in the Coverage Action, pursuant to the terms and conditions set forth” in the settlement agreement executed by the parties (the “Agreement”). (Scott Decl., ECF No. 409, Ex. 1 at 1-2.) This lawsuit is identified as the “Coverage Action”. (Scott Decl. Ex. 1 at 2.) The Agreement defines “Underlying Claims” as “administrative actions by various public PAGE 5 - FINDINGS AND RECOMMENDATION Case 3:08-cv-00447-AC Document 430 Filed 04/16/18 Page 6 of 15 agencies for cleanup of the [Superfund Site] and Natural Resource Damages in connection with alleged environmental contamination at and arising out of [Evraz’s] ownership and operations at properties on or near the Willamette River including: the Rivergate Facility, the Front Avenue Facility, the Union Carbide Facility, 6161 SW Wall Street, and the Swan Island Facility.” (Scott Decl. Ex. 1 at 1.) The “Rivergate Site” is limited to “real property located in Section 26 and 27 T2N, R1W Willamette Meridian, with an address of 14400 N. Rivergate Boulevard, all property within the Portland Harbor Natural Resource Assessment (PHNRA) Site ID 13, all portions of the Willamette River, the riverbank, sediment, air, stormwater and groundwater adjacent to that real property, Evraz’s Current and Historical Operations at, in, on, adjacent to and around the site, and all environmental contamination on, at, emanating from, or arising from that property and those operations.” (Scott Decl. Ex. 1 at 8.) The Settling Parties “agree that property damage exists at the Rivergate Site as alleged in the Coverage Action and that the property damage is the result of at least once occurrence as that term is used in the Policies.” (Scott Decl. Ex. 1 at 8.) They then acknowledge the existence of a primary layer of insurance in the total amount of $10,000,000, issued to Evraz by five insurance companies, defined as the “Primary Insurers,”7 and that the “total past reasonable and necessary indemnity costs paid by Evraz and the Primary Insurers . for property damage at the Rivergate Site exceeds the primary insurance occurrence described above, thereby exhausting the primary layer for one occurrence.” (Scott Decl. Ex. 1 at 8, 9.) 7The Primary Insurers consist of Continental, Firemen’s Fund Insurance Company (“(Firemen’s