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Case Briefs

By ALM Staff | Law Journal Newsletters |
July 31, 2006

Oregon Intermediate Court Takes a Stand on Allocation and Settlements

In Cascade Corp. v. American Home Assurance Co., et al., No. A118185 (Or. Ct. App. May 17, 2006), an Oregon intermediate appellate court, applying Oregon law, reversed a trial court's pro rata allocation of a policyholder's liability for environmental contamination, holding that the lone remaining non-settling excess insurer was jointly and severally liable for all of the policyholder's unreimbursed past and future remediation and defense costs until exhaustion of its policy limits. The court also: 1) ordered the insurer to pay prejudgment interest from the date of the settlement exhausting the primary insurance coverage below the insurer's policies; and 2) reversed the trial court's decision not to award attorneys' fees to the policyholder, remanding the issue to the trial court for further consideration. In its decision, the court did not address the recently enacted Oregon claims statute, ORS 465.480, including whe-ther the statute was constitutional and, if so, whether it mandated the same result.

Since the mid-1950s, the policyholder owned and operated an in-dustrial facility in Oregon. From 1961 until 1975, the policyholder used trichloroethylene ('TCE') as a solvent to degrease and clean metal parts at the facility. In the 1980s, state and federal environmental agencies be-gan investigating groundwater contamination around the plant. After discovery of contaminated groundwater, a nearby landowner sued the policyholder to recover its expenses associated with cleaning up contamination in that area. After a trial, a federal district court concluded that the policyholder was responsible for 70% of the property owner's cleanup costs.

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