Insurer Bypassed in Toxic Waste Cleanup Still Must Pay

By Steven M. Sellers

Southern Pilot Insurance Co. can’t back out of an insurance policy just because the policyholder agreed on its own to cleanup a toxic waste site, a federal district court ruled Nov. 29 ( Southern Pilot Ins. Co. v. Matthews Auto Repair, Inc. , 2017 BL 425647, S.D. Ind., No. 17-cv-01207, 11/29/17 ).

The remediation agreement between Matthews Auto Repair Inc. and Indiana environmental officials “is merely a plan” to conduct the cleanup, admits no liability, determines no penalty, and can be rescinded, the U.S. District court for the Southern District of Indiana said.

Southern Pilot argued that its consent was required before Matthews Auto entered Indiana’s voluntary environmental remediation program, and that failure constituted a clear breach of a policy provision that bars voluntary payments.

The district court wasn't persuaded.

“Because Matthews Auto has not incurred any binding legal or monetary obligation under the agreement, the pleadings do not establish as a matter of law that it is in violation of the voluntary payment provision,” the court said.

Judge Jane Magnus-Stinson wrote the opinion.

Cozen & O’Connor represented Southern Pilot.

Stoll Keenon Ogden represented Matthew Auto.

For More Information

The opinion is available at http://src.bna.com/uBv.

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