London Underwriters Can’t Derail Amtrak’s Cleanup Claims

Environmental due diligence is a critical component of any property transaction where potential environmental risks are a concern—minimize risks and protect yourself from...

By Peter Hayes

London Market Insurers failed to shake Amtrak’s claims to recoup hazardous waste cleanup costs at a maintenance and storage facility in Queens, N.Y. ( Certain Underwriters at Lloyd's, London v. Nat’l R.R. Passenger Corp. , 2017 BL 334453, E.D.N.Y., No. 14-CV-4717, 9/21/17 ).

A jury must decide whether a policy provision barring coverage for damage from pollutants clears Certain Underwriters at Lloyd’s, London and Certain London Market Company—referred to collectively as London Market Insurers, the U.S. District Court for the Eastern District of New York said.

Amtrak, the National Railroad Passenger Corporation, may be entitled to coverage if it can show that the contamination was sudden and accidental, the court said in denying the insurer’s motion to dismiss.

LMI sought dismissal, arguing the contamination wasn't accidental because it resulted from Amtrak’s everyday operations. The court disagreed, finding normal business operations may cause accidental damage.

What matters is whether the policyholder intended the action that gave rise to the liability, the court said.

The record shows that the contamination came from inadvertent spills during fueling and storage operations, not an intentional release of hazardous waste, the court said.

A jury therefore could conclude the contamination was accidental, the court said.

Amtrak seeks coverage for the costs of cleaning up contamination at the Sunnyside Yard site, including petroleum hydrocarbons, volatile organic compounds, polychlorinated biphenyls, and metals.

Judge Frederic Block issued the ruling.

Lewis Baach PLLC represents LMI.

Anderson Kill & Olick LLP, Lowenstein Sandler LLP and Orrick Herrington & Sutcliffe LLP represents Amtrak.

For More Information

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

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Try Environmental Due Diligence Guide™ & Environmental Due Diligence Guide Report™