Important Environmental Insurance Ruling Issued In Protracted Insurance-Coverage Dispute

The latest ruling in the long-running environmental insurance case, Olin Corporation v. Lamorak Ins. Co., was released on April 18, 2018, by Judge Rakoff of the U.S. District Court of the Northern District of New York. Judge Rakoff granted motions for summary judgment filed by Olin Corporation (Olin) and The London Market Insurers, and awarded Olin $55M for its claims against Lamorak Insurance Company (Lamorak).

As Judge Rakoff notes, “the overall litigation, having already outlived two federal judges, is now before the unlucky undersigned.” This ruling is in response to the Second Circuit’s most recent decision in Olin Corp. v. OneBeacon Americans Ins. Co.

Olin, a manufacturing company doing business at many sites and locations, instituted this insurance recovery action more than 30 years ago seeking coverage from its insurance carriers that had written environmental insurance for Olin, granting coverage for environmental contamination. In its Third Amended Complaint against Lamorak, Olin seeks indemnification for remediation costs and other sums related to five “remand sites” in the U.S. and for such contaminating instances as the discharge of contaminated wastewater, mercury groundwater contamination, and ecosystem contamination at an Olin plant’s intake canal.

A ruling by Judge Rakoff;s predecessor in 2015 awarded Olin $87M, but a subsequent ruling by a New York state appellate court caused the Second Circuit to require that this ruling be reconsidered.

Olin’s excess insurance policies were issued by Lamorak in 1970, and included a “Condition C” which the New York court interpreted in 2016. A hearing was held before Judge Rakoff in February 2018, and Judge Rakoff has now held that Lamorak is entitled to a “set-off” of $2.6M from its overall liability of $58M. The London Market Insurers, which had earlier settled with Olin for other sites, also filed a Motion for Summary Judgment, which was granted by Judge Rakoff. This case illustrates how challenging these disputes can be for all parties.