The Oregon Court of Appeals recently issued a ruling in the case of Continental Casualty Co. v. Argonaut Ins. Co. (A176763), affecting how insurers handle contribution claims related to environmental cleanups. The court's decision impacts insurers involved in environmental claims, specifically those under the Oregon Environmental Cleanup Assistance Act (OECAA). This ruling clarifies the rights of insurers seeking contribution from one another when it comes to covering defense costs and other related expenses.
This case stems from a contribution action initiated by plaintiffs Continental Casualty Company and Transportation Insurance Company (collectively referred to as Continental). The dispute revolves around the cleanup of the Portland Harbor Superfund Site, where Schnitzer Steel Industries, Inc. (SSI) and MMGL Corp were named as potentially liable parties. The case has gone through various stages, including a previous ruling from the Oregon Supreme Court, which set the stage for the current appeal.
The dispute began when Schnitzer designated Continental as the “targeted” insurer under ORS 465.480(3)(b), allowing it to choose a more significant general liability insurer to respond to a loss. In 2018, Continental paid the defense costs for Schnitzer related to the Portland Harbor claims and later sought contribution from other insurers, including Employers Insurance Company of Wausau (Wausau). The case eventually reached the Oregon Supreme Court, which reversed an earlier decision by the Court of Appeals that had favored Wausau.
The Supreme Court's ruling clarified that Wausau's settlement with Schnitzer did not extinguish Continental's right to seek contribution. The court emphasized that the settlement did not pertain to the environmental claim for which Continental had already paid. This led to the current appeal, where the Court of Appeals was tasked with addressing several remaining assignments of error related to the allocation of recoverable costs among insurers.
In its ruling, the Court of Appeals reversed part of the lower court's decision, affirmed another part, and remanded the case for reconsideration of how costs should be allocated among the insurers involved. The court specifically examined the terms of ORS 465.480, which governs contribution claims among insurers in environmental cases. The ruling underscored that an insurer that has paid for an environmental claim may seek contribution from other insurers that have not settled in good faith regarding that claim.
One of the key issues addressed by the court was whether certain costs, including attorney fees awarded under ORS 742.061 and prejudgment interest under ORS 82.010, should be included as recoverable costs in the contribution calculation. The court ultimately ruled that attorney fees awarded for failure to settle a claim within a specified timeframe are not recoverable costs subject to allocation among insurers. This decision aligns with previous rulings that have established a clear distinction between statutory liabilities and shared contractual obligations among insurers.
The court's ruling also confirmed that prejudgment interest on unpaid defense bills is recoverable and should be apportioned among the insurers involved in the contribution claim. This distinction is significant as it clarifies the types of costs that can be shared among insurers in environmental claims.
Looking ahead, this ruling sets a precedent for how insurers will handle contribution claims in Oregon, particularly in cases involving environmental cleanup costs. It emphasizes the importance of understanding the specific terms and obligations under the OECAA and the implications of settlements between insurers and their insureds.
The case may still be appealed, and it remains to be seen how the lower court will approach the reconsideration of cost allocation as directed by the Court of Appeals. Insurers involved in similar environmental claims will need to pay close attention to the outcomes of this case and any subsequent legal developments.