ELR Citation: ELR 20456
No(s). 89-869-Civ-J-12 (M.D. Fla. Oct 12, 1990)

The court holds that it lacks jurisdiction over an insurer's declaratory judgment action because the enforceability of an insurance contract between an insurer and a potentially responsible party (PRP) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is a question of state law not preempted by CERCLA. Plaintiff insurance company sought declaratory relief that it did not have liability to its insured under a comprehensive general liability insurance policy for the costs incurred by the Environmental Protection Agency (EPA) for the cleanup of polychlorinated biphenyl (PCB) contaminated transformers. The court finds that subject matter jurisdiction depends on the presence or absence of a federal question in the insurance coverage because plaintiff insurer conceded that neither EPA nor any defendants have made claims against it for reimbursement or contribution as a PRP. The court first summarily holds that the Declaratory Judgment Act does not confer jurisdiction on this action. Rather, the court must reconstruct the underlying action and evaluate the jurisdiction issue in that instance. Applying the "well-pleaded complaint" and "complete preemption" rules, the court finds that the underlying action is a suit for the proceeds of an insurance policy, which is usually a matter of state law, not a federal question. The court notes that plaintiff insurer incorrectly asserts that a court must decide whether an insurance policy is one to insure CERCLA liability as a matter of federal law. However, even if that were true, the issue does not create jurisdiction. The determination of the nature of the insurance policy fits within the framework of a state-law cause of action. In the absence of a federal remedy directed to the matter of insurance coverage, the presence of a claimed violation of the statute as an element of a state cause of action is insufficient to confer federal question jurisdiction. Moreover, the court holds that the reconstructed suit does not fall within an area of complete preemption. First, the McCarran-Ferguson Act creates a strong presumption against a finding of federal preemption of insurance regulation. Second, although CERCLA is a broad, wide-ranging regulatory and remedial regime, §114(a) expressly limits preemption of a state's ability to impose additional liability or requirements respecting the release of hazardous substances within that state. Thus, CERCLA does not preempt state insurance law generally and entities expressly formed to provide insurance to cover CERCLA liabilities can expect that the content of their insurance policies will be subject to state insurance law. To the extent that questions of federal law will be implicated in determining plaintiff insurer's liability on the policy, those questions are solely an ingredient of a defense, not the underlying cause of action sufficient to raise federal question jurisdiction.

Counsel for Plaintiff
Jonathan L. Alpert, Robert A. Levine
Alpert, Josey & Grilli
100 S. Ashley Dr., Ste. 2000, P.O. Box 3270, Tampa FL 33601-3270
(813) 223-4131

Counsel for Defendant
Jeffery Allen Tew
Kirkpatrick & Lockhart
100 Chopin Plaza, Ste. 2000, Miami Ctr., Miami FL 33131-2305
(305) 374-8112