ELR Citation: ELR 21483
No(s). s. 89-5367, -5368 (D.C. Cir. Sep 13, 1991)

The court holds that liability to state and federal governments for environmental cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is compensable as "damages" under comprehensive general liability insurance policies governed by Missouri law. In this diversity action, the court declines to apply the law of the home circuit set forth in Continental Insurance Cos. v. Northeastern Pharmaceutical and Chemical Co. (NEPACCO), 18 ELR 20819, which held that the term "damages" in a comprehensive general liability policy does not include cleanup costs. The court concludes that it is inappropriate to defer to the home circuit's ruling in NEPACCO, because it clearly misapplies state law by defining the plain meaning of the term "damages" according to its technical and legal use by insurance specialists or counsel. Instead, the court directly applies Missouri law to determine how its highest court would decide this unsettled question. The court holds that the plain meaning of "damages," as understood by a Missouri layperson, encompasses all financial liabilities an insured is obligated to pay as a result of another's loss. The court notes that the defendant insurers presented no evidence that the insured intended to be bound by a technical meaning of the term. The court further observes that courts have not interpreted CERCLA as distinguishing between damages and governmental cleanup costs. The court also holds that the insurer is entitled to summary judgment on all claims made by the insured, because an insurance policy issued to the insured's parent company expired six weeks before the environmental contamination occurred, when the parent company sold all of the subsidiary's outstanding stock.

Counsel for Appellants
John H. Gross
Anderson Kill Olick & Oshinsky
666 3rd Ave., New York NY 10017
(212) 850-0745

Sherry W. Gilbert
Anderson Kill Olick & Oshinsky
2000 Pennsylvania Ave. NW, Ste. 7500, Washington DC 20006
(202) 728-3100

Counsel for Appellees
James E. Rocap III, Niki Kuckes, Martin D. Minsker
Miller, Cassidy, Larroca & Lewin
2555 M St. NW, Washington DC 20037
(202) 293-6400

Dennis M. Flannery
Wilmer, Cutler & Pickering
2445 M St. NW, Washington DC 20037
(202) 663-6000

Before: EDWARDS, WILLIAMS, and RANDOLPH, Circuit Judges.