Chubb Custom Ins. v. Space Systems/Loral

Summarized by:

  • Court: 9th Circuit Court of Appeals Archives
  • Area(s) of Law: Environmental Law
  • Date Filed: 03-15-2013
  • Case #: 11-16272
  • Judge(s)/Court Below: Circuit Judge M. D. Smith for the Court; District Judge Duffy; Dissent by Circuit Judge Gould
  • Full Text Opinion

An insurer cannot make a subrogation claim under §107(a) of CERCLA, and must allege the insured is a “claimant” in order to make a claim under §112(c) of CERCLA.

Chubb Custom Insurance sold an environmental insurance policy to the insured landowner for remediation costs stemming from pollution incidents by previous owners of several lots in Palo Alto, California. Chubb reimbursed the insured for remediation costs and brought an action against the previous landowners, alleging they caused the pollution and were responsible for remediation costs under §107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), subrogation under §112(c) of CERCLA, and various state law claims. After the third amended complaint, the district court dismissed the complaint with prejudice. The Ninth Circuit determined that Chubb may not bring a subrogation claim under §107(a) because the subrogee (Chubb) did not itself incur “costs of response” as required by the statute, and reimbursement costs are insufficient. The panel also examined the context of the statute, and determined that allowing a subrogation claim under §107(a) would render §112(c) meaningless. Additionally, to make a subrogation claim under §112(c), the insured must make a claim against the potentially responsible parties or the Superfund, and the subrogee insurance company must allege the insured is a “claimant.” The panel also determined that under the discovery rule, Chubb failed to bring the state law claims before the statute of limitations expired. AFFIRMED.

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