• Skip to primary navigation
  • Skip to content
  • Skip to primary sidebar

McCarter & English Logo

  • People
  • Services
  • Insights
  • Our Firm
    • Leadership Team
    • Social Justice
    • Diversity, Equity & Inclusion
    • Pro Bono
    • Client Service Values
    • Alumni
  • Join Us
    • Lawyers
    • Summer Associates
    • Patent Professionals
    • Professional Staff
    • Job Openings
  • Locations
    • Boston
    • Philadelphia
    • East Brunswick
    • Indianapolis
    • Stamford
    • Hartford
    • Trenton
    • Miami
    • Washington, DC
    • New York
    • Wilmington
    • Newark
  • Share

Share

Browse Alphabetically:

  • A
  • B
  • C
  • D
  • E
  • F
  • G
  • H
  • I
  • J
  • K
  • L
  • M
  • N
  • O
  • P
  • Q
  • R
  • S
  • T
  • U
  • V
  • W
  • X
  • Y
  • Z
  • All
Bankruptcy, Restructuring & Litigation
Blockchain, Smart Contracts & Digital Currencies
Business Litigation
Cannabis
Coronavirus Resource Center
Corporate
Crisis Management
Cybersecurity & Data Privacy
Delaware Corporate, LLC & Partnership Law
Design, Fashion & Luxury
E-Discovery & Records Management
Energy & Utilities
Environment & Energy
Financial Institutions
Food & Beverage
Government Affairs
Government Contracts & Global Trade
Government Investigations & White Collar Defense
Healthcare
Hospitality
Immigration
Impact Investing
Insurance Recovery, Litigation & Counseling
Intellectual Property
Labor & Employment
Life Sciences
Manufacturing
Products Liability, Mass Torts & Consumer Class Actions
Public Finance
Real Estate
Renewable Energy
Sports & Entertainment
Tax & Employee Benefits
Technology Transactions
Transportation, Logistics & Supply Chain Management
Trusts, Estates & Private Clients
Venture Capital & Emerging Growth Companies
  • Broadcasts
  • Events
  • News
  • Publications
  • View All Insights
Search By:
Insights News Contract Stack
Main image for New Jersey Court Confirms a PRP Letter Constitutes a “Suit” Triggering an Insurer’s Duty to Defend
Publications|Alert

New Jersey Court Confirms a PRP Letter Constitutes a “Suit” Triggering an Insurer’s Duty to Defend

Insurance Coverage Alert

9.14.2016

A New Jersey Superior Court recently put to rest a tenuous coverage defense to which insurers stubbornly have clung in environmental coverage cases. The court held in Cooper Industries, LLC v. Employers Ins. of Wausau a Mutual Company et al., Docket No. L-9284-11, that a potentially responsible party (“PRP”) letter from the United States Environmental Protection Agency (“EPA”) constitutes a “suit” triggering an insurer’s duty to defend. The court’s opinion follows holdings in the vast majority of jurisdictions addressing this issue.

The EPA sent a PRP letter to Cooper Industries, LLC (“Cooper”), identifying it as a “potentially responsible party” in the contamination of a 17-mile stretch of the Passaic River in Newark, New Jersey. The EPA requested Cooper participate in a group agreement with the EPA and several other PRPs to remediate the site, and warned Cooper its failure to cooperate may subject it to CERCLA enforcement proceedings. Cooper demanded its insurer OneBeacon Insurance Company (“OneBeacon”) provide a defense in connection with the PRP letter. OneBeacon refused to defend on the ground the PRP letter does not constitute a “suit” under its insurance policy.

The court rejected OneBeacon’s argument that the term “suit” requires a civil action commenced by filing a complaint. The court relied on, among other authority, the New Jersey Supreme Court’s decision in Morton International Inc. v. General Accident and Indemnity Company of America, 134 N.J. 1 (1993), for the premise that “coverage does not hinge on the form of action taken [or] the nature of relief sought, but on the actual or threatened use of legal process to coerce payment or conduct by a policyholder.” The court reviewed CERCLA’s statutory framework and found a PRP letter to be coercive in nature because it provides that PRPs “shall be liable for,” among other things, the costs of removal or remedial action. CERCLA also imposes strict liability with only a few narrow defenses, and entities that fail to cooperate with a PRP letter run the risk of contempt proceedings, fines and treble damages. The court noted that requiring a complaint in a lawsuit to trigger insurance coverage would defeat CERCLA’s main objective by “discourage[ing] prompt and cooperative remediation efforts and the timely cleanup of hazardous waste.”

The court also reinforced the long-standing principle that an insurer’s duty to defend arises immediately when an underlying complaint asserts a potentially covered claim. The court rejected OneBeacon’s overbroad interpretation of Burd v. Sussex Mutual Insurance Company, 56 N.J. 383 (1970), as almost always converting an insurer’s duty to defend into an obligation to reimburse its policyholder’s defense expenses at the end of a coverage action. The court confirmed Burd applies only where the insurer’s conflict of interest with its policyholder means it “cannot assume a defense in good faith.”

The following McCarter & English Insurance Coverage Lawyers are peer recommended by Best Lawyers for 2017

Ira M. Gottlieb*
Gregory H. Horowitz
Thomas Ladd
Joann M. Lytle
Richard F. McMenamin
Sherilyn Pastor

*Ranked in a category besides Insurance

Best Lawyers is published by Best Lawyers in partnership with US News and World Report; click here for their methodology. No aspect of this advertisement has been approved by the Supreme Court of New Jersey.

sidebar

pdfemail

Related People

Ira M. Gottlieb
Gregory H. Horowitz
Joann M. Lytle
Anthony Bartell
Sherilyn Pastor
Adam Budesheim
Steven H. Weisman
J. Wylie Donald
Thomas W. Ladd

Related Services

Insurance Recovery, Litigation & Counseling
Subscribe to our Insights
McCarter & English, LLP
Copyright © 2023 McCarter & English, LLP. All Rights Reserved.
  • Login
  • Attorney Advertising
  • Privacy
  • Awards Methodology
  • Contact
  • Subscribe
  • Sitemap

The McCarter & English, LLP website is for informational purposes only. We do not provide legal advice on this website. We can provide legal advice only to our clients in specific inquiries that they address to us. If you are interested in becoming a client, please contact us, but do not send any information about your specific legal question. We cannot serve as your lawyers until we establish an attorney-client relationship, which can occur only after we follow procedures within our firm and after we agree to the terms of the representation.

Accept Cancel