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Main image for Insurers Must Shell Out $27M for Uranium Mine Cleanup
News|Quote

Insurers Must Shell Out $27M for Uranium Mine Cleanup

Law360

8.5.2015

A New Mexico state judge on Tuesday ordered certain underwriters at Lloyd’s of London and other London Market insurers to pay more than $27 million in a dispute over coverage for former uranium mining company United Nuclear Corp.’s costs associated with the environmental cleanup of a mine site.

In a partial final judgment, Judge Louis E. DePauli Jr. directed the London insurers to shell out $8.2 million to cover UNC’s costs of investigating and remediating environmental conditions from the Northeast Church Rock mine site near Gallup, New Mexico, through March 4, 2013, plus $4.7 million for the policyholder’s defense costs and $14.3 million in prejudgment interest.

The order followed a February jury verdict in UNC’s favor. Following a three-week trial, a McKinley County jury concluded that residual contamination from the site constituted property damage that wasn’t expected by UNC, and found that the company is entitled to payment for past and future cleanup costs.

According to McCarter & English LLP, which is representing UNC, the case was the first insurance coverage dispute in New Mexico to result in a verdict in favor of a policyholder against its carriers related to remediation of a former uranium mine. The verdict and prior rulings in UNC’s favor “bode well for the future cleanup of other uranium mines,” said McCarter partner Wylie Donald.

The $14.3 million prejudgment interest sum represents annual interest of 10 percent on the principal amount of $12.9 million, running from the day UNC’s complaint was served, according to Judge DePauli’s order.

UNC successfully argued for the 10 percent method of calculating interest, as opposed to another method that permits for up to 15 percent interest from the date the cost was incurred.

“One of the purposes of that rule is to encourage settlement,” Donald said. “The court applied the more severe rule and, although the court did not provide its thinking, UNC argued that London’s ceaseless re-argument of issues (sometimes four or five times) provided ample justification for applying the more severe rule.”

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Media item: J. Wylie Donald
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