Certain Underwriters at Lloyd's London v. Massachusetts Bonding & Insurance Co.
Certain Underwriters at Lloyd's London v. Massachusetts Bonding & Insurance Co.
Opinion of the Court
This is the second time this case, an action for contribution between insurance companies, has been before us. See Certain Underwriters v. Mass. Bonding and Ins. Co., 235 Or App 99, 230 P3d 103, rev den, 349 Or 173 (2010), adh’d to as modified on recons, 245 Or App 101, 260 P3d 830 (2011). The issue presented in this case is whether plaintiffs Certain Underwriters at Lloyd’s London and Excess Insurance Company, Limited (collectively, London) can maintain their contribution action against defendants in light of the 2013 amendments to the Oregon Environmental Cleanup Assistance Act (OECAA), ORS 465.475 to 465.484. See Or Laws 2013, ch 350, §§ 4, 8.
London and defendants are companies that issued insurance policies to a common insured, Zidell.
“Defendants Beneficial Fire, National Union, and Industrial Indemnity Company (U.S. Fire) were among those who settled first, which left defendants Glen Falls and Continental Insurance Company (collectively CNA), defendant Century Indemnity Company (CIGNA), and [London] as the only remaining insurers in the coverage case.
“In October 1999, the Moody Avenue court ruled on a series of summary judgment motions filed by Zidell and the remaining insurers. The court ruled that ‘the duty to defendant is a joint and several obligation, which will be allocated among the Defendant Insurers. Allocation should not be any hindrance to the duty to defend.’ The court further ordered that ‘the Defendant Insurers’—at that time, CNA, CIGNA, and [London]—were to ‘make payment of past defense costs submitted by [Zidell] to date’ and that, ‘with respect to ongoing defense costs,’ the parties were to put in place a ‘reasonable system for submission, review and payment of these costs.’
“The remaining insurers paid Zidell’s accrued defense costs—approximately $771,000—as ordered. Of that amount, [London] paid approximately $578,000, and CNA and CIGNA paid the rest. The payments were made by [London] with the understanding that they were ‘subject to a full reservation of each insurer’s rights.’
“After the start of trial in the Moody Avenue action, CNA settled out. The settlement then left [London] and CIGNA as the only insurers subject to the court’s order to pay Zidell’s remaining defense costs. Together, [London] and CIGNA paid another $619,982 in defense costs, with [London] again paying the lion’s share—approximately $566,000. Then, after trial but while the court was still preparing its findings of fact and conclusions of law, CIGNA settled with Zidell.”
235 Or App at 103-04. It is undisputed that all settlements were made in good faith.
“together with dismissed defendants CNA and CIGNA (who shared the joint and several obligation to pay Zidell’s defense costs prior to their dismissal from this case), have satisfied their obligation for defense costs of $1,390,658.65 incurred by Zidell through August 31, 2001, with respect to the DEQ Action and the prejudgment interest of $37,768.35 thereon.”
Thus, according to the judgment, London was “now responsible only for defense costs submitted by Zidell subsequent to August 31, 2001.” With respect to London’s “indemnity obligations (i.e., the costs of remediation as a result of the [the environmental cleanup] claims rather than defending against them or investigating them), the Moody Avenue judgment incorporated the trial court’s earlier findings of fact and conclusions of law, which allocated indemnity costs to particular policies.” Certain Underwriters, 235 Or App at 104. The court also awarded Zidell its attorney fees.
The parties appealed the trial court’s judgment. See ZRZ Realty v. Beneficial Fire and Casualty Ins., 222 Or App 453, 194 P3d 167 (2008) (ZRZ I), adh’d to as modified on recons, 225 Or App 257, 201 P3d 912 (2009) (ZRZ IT), aff'd in part and rev’d in part, 349 Or 117, 241 P3d 710 (2010) (ZRZ III), adh’d to as modified on recons, 349 Or 657, 249 P3d 111 (2011) {ZRZ IV). On appeal, we reversed and remanded for a new trial, concluding, in part, that the trial court had incorrectly allocated the burden of proof to London on certain issues. ZRZ I, 222 Or App at 476-77. On reconsideration, we modified our opinion and adhered to it as modified; we did not change the disposition of the case. ZRZ II, 225 Or App at 265. Thereafter, the Supreme Court granted review and, on review, it affirmed in part and reversed in part our decision and remanded the case to us for resolution of issues we had deemed it unnecessary to address in ZRZ I. ZRZ III,
In 2013, on remand from the Supreme Court, we issued another opinion in the Moody Avenue action, deciding the assignments of error that we had not previously reached and, ultimately, reversing in part the trial court’s judgment on appeal and cross-appeal, and remanding for further proceedings. ZRZ Realty v. Beneficial Fire and Casualty Ins., 255 Or App 524, 300 P3d 1224 (ZRZ V), adh’d to as clarified on recons, 257 Or App 180, 306 P3d 661 (ZRZ VI), rev den, 354 Or 491 (2013). On reconsideration, we clarified our opinion in ZRZ V, and adhered to the disposition of the case. ZRZ VI, 257 Or App 180. In November 2013, the Supreme Court denied review, and, finally, in February 2014, the appellate judgment was issued remanding the case to the trial court.
Meanwhile, in 2003, after the trial court had entered its judgment in the Moody Avenue action, London filed this contribution action against defendants. London alleged that the duty to defend Zidell from an environmental cleanup action was an obligation owed by London and defendants jointly. London alleged that it had paid a disproportionate share of that common obligation and was entitled to pro rata contributions from defendants, the settling insurers. Certain Underwriters, 235 Or App at 102. London also asserted that it “had been held liable for attorney fees * * * as well as prejudgment interest on the unpaid defense costs, for which defendants would have been liable had they not settled with Zidell before the Moody Avenue judgment was entered.” Id. at 105. Defendants sought summary judgment on a number of grounds, including that their settlements with Zidell had extinguished any common liability for purposes of a contribution claim. The trial court granted summary judgment and, on appeal, London argued, in part, that “the trial court erred in concluding that defendants’ settlements with Zidell foreclosed any subsequent contribution claims as a matter of law.” Id. at 110. We agreed, explaining that
*285 “defendants’ settlements with Zidell did not operate to extinguish [London’s] right to equitable contribution for defense costs paid prior to the settlement. If [London] and defendants had the same obligation to defend Zidell, and [London] discharged a disproportionate share of that obligation, then [London’s] right to equitable contribution arises at that point in time. Although Zidell was able to release its own claims against defendants for defense costs, Zidell was not in a position to release [London’s] claims against defendants.”
Id. at 113 (footnote and emphasis omitted).
We also addressed the question, raised in a cross-assignment of error, whether 2003 amendments to the OECAA “retroactively extinguished” London’s contribution claims. Id. at 123. The contention that the contribution claims were extinguished by statute was
“premised on ORS 465.480(4), a provision of the OECAA that was enacted during the 2003 legislative session—after [London] filed [its] contribution claims. ORS 465.480(4) provides, in part, that ‘[a]n insurer that has paid an environmental claim may seek contribution from any other insurer that is liable or potentially liable’ (Emphasis added.) [On cross-appeal, it was argued that], as a result of * * * settlement with Zidell, [an insurer] no longer ‘is liable or potentially liable’ for an environmental claim; hence, [London] cannot seek contribution from [the insurer] under the plain language of the statute.”
Id. at 123 (third brackets in original). We were not persuaded that the legislature intended the phrase “is liable or potentially liable” to be understood as the insurer argued. We further observed that a different section of “the 2003 amendments expressly cut off contribution claims against insurers who ‘reached a binding settlement with the insured as to the environmental claim.’” Id. at 129. However, that part of the 2003 amendments only cut off “contribution claims against settling insurers in a narrow window of cases—those in which a ‘final judgment as to all insurers
In 2013, while this contribution case was back before the trial court and the Moody Avenue coverage case was pending in this court, the legislature amended the OECAA. In part, it amended ORS 465.480(4) to provide that “[a]n insurer that has paid all or part of an environmental claim may seek contribution from any other insurer that is liable or potentially liable to the insured and that has not entered into a good-faith settlement with the insured regarding the environmental claim” Or Laws 2013, ch 350, § 4 (emphasis added); see ORS 465.480(4)(a).
“[T]he purpose of SB 814 was to facilitate speedy cleanup of hazardous waste sites by encouraging good faith settlements and precluding lengthy contribution claims from non-settling insurers. The Moody Avenue case was cited more than once as an example of a ‘pending’ or ‘ongoing’ case in which insurance companies denied coverage and thereby slowed down the clean up process. It is as though the legislature enacted these amendments to specifically address this case.”
(Internal citations omitted.) The parties stipulated that defendants had settled with Zidell in good faith. Thus, based on the application of then-newly amended ORS 465.480, the court dismissed London’s contribution case with prejudice.
As noted, on appeal from the trial court’s judgment, the sole issue in this case is whether the 2013 amendments to the OECAA apply to London’s contribution claim. It is undisputed that if they do apply, the amendments extinguish London’s contribution rights.
London contends that the 2013 amendments did not abrogate its contribution rights. In London’s view, the Moody Avenue action itself is not a single environmental claim; instead, the Moody Avenue action involves two
Defendants make a number of arguments in response. In part, they assert that “the ‘environmental claim’ for which London seeks contribution is the claim by Zidell in the Moody Avenue action” and that London is incorrect in asserting, as a legal matter, that the Moody Avenue action contains two environmental claims. In defendants’ view, the statutes make clear that “a single ‘environmental claim’ can allege breach of defense-related duties, breach of indemnity related duties, or, as in Zidell’s case, breach of defense- and indemnity-related duties.” (Emphasis in original.) In the end, however, in defendants’ view, “it doesn’t matter whether the Moody Avenue case is one ‘environmental claim’ or two.” They explain that,
“[h]owever many claims there might be in the Moody Avenue case, and whatever London and Zidell might have argued on appeal, there was only one judgment in that case and that judgment was under appeal on the effective date of the 2013 law. It doesn’t matter, then, whether there were two ‘environmental claims,’ one for defense, the other for indemnity, or just one such claim, with defense and indemnity components. Nor does it matter whether London and Zidell argued about defense-cost issues on appeal. If there were two environmental claims, then the 2003 judgment was a judgment on both of them. And if there was just one environmental claim, then the 2003 judgment was a judgment on that claim. Either way, and no matter what the parties argued on appeal, there was still only one judgment, and that judgment was still on appeal when the 2013 law took effect.”
(Emphases in original.)
Our discussion in Certain Underwriters is consistent with that conclusion. As noted, in that case, we discussed the 2003 amendments to the OECAA, which cut “off contribution claims against settling insurers in a narrow window of cases”—those in which a binding settlement had been reached on or before the effective date of the 2003 Act
We have reviewed the legislative history of the 2013 amendments, see State v. Gaines, 346 Or 160, 171-72, 206
In sum, we conclude that the trial court correctly held that the 2013 amendments to the OECAA apply to London’s contribution action. Accordingly, it did not err in dismissing this case.
Affirmed.
The amendments to the OECAA were enacted in Senate Bill (SB) 814 (2013).
Pursuant to ORS 465.475(1), an “environmental claim” is defined as “a claim for defense or immunity submitted under a general liability insurance policy by an insured facing, or allegedly facing, potential liability for bodily injury or property damage arising from a release of pollutants onto or into land, air or water.”
As we have explained, “[m]ore accurately, the parties insured a number of related entities, including ZRZ Realty Co. and others.” Certain Underwriters, 235 Or App at 102 n 1. We refer to those entities collectively as Zidell.
We expressed no opinion “regarding the effect, if any, that the settlement agreements had with respect to contribution liability for defense costs that Zidell incurred after the date of the settlements.” Certain Underwriters, 235 Or App at 116 n 8 (emphasis in original).
On reconsideration, we were asked to address an assignment of error that we had initially declined to reach. 245 Or App at 104. We allowed the petition, addressed and rejected that assignment of error, and modified our opinion accordingly. Id.
The legislature also amended ORS 465.480(4) to provide that
“[t]here is a rebuttable presumption that all binding settlement agreements entered into between an insured and an insurer are good-faith settlements. A settlement agreement between an insured and insurer that has been approved by a court of competent jurisdiction after 30 days’ notice to other insurers is a good-faith settlement agreement with respect to all such insurers to whom such notice was provided.”
Or Laws 2013, ch 350, § 4; see ORS 465.480(4)(b).
Indeed, as defendants correctly point out, the 2003 judgment in the Moody Avenue action was reversed, in part, on appeal and cross-appeal and the case remanded for further proceedings. Thus, “[e]ven now, there is no final judgment after all appeals.”
Under Oregon Laws 2003, chapter 799, section 5(4),
“[Notwithstanding any other provision of law, an insurer that is a party to an action based on an environmental claim for which a final judgment as to all insurers has not been entered by the trial court on or before the effective date of this 2003 Act and in which a binding settlement has been reached on or before the effective date of this 2003 Act between the insured and at least one insurer that was a party to the action may not seek or obtain contribution from or allocation to:
“(a) The insured; or
“(b) Any other insurer that prior to the effective date of this 2003 Act reached a binding settlement with the insured as to the environmental claim.”
Case-law data current through December 31, 2025. Source: CourtListener bulk data.