The federal district court determined the insurer had no coverage obligations for environmental damage when the injury in fact occurred long before the policy period. Alabama Gas Corp. v. Travelers Cas & Sur. Co., 2013 U.S. Dist. LEXIS July 16, 2013).
The predecessor of Alabama Gas Corp. manufactured gas on the property from 1856 until 1946. Spills, leaks and emissions released hazardous substances into the environment. The plant was sold to the City of Huntsville in 1949 and then used for a propane air system until 1967, when the plant was demolished and a public housing projected was built on the property.
In 2009, the EPA named Alabama Gas as a primary responsible party because it was a successor to the party responsible for the environmental contamination. Alabama Gas tendered to its insurer, Travelers, who denied coverage.
Alabama Gas filed suit against Travelers. Because policies prior to 1967 were no longer in existence, the court considered policies issued by Travelers from 1967 to 1983, primarily focusing on the 1967 policy. The court questioned whether, under the language of these policies, there was a "continuous or repeated exposure during the policy period to conditions which unexpectedly and unintentionally caused personal injury or injury to or destruction of tangible property, including the loss or use thereof."
The court determined that injury to the property occurred prior to 1949. Alabama Gas argued that the removal of structures from the land and construction of housing caused a new injury to the land through redistribution of the hazardous substances. But even if Alabama Gas could prove this theory, there was no allegation that it was liable for damages resulting from the redistribution of substances between 1967 and 1983. Alabama Gas did not perform the demolition and construction, and did not own the property during the period in which this work was done.
The fact that people moved onto the land and the EPA compelled clean-up activities did not change the fact that any injury to the land occurred prior to 1949. Consequently, there was no indemnity coverage based on the 1967 policy.
