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February 6, 2013   PSRB Wins $2.945 Million Judgment for Client Against its Insurers
By Plews Shadley Racher & Braun LLP

 On December 31, 2012, PSRB won a $2.945 million judgment for the Standard Fusee Corporation in an insurance recovery action in the Marion County Superior Court.   Judge S.K. Reid entered judgment against insurers Chubb and GAN for defense costs in two underlying environmental actions, prejudgment interest on those costs, and attorneys’ fees in the coverage action.  Chubb and GAN were the last of seven primary level comprehensive general liability insurers that Standard Fusee originally sued to recover its costs for defending environmental claims in California and Indiana.

In 2008 Standard Fusee won summary judgment declaring its insurers’ had a duty to defend under Indiana law.   In 2010 the Indiana Supreme Court ruled that the case should have been decided under the law of Maryland, and the case was remanded back to the trial court.   GAN and Chubb were the only primary level insurers remaining in the case at that point.  

Standard Fusee returned to the trial court and, in February 2012, it won summary judgment declaring GAN’s and Chubb’s had a duty to defend under Maryland law.   Under Maryland law, as in Indiana, insurers have a duty to defend where there is even the slightest potential for coverage.  The trial court noted that the last two decisions from Maryland’s highest court had held the pollution exclusion to be unenforceable and, thus, there was at least the potential for coverage in Standard Fusee’s case necessary to establish GAN’s and Chubb’s duty to defend.   Thus, the court ruled a second time that Standard Fusee’s insurers should pay defense costs and prejudgment interest on those costs. But this time, the court also ruled that Standard Fusee was entitled to recover its attorneys’ fees and costs in the insurance recovery action as the prevailing party.  Maryland allows for the recovery of attorneys’ fees to a prevailing policyholder.  

Having prevailed on its right to defense costs, attorneys’ fees and prejudgment interest, Standard Fusee filed its petition for the payment of those specific costs.   On December 24 the court entered the first of two orders necessary for the payment of the costs.   The first order resolved legal issues in connection with the petition, including issues of allocation (to determine the amounts that Chubb and GAN should pay, as opposed to what should have been allocated to the other settling defendants) and the proper standards that would be employed to determine whether Standard Fusee’s costs and fees were reasonable under Maryland law.  Those and other issues were generally resolved in Standard Fusee’s favor.   The court then entered a second order, its order of judgment, on December 31, 2012, holding Chubb and GAN liable for a total of $2.945 million in past defense costs, prejudgment interest and attorneys’ fees in the coverage action, plus the payment of additional such costs incurred after those included in the petition.   Chubb and GAN are appealing. 

Standard Fusee is represented by Jeff Claflin, Greg Gotwald and Theresa Willard.  If you have any questions about this case or recovering environmental costs from your insurance company, please contact them directly. Every case is unique, so outcomes can vary.

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