Nebraska Court: Insurers Must Pay in Pollution Case

February 8, 2010

The Nebraska Supreme Court on Feb. 5 upheld a decision ordering two insurance companies to pay about $550,000 of the cost of cleaning up industrial contamination in Hastings.

The ruling sets the standard in Nebraska for determining how much insurance companies are responsible for when they insure a company for only part of the time that the contamination occurred.

The Supreme Court said The Continental Insurance Co. and Northern Insurance Co. of New York should pay, but the court agreed with a lower court’s ruling that the insurers should only be held responsible for part of the damages. Both companies insured Dutton-Lainson Co. during part of the four decades that it contributed to groundwater pollution in Hastings.

Continental has been ordered to pay more than $475,000. Northern has been ordered to pay almost $75,000.

The court refused Dutton-Lainson’s appeal seeking $4.9 million from the insurance companies to cover damages and the cost of defending itself.

Continental’s attorney did not immediately respond to requests for comment.

Northern’s attorney, Tom Culhane, declined to comment on the ruling.

Dutton-Lainson attorney James W.R. Brown said he was still reviewing the decision, so he declined to comment on it.

Dutton-Lainson was one of several companies that settled with the Environmental Protection Agency over groundwater contamination. The Hastings-based maker of tools and trailer parts took some chemicals and byproducts of its manufacturing operation to city landfills because the law required it at the time.

No one realized then the danger of what was being put in the landfills, Brown said.

The Supreme Court agreed with the Douglas County District Court’s interpretation of how much Continental and Northern should be responsible for.

The court used the amount of time both insurers were involved with Dutton-Lainson to determine how much they owed. Continental insured Dutton-Lainson for 60 months out of the 480 months when contaminants were being deposited in the landfill. Northern insured the company for 14 months.

So Continental is responsible for 12.5 percent of the total $3.8 million in damages Dutton-Lainson sustained. And Northern is responsible for just under 3 percent of the total.

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