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Seth H. Row
From: [email protected]
Sent: Thursday, October 13, 2011 1:11 PM
Subject: Activity in Case 3:11-cv-00137-MO Anderson Brothers, Inc. v. St. Paul Fire and Marine Insurance Company Order on motion for partial summary judgment
Page 1 of 1
10/14/2011
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U.S. District Court
District of Oregon
Notice of Electronic Filing The following transaction was entered on 10/13/2011 at 1:10 PM PDT and filed on 10/11/2011
Docket Text: MINUTES of Proceedings: Oral Argument regarding Motion for Partial Summary Judgment (Plaintiff's) [7] and defendant's Cross Motion for Partial Summary Judgment Against Plaintiff [22]. Order DENYING defendant's cross motion for partial summary judgment [22] and GRANTING plaintiff's motion for partial summary judgment [7], as stated on the record. Seth H. Row present as counsel for plaintiff(s). Thomas A. Gordon and Stephanie M. Parent present as counsel for defendant(s).(Court Reporter Bonita Shumway.) (dls)
3:11-cv-00137-MO Notice has been electronically mailed to: Thomas A. Gordon [email protected], [email protected] Stephanie M. Parent [email protected], [email protected] Seth H. Row [email protected], [email protected] Andrew S. Moses [email protected], [email protected] Kristopher L. Kolta [email protected], [email protected] 3:11-cv-00137-MO Notice will not be electronically mailed to:
Case Name: Anderson Brothers, Inc. v. St. Paul Fire and Marine Insurance CompanyCase Number: 3:11-cv-00137-MOFiler:Document Number: 49(No document attached)
Seth H. Row, OSB #021845 [email protected] PARSONS F A R N E L L & GREIN, LLP 1030 SW Morrison Street Portland, Oregon 97205 Telephone: (503)222-1812 Facsimile: (503) 274-7979
Attorneys for Plaintiff Anderson Brothers, Inc.
UNITED STATES DISTRICT COURT DISTRICT OF OREGON PORTLAND DIVISION
ANDERSON BROTHERS, INC., an Case No: 11-CV-00137-MO Oregon corporation.
Plaintiff, PLAINTIFF'S MOTION FOR
V. PARTIAL SUMMARY JUDGMENT
ST. PAUL FIRE AND MARINE Pursuant to Fed. R. Civ. P. 56 INSURANCE COMPANY, a Minnesota insurance company, REQUEST FOR ORAL A R G U M E N T
Defendant.
I. CONFERRAL STATEMENT
The undersigned counsel certifies that counsel for Plaintiff Anderson Brothers, Inc.
("Anderson" or "Plaintiff) has conferred with counsel for St. Paul Fire and Marine Insurance
Company ("St. Paul") and the parties were unable to resolve the issues presented by this Motion.
II. MOTION
Pursuant to Fed. R. Civ. P. 56, Plaintiff moves the Court for an Order granting partial
summary judgment in its favor as follows:
Page 1 ~ PLAINTIFF'S MOTION FOR PARTIAL S U M M A R Y JUDGMENT
Case 3:11-cv-00137-MO Document 7 Filed 05/12/11 Page 1 of 2 Page ID#: 44
1. On Plaintiffs First Claim for Relief, partial summary judgment on St. Paul's
liability for breach of contract as to Policy Numbers 587JD7640 and 587JE180 as to the
Anderson 104(e) Request, as that is defmed in the Complaint;
2. On Plaintiffs First Claim for Relief, partial summary judgment on St. Paul's
liability for breach of contract as to Policy Numbers 587JD7640 and 587JE180 as to the General
Notice Letter ("GNL"), as that is defmed in the Complaint;
3. On Plaintiffs Second Claim for Relief, partial summary judgment and a
declaration that St. Paul has an obligation to defend Plaintiff under Policy Numbers 587JD7640
and 587JE 180 against the Anderson 104(e) Request and the GNL, as both are defmed in the
Complaint in this matter, and specifically that the duty to defend includes the alternative dispute
resolution process underway in connection with the Site;
This Motion is supported by Plaintiffs Memorandum In Support of Motion for Partial
Summary Judgment, the Declaration of Seth H. Row In Support of Plaintiff s Motion for Partial
Summary Judgment; the Declaration of Martha Sharp In Support of Plaintiff s Motion for Partial
Summary Judgment; and the Declaration of John W. Anderson In Support of Plaintiff s Motion
for Partial Summary Judgment, all filed contemporaneously herewith.
DATED this 12* day of May, 2011.
PARSONS F A R N E L L & GREIN, LLP
By: /s/Seth H. Row Seth H.Row, OSB #021845 Telephone: (503)222-1812
Attorneys for Plaintiff Anderson Brothers, Inc.
Page 2 - PLAINTIFF'S MOTION FOR PARTIAL S U M M A R Y JUDGMENT
Case 3:11-cv-00137-MO Document 7 Filed 05/12/11 Page 2 of 2 Page ID#: 45
Seth H. Row, OSB # 021845 Email: [email protected] PARSONS F A R N E L L & GREIN, LLP 1030 SW Morrison Street Portland, Oregon 97205 Telephone: (503)222-1812 Facsimile: (503) 274-7979
Attorneys for Plaintiff Anderson Brothers, Inc.
UNITED STATES DISTRICT COURT DISTRICT OF OREGON PORTLAND DIVISION
ANDERSON BROTHERS, INC., an Case No: 11-CV-00137-MO Oregon corporation.
Plaintiff, MEMORANDUM IN SUPPORT OF
V. PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Minnesota insurance company,
Defendant.
Page 1 - M E M O R A N D U M IN SUPPORT OF PLAINTIFF'S MOTION FOR PARTIAL S U M M A R Y JUDGMENT
Case 3:11-cv-00137-MO Document 8 Filed 05/12/11 Page 1 of 23 Page ID#: 46
TABLE OF CONTENTS
Page No.
L INTRODUCTION 2
II. STATEMENT OF BASIC M A T E R I A L FACTS 3
A. The Policies 3
B. Anderson's Property Identified Within Superfund Site 3 C. The 104(e) Request 4 D. The General Notice Letter 6 E. Tender & Denial By St. Paul 7
in . A R G U M E N T 8
A. St. Paul Breached the Policies By Refusing to Defend the 104(e) Request 8 1. The O E C A A Governs the Scope of an Insurer's Duty to Defend
Environmental Claims 8 2. The 104(e) Request Was a "Suit" Under the O E C A A 11 3. The 104(e) Request Triggered the Defense Obligation 13 4. Because the 104(e) Request Was a "Suit," St. Paul Had a Duty to Defend,
Which It Breached 16 5. St. Paul's Duty to Defend the 104(e) Request Is Continuing 16
B. St. Paul Breached the Policies By Refusing to Defend the G N L 16 1. The G N L Is a "Suit" Under the O E C A A & Controlling Ninth Circuh Case
Law 17 2. The GNL Triggered the Defense Obligation 18 3. Because the GNL Was a "Suit," St. Paul Had an Obhgation to Defend, Which
It Breached 19
C. Anderson Is Entitled to Declaratory Judgment that St. Paul Has an Obligation to Defend Anderson 19
1. Legal Standard for Declaratory Judgment 19 2. The Defense Obligation for the GNL Includes the Ongoing A D R Process.... 19
IV. CONCLUSION 20
Page i - T A B L E OF CONTENTS
Case 3:11-cv-00137-MO Document 8 Filed 05/12/11 Page 2 of 23 Page ID#: 47
TABLE OF AUTHORITIES
Cases Page No.
Aetna Casualty and Surety Company v. Pintlar Corporation, 948 F.2d 1507, 1516 (9* Cir. 1991) 11, 18
Ash Grove Cement Co. v. Liberty Mutual Ins. Co. et al., No. 09-239-KI, 2010 WL 3894119 (D. Or. Sept. 30, 2010) 11
Carson Harbor Vill, Ltd v. Unocal Corp., 270 F.3d 863, 870 (9th Cir. 2001) 15
Fireman's Fund Ins. Co. v. Ed Niemi Oil Co., Inc., 2005 W L 3050460 (D. Or. 2005) 10
GE Prop. & Cas. Ins. Co. v. Portland Community Coll., 2005 WL 2044315 (D. Or. 2005) 10, 14
GerlingAm. Ins. Co. v. Wagner Constr. Co., No. CV-98-1156-K1, 1999 WL 962468 (D. Or. 1999) 10
Grabhorn, Inc. v. Metropolitan Service Dist. 624 F.Supp.2d 1280, 1284 (D. Or. 2009) 14
Hiebert V. Farmers Ins. Co. ofOregon, 172 Or. App. 13, 17, 18, 18 P.3d 397 (2001) 12
Ledford v. Gutoski, 319 Or. 397, 399-400, 877 P.2d 80 (1994) 10, 13
North Pacific Ins. Co. v. Wilson Distributing Serv., Inc., 138 Or. App. 166, 169, 908 P.2d 827 (1995) 10
Northwest Environmental Advocates V. U.S. E.P.A., 537 F.3d 1006, 1026 -1027 (9* Cir. 2008) 14
Sch. Dist No. 1 V. Mission Ins. Co., 58 Or. App. 692, 703-04, 650 P.2d 929 (1982) 10
Schnitzer Investment Corp. v. Certain Underwriters at Lloyd's of London, 197 Or. App. 147, 156-57, 104 P.3d 1162 (2005), a f f d in part, 341 Or. 128, 137 P.3d 1281 (2006) 10
Spring Vegetable Co. v. Hartford Cas. Ins. Co., 801 F.Supp. 385, 391 (D. Or. 1992) 11
United States v. Cannons Engineering Corp etal, 899 F.2d 79, 93 (1'̂ Ch. 1990) 15
W. Equities, Inc. v. St Paul Fire & Marine Ins. Co., 184 Or. App. 368, 371, 56 P.3d 431 (2002) 10
XDP, Inc. v. Watumull Properties Corp., 2004 WL 1103023 (D.Or. May 14, 2004) 15
Page ii - T A B L E OF AUTHORITIES
Case 3:11-cv-00137-MO Document 8 Filed 05/12/11 Page 3 of 23 Page ID#: 48
TABLE OF AUTHORITIES cont'd
Statutes Page No.
28 U.S.C. § 2201(a) 19 28 U.S.C. § 2461 5 31 U.S.C. § 3701 5 42 U.S .C. §§ 9607(a) (cost recovery) and 9613(f)(1) (contribution) 15 42 U.S.C. § 9601(9) 15 42 U.S.C. § 9607(a)(l-2) 15 ORS 465.478 18
Page iii - T A B L E OF AUTHORITIES
Case 3:11-cv-00137-MO Document 8 Filed 05/12/11 Page 4 of 23 Page ID#: 49
Plaintiff Anderson Brothers, Inc. ("Anderson" or "Plaintiff) submits the following
Memorandum In Support of Plaintiff s Motion for Partial Summary Judgment. This
Memorandum is supported by the Declaration of Seth H. Row In Support of Plaintiff s Motion
for Partial Summary Judgment ("Row Dec."); the Declaration of Martha Sharp In Support of
Plaintiffs Motion for Partial Summary Judgment ("Sharp Dec."); and the Declaration of
John W. Anderson In Support of Plaintiff s Motion for Partial Summary Judgment ("Anderson
Dec"), all filed contemporaneously herewith.
I. INTRODUCTION
This is an environmental insurance coverage dispute involving policies sold by defendant
St. Paul Fire and Marine Insurance Company ("St. Paul") to Anderson and to its predecessor-in-
interest. Specialty Truck Parts, Inc., over a period of years in the 1970s and early 1980s.
Plaintiff brought this action against St. Paul to enforce its statutory and contractual rights to a full
and complete defense for environmental claims against Plaintiff related to the Portland Harbor
Superfund Site ("Site"). Plaintiff owns or leases property within the boundaries ofthe Site.
Plaintiff received several demands and claims against it relating to the Site, including two letters
from the Environmental Protection Agency, the first called the "104(e) Request," and the second
a "General Notice Letter" (aka a "PRP letter" or "GNL"). Plaintiff tendered both to St. Paul, but
St. Paul has refused to defend, in breach of its contracts of insurance. Plaintiff brings this
Motion now, before discovery has been completed, because its rights are being jeopardized by
the lack of a full and complete defense in connection with the Site, and because the material facts
relating to this Motion are uncontested.
/////
/////
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Case 3:11-cv-00137-MO Document 8 Filed 05/12/11 Page 5 of 23 Page ID#: 50
II. STATEMENT OF BASIC MATERIAL FACTS
A. The Policies
St. Paul sold to Anderson several insurance policies, including the following
Comprehensive General Liability ("CGL") contracts of insurance (collectively referred to
hereinafter as "the Policies"):
Policy Number Effective Dates Insured
587JD7640 1/21/79-1/21/80 Anderson
587JE3180 1/21/80-1/21/81 Anderson
Row Dec, Exs. A & B . Each of the Policies provides for coverage, and defense, as follows:
The Company will pay on behalf of the insured all sums which the Insured shall become legally obligated to pay as damages because of:
Coverage A. bodily injury or
Coverage B. property damage
to which this insurance applies, caused by an occurrence, and the Company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even i f any of the allegations of the suit are groundless, false or fraudulent, and may take such investigation and settlement of any claim or suit as it deems expedient, but the Company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the Company's liability has been exhausted by payment of judgments or settlements.
Id. The Policies do not contain a defmition of the term "suit." Id.
B. Anderson's Property Identified Within Superfund Site
Anderson is an Oregon corporation with its principal place of business in Portland,
Oregon. Anderson Dec.,T| 2. Anderson operates and has operated as a truck wrecking, servicing.
Page 3 - M E M O R A N D U M IN SUPPORT OF PLAINTIFF'S MOTION FOR PARTIAL S U M M A R Y JUDGMENT
Case 3:11-cv-00137-MO Document 8 Filed 05/12/11 Page 6 of 23 Page ID#: 51
and storage company. Anderson Dec.,^ 3. During the period 1975 to 1985 Anderson leased
property known as Tax Lots 400, 1000, and 1100, which are part of property loiown as 4621 NW
St. Helens Road, Portland, Oregon. Anderson Dec.,Tf 5. Anderson also purchased, itself, an
adjacent parcel, known as Tax Lot 200, in 1976. Anderson Dec.,T| 6.
C. The 104(e) Request
The United States Environniental Protection Agency ("EPA") has identified an 11-mile
stretch of the lower Willamette River, and properties along that stretch, as the "Portland Harbor
Superfund Site" (hereinafter "Site").^ Tax Lots 400, 1000, 1100 and 200 are all within the land
area that is part of the Site. Sharp Dec, Tf2.
On or shortly after November 6, 2006, Anderson received a letter from an attorney for
Chevron U.S.A., Inc., which the author stated was a participant in the Lower Willamette Group
("LWG"). Anderson Dec, Ex. C. The L W G letter indicated that Anderson had been identified
as a potentially responsible party ("PRP") in connection with the Site. Id. The letter threatened
to bring a lawsuit against Anderson for contribution to costs that had been incurred by the L W G ,
if Anderson did not sign a tolling agreement. Id. Anderson did not sign the tolling agreement.
Anderson Dec, ^9.
On or shortly after January 18, 2008, Anderson received a letter from the EPA that
demanded information from Anderson pursuant to the authority of Section 104(e) of the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. § 9604(e) ("104(e) Requesf). Anderson Dec, Ex. A . The 104(e) Request sought
' Anderson acquired a company known as Specialty Trucli Parts, Inc. ("Specialty") in 1973. Anderson Dec, \ 4. On or about September 16, 1992, Specialty dissolved. Id. Specialty purchased several policies from St. Paul as alleged in the Complaint. However, those policies are not at issue in this Motion as to St. Paul's breach of contract or declaratory relief, because St. Paul has indicated that it believes that there are issues of fact regarding successorship, and successor liability, that would preclude summary judgment as to those policies. ^ See the EPA's map of the Portland Harbor Superfund Site, at
http://yosemite.epa.gov/rl0/CLEANUP.NSF/0/6312f7efl7518912882573990068d67d/$FILE/Portlandharbormaplg. jpg (last visited May 2, 2011).
Page 4 - M E M O R A N D U M IN SUPPORT OF PLAINTIFF'S MOTION FOR PARTIAL S U M M A R Y JUDGMENT
Case 3:11-cv-00137-MO Document 8 Filed 05/12/11 Page 7 of 23 Page ID#: 52
responses to 82 separate questions (not including numerous sub-parts and compound elements of
those questions). Id. The Instructions accompanying the 104(e) Request provided that Anderson
was obligated to "[p]rovide responses to the best of Respondent's ability, even i f the information
sought was never put down in writing or if the written documents are no longer available." Id.
They further provided that Anderson was obligated to "[sjeek out responsive information from
current and former employees/agents." Id. In the 104(e) Request, EPA noted that it was seeking
information "from current and past landowners, tenants, and other entities believed to have
information about activities that may have resulted in releases or potential threats of releases of
hazardous substances to the Site." Id. The 104(e) Request went on to note that "[tjhis
information will be used for the purposes of determining the need for response, or choosing or
taking any response action at the Portland Harbor Superfund Site, and to identify additional
potentially responsible parties for performing the cleanup." Id. It also made clear that
compliance with the 104(e) Request was "required by law." Id. The 104(e) Request warned
that:
[f]ailure to respond fully and truthfully to the Information Request by the due date provided below may result in an enforcement action by EPA. Under Section 104(e)(5)(B) of CERCLA, 42 U.S.C. § 9604(e)(5)(B), pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. § 2461, as amended by the Debt Collection Improvement Act of 1996, 31 U.S.C. § 3701, EPA is authorized to commence an action to assess civil penalties of not more than $32,500 per day for each day of noncompliance against any person who unreasonably fails to comply with an Information Request.
Id. The Instructions accompanying the 104(e) Request required Anderson to provide responsive
information notwithstanding objections, and warned that objecting without providing responsive
information could subject Anderson to the penalties listed above. Id. The Instructions also
warned Anderson that submission of cursory responses when other responsive information was
available would be considered noncompliance, and that "[ijncomplete, evasive, or ambiguous
Page 5 - M E M O R A N D U M IN SUPPORT OF PLAINTIFF'S MOTION FOR PARTIAL S U M M A R Y JUDGMENT
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answers shall constitute failure to respond" and could subject Anderson to the penalties listed
above. Id.
Anderson retained attorney Martha Sharp to assist it in responding to the 104(e) Request.
Sharp Dec, | 3 . Sharp and Anderson retained an environmental consultant to assist Sharp, and
Anderson, in performing the investigation required by the 104(e) Request. Sharp Dec, f4.
Sharp prepared a detailed response to the 104(e) Request, as required by the terms of the request.
Sharp Dec, ^5. Sharp, and the environmental consultant, spent hundreds of hours retrieving,
assembling, and analyzing historical and current documents and information about the properties
and activities on those properties. Sharp Dec, [̂6. Anderson submitted its initial response to the
104(e) Request on June 16, 2008.^ Sharp Dec, \1.
D. The General Notice Letter
Shortly after November 13, 2009, Anderson received a letter from the EPA entitled
"General Notice Letter for the Portland Harbor Superfund Site in Portland, Oregon." Anderson
Dec, Ex. B ("GNL Letter"). This letter stated that "EPA has determined that Anderson
Brothers, Inc. and Specialty Truck Parts may be responsible under C E R C L A for cleanup of the
Site or costs EPA and others have incurred in cleaning up the Site." Id. The letter goes on to
state that "EPA has reason to believe that hazardous substances have been or are being released
from the facilities located at 5275 N W St. Helens Road, 5315 N W St. Helens Road, and 4621
NW St. Helens Road & adjacent Tax Lots 200 & 300 in Portland Oregon, into the 'study area'
for the Portland Harbor Superfund Site, which is River Mile 2 to River Mile 12." Id. The letter
informed Anderson that " E P A is encouraging PRPs [potentially responsible parties] to convene a
mediated allocation process," described an ongoing ahernative dispute resolution ("ADR")
process known as the "Convening Group," and provided a contact for the Convening Group. Id.
^ Anderson is under a continuing duty to supplement its 104(e) Response if it comes across additional responsive information. Anderson Dec, Ex. A .
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The GNL Letter received by Anderson is based on a standard-form GNL letter used by
EPA. Sharp Dec, 1̂9, Ex. A.
In response to the GNL Letter, Anderson investigated participating in the Convening
Group as EPA directed. Sharp Dec, |10. However, Anderson learned that the costs of
participating in the Convening Group, including paying an attorney to participate in the group on
its behalf and the "buy in" costs required of participants (to fund the operations of the group,
including costs for neutrals) were beyond its means. Sharp Dec, ^11; Anderson Dec, ^9.
Anderson has, through its attorney Ms. Sharp, continued to monitor the process underway
involving other "PRPs" at the Site and to do what it can to limit its liability at the Site, including
attending meetings hosted by the EPA. Sharp Dec, f 12.
E. Tender & Denial By St. Paul
Anderson, through its attorney, tendered the 104(e) Request to St. Paul on March 10,
2008. Sharp Dec, Ex. B. On March 27, 2008, St. Paul acknowledged receipt ofthe tender.
Sharp Dec, Ex. C. On September 10, 2008, St. Paul denied the tender. Sharp Dec, Ex. E. On
September 22, 2008 Anderson requested that St. Paul reconsider its denial. Sharp Dec, Ex. F.
On October 14, 2008, St. Paul again denied the tender. Sharp Dec, Ex. G. On June 17, 2009,
Anderson again demanded that St. Paul accept the tender. Sharp Dec, Ex. H. On June 24, 2009,
St. Paul again denied the tender. Sharp Dec, Ex. I.
On November 20, 2009, Anderson tendered the GNL letter to St. Paul. Sharp Dec, Ex. J.
On March 26, 2010, St. Paul denied the tender. Sharp Dec, Ex. K. On March 31, 2010,
Anderson again wrote to St. Paul encouraging it to reconsider its denial. Sharp Dec, Ex. L.
Anderson wrote to St. Paul on May 27, 2010 and July 6, 2010, again requesting that St. Paul
reconsider its denial of the tender. Sharp Dec, Exs. M and N . On July 14, 2010, St. Paul
repeated its denial of the tender. Sharp Dec, Ex. O. On July 29, 2010, Anderson wrote to
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St. Paul informing it of statements made by the EPA at a meeting on July 27, 2010, the
importance of St. Paul agreeing to defend Anderson in light of EPA's statements, and the
prejudice that Anderson was suffering as the result of not being defended by St. Paul. Sharp
Dec, Ex. P. On October 6, 2010, Anderson again requested that St. Paul reconsider its denial.
Sharp Dec, Ex. Q.
III. ARGUMENT
The 104(e) Request from the EPA was sufficient to trigger the duty to defend under the
Liberty Mutual policies because the 104(e) Request is a "suif under the Oregon Environmental
Cleanup Assistance Act ("OECAA"), which governs this dispute."^ The GNL also
unquestionably triggered the duty to defend under the OECAA.
A. St. Paul Breached the Policies By Refusing to Defend the 104(e) Request.
1. The O E C A A Governs the Scope of an Insurer's Duty to Defend Environmental Claims.
The Oregon Environmental Cleanup Assistance Act (OECAA) was passed to assist in the
"fair and efficient resolution of environmental [insurance] claims while encouraging voluntary
compliance and regulatory cooperation." ORS 465.478. The O E C A A governs the scope of an
insurer's duty to defend an environmental claim because it requires that courts use a specific rule
of construction when attempting to define the terms "lawsuit" or "smt" (which in older insurance
policies - including the St. Paul policies - are not defined) ^ for purposes of interpreting an
insurance contract. ORS 465.480(2). The O E C A A specifies that the term "suif in an insurance
policy shall be given a specific, and broad, interpretation as to environmental claims. ORS
465.480(2)(b).
* There is no question that Oregon coverage law applies to this dispute. ^ The statute contains a "savings clause" that provides that "The rules of construction set forth in this section do not apply i f the application of the rule results in an interpretation contrary to the intent of the parties to the general liability insurance policy." ORS 465.480(7). Where, as here, a term is undefined in the policy (as is the term "suit" in the St. Paul policies), the statutory rule of construction will control.
Page 8 - M E M O R A N D U M IN SUPPORT OF PLAINTIFF'S MOTION FOR PARTIAL S U M M A R Y JUDGMENT
Case 3:11-cv-00137-MO Document 8 Filed 05/12/11 Page 11 of 23 Page ID#: 56
The OECAA provides specific rules of construction for insurance policies in coverage
actions such as this one:
(2) Except as provided in subsection (7) of this section, in any action between an insured and an insurer to determine the existence of coverage for the costs of investigating and remediating environmental contamination, whether in response to governmental demand or pursuant to a written voluntary agreement, consent decree or consent order, including the existence of coverage for the costs of defending a suit against the insured for such costs, the following rules of construction shall apply in the interpretation of general liability insurance policies involving environmental claims:
* * * *
(b) Any action or agreement by the Department of Environmental Quality or the United States Environmental Protection Agency against or with an insured in which the Department of Environmental Quality or the United States Environmental Protection Agency in writing directs, requests or agrees that an insured take action with respect to contamination within the State of Oregon is equivalent to a suit or lawsuit as those terms are used in any general liability insurance policy.
ORS 465.480(2) & (2)(b) (emphasis added). "Sui f is defined for purposes ofthe O E C A A as
follows:
(1) As used in this section: (a) "Suh" or "lawsuit" includes but is not limited to formal judicial proceedings, administrative proceedings and actions taken under Oregon or federal law, including actions taken under administrative oversight of the Department of Environmental Quality or the United States Environmental Protection Agency pursuant to written voluntary agreements, consent decrees and consent orders.
ORS 465.480(l)(a).
Taken together, these O E C A A sections provide that i f an insured and an insurer are in
litigation over coverage of "the costs of investigating and remediating environmental
contamination," ORS 465.480(2), the court shall interpret the term "suif in the policy to mean
"any action... against... an insured in which... the Department of Environmental Quality or the
United States Environmental Protection Agency in writing directs, requests or agrees that an
insured take action with respect to contamination within the State of Oregon..."
ORS 465.480(2)(b). Page 9 - M E M O R A N D U M IN SUPPORT OF PLAINTIFF'S MOTION FOR PARTIAL
S U M M A R Y JUDGMENT
Case 3:11-cv-00137-MO Document 8 Filed 05/12/11 Page 12 of 23 Page ID#: 57
The O E C A A acts to further broaden Oregon's aheady-broad law on the duty to defend.
GEProp. & Cas. Ins. Co. v. Portland Community Coll, 2005 W L 2044315, at *3 (D. Or. 2005)
(unpublished) (duty to defend under Oregon law is separate from and broader than its duty to
indemnify); North Pacific Ins. Co. v. Wilson Distributing Serv., Inc., 138 Or. App. 166, 169, 908
P.2d 827 (1995); Ledford v. Gutoski, 319 Or. 397, 403, 877 P.2d 80 (Or. 1994) ; Fireman's Fund
Ins. Co. V. Ed Niemi Oil Co., Inc., 2005 WL 3050460, at *1 (D. Or. 2005) (unpublished) ("[T]he
duty to defend is based on a possibility of coverage. Specifically, this involves the possibility
that the insurer might be liable to indemnify the insured based on the factual allegations asserted
in the complaint against the insured.").'' An insurer is required to defend a "suit" if the
complaint "contains some allegations of conduct or damage ... that fall within policy coverage or
can reasonably be interpreted to fall within coverage..." Ledford, 319 Or. at 400.
The O E C A A is consistent with Oregon's generally expansive approach to defense.
Oregon courts have in several situations found a duty to defend to have been triggered before a
formal complaint was filed against the insured. See Schnitzer Investment Corp. v. Certain
Underwriters at Lloyd's of London, 197 Or. App. 147, 156-57, 104 P.3d 1162 (2005), a f f din
part, 341 Or. 128, 137 P.3d 1281 (2006) (finding, under pre-OECAA law, that the tendering of
correspondence and demands from the Department of Environmental Quality ("DEQ") and a
consent order with DEQ was the "functional equivalent of a judicial complaint" and therefore
triggered the insurer's duty to defend, and citing Sch. Dist. No. I v. Mission Ins. Co., 58 Or. App.
692, 703-04, 650 P.2d 929 (1982) for proposition that administrative proceeding may be a "suit"
under insurance policy); GerlingAm. Ins. Co. v. Wagner Constr. Co., No. CV-98-1156-Kl, 1999
WL 962468 (D. Or. 1999) (permitting recovery of pre-lawsuh defense fees); Spring Vegetable
^ A l l doubts or ambiguities in the allegations of a complaint are resolved in favor of defense coverage. W. Equities,
Inc. V. St Paul Fire & Marine Ins. Co., 184 Or. App. 368, 371, 56 P.3d 431 (2002).
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Co. V. Hartford Cas. Ins. Co., 801 F.Supp. 385, 391 (D. Or. 1992) (finding that notice to the
insurer of a court's oral ruling that opened the door for potential indemnity coverage was
sufficient to trigger defense coverage).
2. The 104(e) Request Was a "Su i f Under the O E C A A .
(a) The Ash Grove Decision
In September, 2010, Judge King held that a 104(e) request was a "smt" under the
OECAA. Ash Grove Cement Co. v. Liberty Mutual Ins. Co. et a/.. No. 09-239-KI, 2010 WL
3894119 (D. Or. Sept. 30, 2010). In Ash Grove the plaintiff received a 104(e) request nearly
identical to the letter received by Anderson. Ld. at 2010 WL 3894119 at *2. Judge King held
that a 104(e) request fits within the OECAA's provision directing that the term "suit" in an
insurance policy be interpreted to include letters from the EPA that can be considered an
"action" "against" the insured in which the EPA requests that the insured "take action with
respect to contamination." Ld. at *4. Judge King noted that compliance with a 104(e) request is
required by law (CERCLA), as stated in the 104(e) letter itself, and that i f an entity fails to
respond fully in a timely manner, the EPA "can commence an action for civil penalties of up to
$32,500 per day..." Id
Judge King also noted that the Ninth Circuit's decision in Aetna Casualty and Surety
Company v. Pintlar Corporation, 948 F.2d 1507, 1516 (9* Ch. 1991), supports the finding that a
104(e) request triggers a duty to defend. In Pintlar the Ninth Circuh held that a "PRP notice"
triggered the duty to defend, despite the fact that the PRP letter is merely part of an EPA
administrative process. at 1516.
Judge King noted that the 104(e) request is part of the C E R C L A administrative process
just like the PRP notice discussed in Pintlar.
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Unlike the garden variety demand letter, which only exposes one to a potential threat of future litigation, a PRP notice carries with it immediate and severe implications. Generally, a party asserting a claim can do nothing between the occurrence of the tort and the filing of the complaint that can adversely affect the insureds' rights. However, in a C E R C L A case, the PRP's substantive rights and ultimate liability are affected from the start of the administrative process... In many instances, it is more prudent for the PRP to undertake the environmental studies and cleanup measures [resulting from the PRP letter] itself than to await the EPA's subsequent suit in a cost recovery action.
Ash Grove, 2010 WL 3894119 at *5 (quoting Pintlar, 948 F. 2d at 1517); see also Ash Grove,
2010 WL 3894119 at *5 ("The Pintlar court's rationale for construing a PRP notice applies to a
[§ 104(e)] letter as well...").
Therefore, it is clear that Judge King found that a 104(e) request - and the named target's
response to h - was part of a compulsory administrative process that permitted the targeted entity
to have some influence on hs liability for the Superfund site. The 104(e) request is simply one
starting point for the administrative process.
Judge King also found that treating a 104(e) request as a "suh" was consistent with
Oregon law on the duty to defend and interpretation of insurance contracts generally:
A reasonable insured could interpret the § 104(e) letter as an "effort to impose on policyholders a liability ultimately enforceable by a court," triggering the need for a defense, see Pintlar, 948 F.2d at 1516, and the insured is entitled to the advantage of the court's interpreting the policy provision against the drafting party.
Ash Grove, 2010 WL 3894119 at *5, a/̂ o citing Hiebert v. Farmers Ins. Co. ofOregon, 172 Or.
App. 13, 17, 18, 18 P.3d 397 (2001).
(b) Anderson's 104(e) Request Falls Within the Ash Grove Analysis.
The 104(e) Request received by Anderson is nearly identical to the 104(e) request in the
Ash Grove matter as discussed by Judge King. The Anderson 104(e) Request contained the same
language quoted by Judge King relating to compliance being required by law and penalties for
non-compliance. Anderson Dec, Ex. A. The Anderson 104(e) Request contained "82 questions,
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with subparts," and as in Ash Grove "required [Anderson] to seek information from former
employees and agents, as well as documents." Ash Grove, 2010 W L 3894119 at *2; Anderson
Dec, Ex. A .
Therefore, analytically the Anderson 104(e) Request falls within the Ash Grove analysis,
and Anderson submits that the same analysis should be applied. The Anderson 104(e) Request
was an "action" "against" the insured in which the EPA "directed" that Anderson "take action"
in connection with contamination. ORS 465.480(2)(b).
3. The 104(e) Request Triggered the Defense Obligation.
Not only was the 104(e) Request a "suit" under the Policies, due to the interpretative
mandate of the O E C A A , but it also satisfied the other factors in the Policies to trigger the duty to
defend. As set out above, under the Policies St. Paul must defend any "suit" "against the insured
seeking damages on account of... property damage [to which this insurance applies]." Row
Dec, Exs. A & B .
Two aspects of Oregon law on the duty to defend are critical in evaluating whether the
104(e) Request triggered the duty to defend: first, Oregon law is clear that if the "complaint
provides any basis for which the insurer provides coverage" the duty to defend exists; second,
"[a]ny ambiguity in the complaint with respect to whether the allegations could be covered is
resolved in favor ofthe insured." Ledford v. Gutoski, 319 Or. 397, 399-400, 877 P.2d 80 (1994).
Here, the facts alleged in the 104(e) Request provide a basis for coverage. First, the
104(e) Request alleged that there had been property damage, in the form of contamination at the
Portland Harbor Superfund Site ("Site").^ Anderson Dec, Ex. A . The 104(e) Request also
^ The 104(e) Request, although it did not contain extensive detail about the property damage at the Site, incorporated by reference the materials at the EPA's Portland Harbor Superfund Site website: http://yosemite.epa.gov/R10/cleanup.nsf7dl9cd587dffleee8825685f007d56b7/75e7f27bdl08f3eb88256f4a007ba01 8!OpenDocument. The Court may take judicial notice ofthe fact that within that website are documents dated prior to January, 2008 that refer to various types of contamination, including contamination in river sediment for which Page 13 - M E M O R A N D U M IN SUPPORT OF PLAINTIFF'S MOTION FOR PARTIAL
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alleged that response costs had already been incurred, and were continuing to be incurred, in the
form of a Remedial Investigation and Feasibility Study ("RI/FS"), in cormection with that
property damage, and that additional response costs were going to be incurred in the future. Id.
Second, the 104(e) Request alleged that Anderson was among the group of persons
potentially liable for that contamination. The 104(e) Request stated that the EPA was sending
information requests to, among others, "landowners" and "tenants" at the Site. Id. It is
undisputed that Anderson is a landowner and tenant at the Site.
Any ambiguity in the 104(e) Request, of course, must be resolved in favor of coverage.
Ledford, 319 Or. at 399-400. Oregon courts have held that where a complaint is ambiguous as to
a coverage-related fact, a duty to defend exists whenever the factual allegations in the complaint
would permit the presentation of evidence at trial that would establish the missing coverage fact.
GEProp. & Cas. Ins. Co. v. Portland Community College, No. C V 04-727-HU, 2005 WL
2044315, *6 (D. Or., August 25, 2005) ("G£ v. PCC") (allegations in DEQ voluntary agreement
would have permitted DEQ to put on evidence of groundwater contamination). The 104(e)
Request clearly was broad enough to permh EPA to "introduce evidence" that Anderson was a
landowner of facilities within the Site subject to potential liability under state and federal
environmental laws and regulations.
C E R C L A is essentially a strict liability statute for landowners and tenants. Under the law
implicated by the 104(e) Request (CERCLA and the Superfund statute), any landowner or
Anderson, as a riparian landowner, is potentially liable. See Northwest Environmental Advocates v. U.S. E.P.A., 537 F.3d 1006, 1026 -1027 (9* Cir. 2008) (taking judicial notice of statements in E P A administrative documents); Grabhorn, Inc. v. Metropolitan Service Dist. 624 F.Supp.2d 1280, 1284 (D. Or. 2009) ("The court may take judicial notice of matters of public record which are not subject to reasonable dispute over authenticity," without taking notice of the truth of facts asserted in those documents where it would be inappropriate to do so.); see also Schnitzer, 197 Or. App. at 157 (reading DEQ letter together with attached documentation to assess duty to defend). One such document is the March, 2007 "Comprehensive Round 2 Site Characterization Summary and Data Gaps Analysis Report" which at page 3-7 of the Main Text discusses river sediment (main text available at: http://yosemite.epa.gov/R10/CLEANUP.NSF/6d62f9al6e249d7888256db4005fa293/0fal09d2ec455988882572950 079ff2f$FILE/2007-02-21_CompR2Rep__MainText.pdf).
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facility operator within a contaminated site where hazardous substances have ever been released
is prima facie liable for an allocated share of the response costs:
To establish a claim for cost recovery under C E R C L A , a claimant must show that the defendant is a responsible party, a release or threatened release of hazardous material occurred at a facility, and the release or threatened release has caused the claimant to incur response costs that were necessary under C E R C L A . Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 870 (9th Ch. 2001). These are the prima facie elements for a claim under both 42 U.S .C. §§ 9607(a) (cost recovery) and 9613(f)(1) (contribution). Liability for the costs of response and remediation may be imposed upon current owners or operators of a facility, as well as upon previous owners or operators who owned or operated a facility at the time of disposal of any hazardous substance at the facility. 42 U.S.C. § 9607(a)(l-2).
XDP, Inc. V. Watumull Properties Corp., 2004 WL 1103023, *3 (D.Or. May 14, 2004).^ The
CERCLA statute was ched in the 104(e) Request, and the 104(e) Request referred to the Portland
Harbor Superfund Site; it was no secret that potential liability under these statutes was implicated
by the EPA's demand. As a landowner and tenant within a Superfund site - that is, a site that
had already been identified as having property damage - Anderson was most assuredly
potentially liable under C E R C L A based on the 104(e) Request's allegations.^
Further, the consequences of failing to comply with the 104(e) Request included the high
likelihood that Anderson would face greater financial liability for response costs - liability
arising out of covered property damage - than if it complied with the demand. An entity that
fails to cooperate with a 104(e) demand will be precluded from negotiating with the EPA
regarding allocation for response costs. See United States v. Cannons Engineering Corp. et al.,
899 F.2d 79, 93 (1'' Cir. 1990), As noted by Judge King in Ash Grove and the Ninth Circuh in
A "facility" includes a building, structure, or "any site or area where a hazardous substance has been deposited, stored, disposed of or placed, or otherwise come to be located." 42 U.S.C. § 9601(9). ' T O the extent that St. Paul would contend that the 104(e) Request did not trigger the duty to defend because it did not order Ash Grove to perfonn any "remedial action," that argument has been rejected by other courts. See GE v. PCC, 2005 W L 2044315, at *6 (order to conduct investigation triggered duty to defend).
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Pintlar, getting involved in the administrative process early is essential to controlling liability for
property damage.
Based on the undisputed facts, the 104(e) Request was a "suh" that triggered the defense
obligation.
4. Because the 104(e) Request Was a "Suh," St. Paul Had a Duty to Defend, Which It Breached.
Under the terms of the Policies St. Paul had an obligation to defend "suhs" against
Anderson. Because, under the OECAA, the 104(e) Request was a "suit," St. Paul's refusal to
defend the 104(e) Request was a breach of the Policies.
5. St. Paul's Duty to Defend the 104(e) Request Is Continuing.
Anderson has submitted its initial response to the 104(e) Request. Sharp Dec, ^ 7.
However, the 104(e) Request states that the obligation to respond is continuing and that
Anderson has an obligation to supplement the response with "any additional information or
documents that become available or known to [Anderson] after [Anderson] submit[s hs]
response." Anderson Dec, Ex. A. Therefore, St. Paul's obhgation to defend the 104(e) Request
is ongoing.
For the foregoing reasons, Anderson respectfully requests that this Court grant partial
summary judgment on Anderson's First Claim for Relief as to breach of Pohcy Numbers
587JD7640 and 587JE180 by St. Paul's refusal to defend the 104(e) Request.
B. St. Paul Breached the Policies By Refusing to Defend the GNL.
St. Paul also breached the Policies by refusing to defend the G N L that Anderson received
from the EPA. Therefore, even if the 104(e) Request did not trigger a defense obligation, St.
Paul is still liable for breach. Moreover, the duty to defend the G N L is ongoing and carries with
it current, and urgent, obligations to assist Anderson in resisting the imposition of liability in
cormection with the Site.
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1. The GNL Is a "Smt" Under the O E C A A & Controlhng Ninth Chcuit Case Law.
As discussed above, the O E C A A mandates that for any insurance policy that does not
hself define the term "suit" (as the St. Paul policies do not), that term shall be interpreted to
include any "action" "against" an insured in which EPA (or the Oregon Department of
Environmental Quality, DEQ) "in writing directs, requests or agrees that an insured take action
with respect to contamination within the State of Oregon..." ORS 465.480(2)(b).
Just as with a 104(e) request, a GNL clearly falls within the scope of the OECAA's rules
of construction. The Anderson GNL states: 1) that EPA has determined that contamination has
occurred; 2) that funds have been or will be spent (by EPA and others) on investigation; 3) that
Anderson "may be responsible under C E R C L A " for cleanup costs and that Anderson "may be a
PRP [Potentially Responsible Party] with respect to this Site." Anderson Dec, Ex. B. The GNL
specifically refers to Anderson's property ~ ching, among other properties, 4621 N W St. Helens
Road and "adjacent Tax Lots 200 and 300" - and states that "EPA has reason to believe that
hazardous substances have been or are being released from those facilhies." Id.
The GNL also directs that Anderson "take action." The GNL directs Anderson to "give
these matters your immediate attention" and to contact someone affiliated with the "Convening
Group," coupled with the statement that the "mediated allocation process" undertaken by the
Convening Group, which in description is a form of ahernative dispute resolution ("ADR") "will
avoid litigation and significant transaction costs to you and your company." Anderson Dec, Ex.
B.
In Pintlar, the Ninth Circuh discussed the impact of a GNL (which h described using the
commonly-used sobriquet "PRP notice") on an entity like Anderson. The court noted that "a
PRP notice carries with it immediate and severe implications... in a C E R C L A case, the PRP's
substantive rights and ultimate liability are affected from the start of the administrative process...
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In order to influence the nature and costs of the environmental studies and cleanup measures, the
PRP must get involved firom the outset." Pintlar, 948 F.2d at 1516-1517. After noting
CERCLA's severe penalties for non-cooperation and "incentives" for a PRP to cooperate, the
court held that "[a]s a resuh, an 'ordinary person' would believe that the receipt of a PRP notice
is the effective commencement of a 'suh' necessitating a legal defense." Pintlar, 948 F.2d at
1517.̂ "
In this context it is clear that the EPA's language in the Anderson G N L about the A D R
process is a "direction" to Anderson to get involved in that A D R process. Therefore, under the
OECAA (and Ninth Circuh case law), the GNL is clearly a "suit."
2. The GNL Triggered the Defense Obligation.
The GNL also satisfied the language in the Policies stating that St. Paul must defend any
"suit" "against the insured seeking damages on account of... property damage [to which this
insurance applies.]" Row Dec, Exs. A & B . The GNL stated that a "release" "of hazardous
substances, pollutants, or contaminants" "has occurred" at the Site, and specifically at
Anderson's property at 4621 N W St. Helens Road and adjacent Tax Lots 200 and 300.
Anderson Dec, Ex. B. The G N L states that EPA "has spent or is considering spending public
funds to investigate and control releases" at the Site, and that EPA "has determined that"
Anderson "may be responsible under C E R C L A for cleanup of the Site." Anderson Dec, Ex. B.
The GNL, similar to the 104(e) Request, clearly alleged that there has been property
damage and that Anderson may be liable for damages resulting from that property damage. For
The court rejected the carriers' contention that nothing in insurance coverage law requires an interpretation of insurance policies to promote settlement rather than litigation: "Coverage should not depend on whether EPA may choose to proceed with its administrative remedies or go directly to litigation. A fundamental goal of C E R C L A is to encourage and facilitate voluntary settlements." Pintlar, 948 F.2d at 1517. Moreover, the O E C A A contains an express statement that its purpose is to encourage potentially liable parties to cooperate with the government's cleanup efforts. ORS 465.478.
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all ofthe same reasons set out above in cormection with the 104(e) Request, the GNL triggered
St. Paul's defense obligation.
3. Because the GNL Was a "Suit," St. Paul Had an Obligation to Defend, Which h Breached.
Under the terms of the Policies St. Paul had an obligation to defend "suhs" against
Anderson. Because, under the OECAA, the GNL was a "suh," St. Paul's refusal to defend the
GNL was a breach of the Policies.
Therefore, Anderson respectfully requests that the Court grant Anderson's Motion for
Partial Summary Judgment on St. Paul's liability for breach of contract as to Policies 587JD7640
and 587JE180 as to the GNL.
C. Anderson Is Entitled to Declaratory Judgment that St. Paul Has an Obligation to Defend Anderson.
1. Legal Standard for Declaratory Judgment
A declaratory judgment is appropriate where there is a "case of actual controversy" in
which the court may "declare the rights [or] other legal relations of any interested party." 28
U.S.C. § 2201(a).
2. The Defense Obligation for the GNL Includes the Ongoing A D R Process.
As discussed above, St. Paul has, repeatedly, stated that it owes no obligation to defend
Anderson against either the 104(e) Request or the GNL. In particular, St. Paul has stated in
writing that hs denial is based on the two following two propositions: 1) the 104(e) Request and
the GNL do not constitute an "actual demand" "to take any action to perform clean-up
activities;" and 2) that the EPA "correspondence" "does not arise to the level of a suh as there
does not appear to be any demand that Anderson take any action to perform clean up activities."
Sharp Dec, Ex. O. If the Court holds that St. Paul breached the Policies by refusing to defend
Anderson against the 104(e) Request and/or the GNL, those contentions (which seek to narrowly
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interpret the term "suit," contrary to the OECAA) will have been put to rest. However, an actual
case or controversy will remain i f St. Paul takes the position, as its sister company United States
Fidelity and Guaranty Company ("USF&G") has in the Ash Grove htigation, that the "defense"
of an entity in connection with the Site does not include the A D R process identified in the
G N L . "
St. Paul is expected to take the position that "defense" of the G N L does not include
participation in the A D R process. Therefore, Anderson seeks summary judgment on hs Second
Claim for Relief and specifically a declaration that the duty to defend includes participation in
the ADR process described in the GNL. As described above, the A D R process was specifically
identified by the EPA in the GNL as the mechanism by which an entity like Anderson may
reduce hs liability. For all of the reasons described above, including the analysis provided by the
Ninth Circuit in Pintlar, Anderson must get involved now in the administrative process.
Anderson respectfully requests summary judgment in hs favor on its Second Claim for Relief
IV. CONCLUSION
For the foregoing reasons, Anderson respectfully requests that the Court grant its Motion
for Partial Summary Judgment.
DATED this 12* day of May, 2011.
PARSONS F A R N E L L & GREIN, LLP
By: /s/Seth H. Row SethH. Row, OSB #021845 Telephone: (503)222-1812 Attomeys for Plaintiff Anderson Brothers, Inc.
" See the pleadings in the Ash Grove matter submitted by co-defendants Liberty Mutual Insurance Company and USF&G making the assertion that the A D R process (including the "Convening Group") is not within the scope of the duty to defend, attached to the Row Declaration as Exhibits C and D.
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