of insurance contracts, that is, the exception which would relieve an insured of taking responsibility during uninsured years -- it is my finding that that exception applies only where insurance is unavailable in the marketplace.
Consequently, if insurance was available in the marketplace to companies such as Olin, then the Stonewall exception does not apply. It is my view that Stonewall should be applied narrowly, and I want to make that clear without any mistake. It is my view that Stonewall should be applied so as to achieve a result as close as possible to what would be the result under the insurance contracts.
I accept Olin's argument that there was a time when insurance for gradual pollution was not available. This occurred commencing with the advent of the pollution exclusion in 1971. I believe and find that, commencing at that time, for all practical purposes Olin could not obtain general comprehensive liability without a pollution exclusion.
However, a substitute form of insurance appeared in the marketplace specifically designed to fill in the gap created by the pollution exclusions in the CGL policies. This new form of insurance was environmental impairment liability (EIL) insurance.
There is an issue about when such insurance was available in the United States to companies such as Olin. The insurance companies here argue that it was available beginning in the mid-70s. Olin argues that it was not available until about 1980. That issue is really irrelevant for the following reason:
The EIL insurance was on a claims-made basis. That is, if insurance coverage of the EIL nature was in effect for a particular insured during a particular year, and if there was not some abnormal time limit placed on that insurance as, this would mean that any claim made during that year would be covered even if that claim related to injury or property damage occurring in prior years.
Consequently, if Olin had purchased an EIL policy in 1980, it could have been insured for claims made in 1980 even though they related to injuries occurring in the 1970s when the pollution exclusion in the GCL policies was in effect. It is clear that by 1980, at least, EIL coverage was available to major companies such as Olin in the United States. Thus, this was not a situation, at least beginning in 1980, where insurance was unavailable within the meaning of Stonewall.
There has been an enormous amount of evidence about what Olin did or did not do to try to obtain EIL coverage. There has been an enormous amount of evidence about particular insurance companies as to when they were in the market, how strong or how weak they were, how desirable or how undesirable they were from the standpoint of Olin obtaining insurance from them. There has been a great deal of evidence about certain groups of insurers, one in England, which used the initials ERAS, and one in the United States which used the initials PLIA. There has been evidence about whether Olin developed a loss record which would have at some point made it difficult or even impossible to obtain EIL coverage.
There has been evidence that one source of insurance turned Olin down in 1982. There has been evidence that ERAS went out of business in early 1984 at a time when Olin was indeed applying for EIL insurance from ERAS. There has been evidence and argument about whether, in dealing with ERAS, Olin was too slow in moving to obtain that insurance when it was available. There has been a morass of evidence and argument about these particular details.
As stated, EIL insurance was available to companies like Olin in the marketplace beginning at least in 1980. Olin did not obtain such insurance. Olin argues that it was prevented by various circumstances occurring over the years from obtaining the EIL coverage it needed from an insurer which was appropriate for Olin. The insurer defendants contend that Olin had a number of opportunities with various appropriate insurers to obtain the coverage, and that, because of Olin's dilatory conduct and because of its rejecting opportunities to obtain coverage, the result was that Olin went uninsured.
The court frankly states that these contentions present issues which are difficult and uncertain in the extreme. It is inconceivable that Stonewall is intended to thrust the court into the kinds of evidentiary mazes that have been presented in the present case. It seems to me clear that Stonewall should be applied in a way that poses as simple an issue as possible, as basic an issue as possible and, as I said before, Stonewall should be applied in a way which will come as close to fidelity to the insurance contracts as possible.
Consequently, I am holding that there should be no application of what I will call the Stonewall exception unless the insurance is unavailable in the marketplace to the kind of insured involved in the particular matter.
I am holding that the proration in a case such as was involved in the Williamston, North Carolina site, this proration should take place over all the years of the injury. I am further holding that the insurance company is to pay its share for the years in which insurance coverage existed. I am further holding that Olin will be required to accept responsibility for the years in which injury occurred and in which it did not have insurance in effect.
Dated: New York, New York
December 24, 1997
THOMAS P. GRIESA
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