In Travelers Cas. and Sur. Co. v. Maplehurst Farms, Inc. (2014), 18 NE 3d 311, the facts were that Maplehurst owned and operated a dairy farm in the Indianapolis area from 1933 to 1997. In the 1950s, Maplehurst installed one or more underground storage tanks for fuel oil on the dairy premises. In 1997, Maplehurst sold the dairy to a 3rd party, Dean Foods Company. Subsequently, environmental contamination was discovered on the property by Dean. Dean notified Maplehurst and demanded that Maplehurst remedy the contamination. Then the Indiana Department of Environmental Management got involved and put a deadline on Maplehurst and Dean to submit a corrective action plan, or alternatively, IDEM indicated it would consider issuing its own order for the remediation of the contamination at the expense of Maplehurst and Dean.
Subsequently, Maplehurst reached an agreement with Dean to remediate the contamination at the expense of Maplehurst and undertook the work.
Still later, Maplehurst discovered it had insurance policies with three different insurance companies that provided insurance coverage to Maplehurst during the relevant time period when the underground storage tanks were in use. However, at least one of the policies in question contained provisions stating that the insurer would not be liable for any costs for remediation incurred prior to notice of claim being given to the insurance company by the insured. The outcome was that remediation costs incurred by Maplehurst prior to giving notice of the claim to the insurance companies were not covered by the insurance, although post-notice costs and expenses were.
The lessons here include the following:
- The time to address potential environmental contamination issues is before a purchase and sale of real estate, not after.
- If there is environmental contamination on real estate, coverage for remediation costs, and also attorney’s fees in defending against the claims for environmental remediation and handling the environmental remediation, can often be obtained under insurance policies that were in effect years ago during the time the contamination occurred even if the environmental contamination is discovered after the policy period.
- If environmental contamination is discovered or suspected, the parties involved should seek advice from knowledgeable legal counsel immediately, and the search for insurance coverage should also begin immediately, and notice should be given to insurers who have potential liability as soon as possible.