Md. judge tells insurer to pay for cleanup

January 10, 1991|By Kim Clark

In a ruling that could save Maryland's factories millions of dollars at the expense of their insurers, a Baltimore County circuit judge has ruled that an insurance company must pay for the cleanup of polluted soil and water at a Sparks binocular plant.

Legal experts interviewed yesterday said a wave of suits could follow Judge John F. Fader's potentially

precedent-setting ruling that Utica Mutual Insurance Co. must pay for environmental cleanup costs incurred by Bausch & Lomb Inc.

"This is the leading edge of a great wave," said Kenneth Abraham, a professor at the University of Virginia who follows environmental law.

Though the Maryland decision follows a similar ruling in California, Mr. Abraham said the courts are just beginning to hear scores of suits by industrial companies against their

insurers.

Because the legal controversy over who should pay for environmental cleanups is so new, no clear precedent has been set nationally, he said.

If the Maryland ruling stands, however, Mr. Abraham said, factories will be able to pass on billions of dollars of pollution cleanup costs to their insurers, some of which might fail because of the additional cost and some of which will pass on the

increased costs to consumers in the form of higher insurance rates.

The attorneys in the case said that Judge Fader, who has yet to issue a written decision, announced last month, after a 2 1/2 -week trial, that he had decided Utica's policy covered damage done to the area around Bausch & Lomb's Diecraft plant, which the company owned from 1965 to 1987.

RF After years of disposing of solvents and metals in pits around the

plant, Bausch & Lomb found that some of the chemicals had leached into the ground water and neighboring properties in the mid-1980s, said Bausch & Lomb attorney Mark H. Kolman.

The company has spent more than $200,000 cleaning up the soil and water, but the bill could reach as much as $10 million, Mr. Kolman said.

Though Judge Fader said Bausch & Lomb must pay the approximately $500,000 spent on environmental studies, Mr. Kolman said the decision is a victory for factories and taxpayers because it means insurers can be forced to pay for cleanups even if the polluting company has gone bankrupt.

Utica attorney John Wyss said yesterday that he and his client were waiting for the written opinion before deciding whether to appeal.

If the decision stands, Maryland will join a growing number of states that are forcing insurance companies to pay such cleanup costs, even though their policies may not specifically mention them, environmental attorneys said.

In two previous cases, federal judges in Maryland ruled that since environmental damages weren't mentioned in the old general-liability policies that covered companies through the 1980s, the insurance companies shouldn't have to pay environmental claims.

David Farmer, a spokesman for the Alliance of American Insurers, said yesterday the industry has argued that insurers should not have to pay claims for problems that weren't even imagined when the policies were written.

"The manufacturers are looking for a deep pocket, but the insurers are not a bottomless pit. We have finite resources as well," he said.

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