A 1989 settlement that released insurers, including a Liberty Mutual Holding Co. Inc. subsidiary, from any future claims arising from environmental contamination at five facilities did not include a New Jersey storage battery facility because it was not specifically named, says a federal appeals court in a divided opinion that overturns a lower court ruling.

The ruling in the case means the policyholder is not barred from seeking insurance coverage for subsequent environmental claims by the U.S. Environmental Protection Agency.

The complex litigation has a long history. In the 1950s, the McGraw-Edison Co. owned a plot of land in Bloomfield, New Jersey, where it operated two battery factories, the Primary Battery plant and the Storage Battery plant, according to the June 30 ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati in Employers Insurance of Wausau et al. v. McGraw-Edison Co.

McGraw sold the Storage Battery plant in 1960 and later transferred the Primary Battery plant to a subsidiary called Battery Products Inc., according to the ruling.

After Waukesha, Wisconsin-based Cooper Industries acquired McGraw-Edison, it discovered that several of McGraw’s factories, including the Primary Battery plant, had potentially contaminated the environment.

Cooper asked its insurers, which included Employers Insurance of Wausau, a unit of Boston-based Liberty Mutual, to cover its liabilities for the cleanup, and in response the insurers filed suit seeking a declaration the contamination was not covered by their policies.

That suit was settled in 1989. The settlement agreement released insurers from future claims arising from contamination at five facilities, including one identified as the McGraw-Edison Battery Products Battery Products Plant facility.

Twenty years later, the EPA notified Cooper that the entire McGraw Bloomfield property, including both the Primary Battery plant and the Storage Battery plant, might have contributed to pollution in the Passaic River.

Cooper’s insurers then returned to federal court in 2014, arguing the 1989 settlement agreement barred Cooper from seeking insurance coverage for the EPA claims. (Cooper Industries was acquired by Cleveland-based Eaton Corp. in 2012.)

The U.S. District Court in Grand Rapids, Michigan, ruled in the insurers’ favor, holding the 1989 settlement agreement included the Storage Battery plant.

The 6th Circuit overturned that ruling in its 2-1 decision. “According to Cooper, the term ‘Battery Products Plant facility’ refers to only the Primary Battery plant — the factory that McGraw transferred to its wholly owned subsidiary, Battery Products Inc., in 1985. The settlement agreement supports this position,” said the majority ruling, in holding the agreement did not apply to the Storage Battery plant.

In the settlement agreement, “Each facility is named after the entity or division operating it, with names including the ‘Service Division Facility,’ the ‘Bussman Facility,’ and the former ‘Toastmaster’ and ‘Worthington’ facilities,” said the ruling.

“These names show that the contracting parties had a convention for identifying the facilities in the agreement based on the entities that operated them.

“Under that convention, the Battery Products Plant facility refers to the Primary Battery plant, which Battery Products Inc. operated, and which does not include the Storage Battery plant,” said the ruling, in reversing the lower court’s ruling.

 The dissenting opinion says, “I conclude that the settlement agreement is ambiguous and I would vacate the District Court’s judgment and remand for an evidentiary hearing.”