TWO COURTS RULE AGAINST POLLUTION POLICYHOLDERS

Policyholders suffered setbacks in the pollution coverage arena due to two recent decisions.

A Pennsylvania jury found that London insurers were not liable for cleanup costs at two sites owned by Philadelphia-based Rohm & Haas Co.

Separately, a federal court judge in Connecticut ruled that United Technologies Corp. did not provide timely notice of its claims against American Home Assurance Co. for ground and water contamination at two sites.

The Pennsylvania state court jury verdict concerned two sites owned by chemical manufacturer Rohm & Haas. One is the Whitmoyer manufacturing site in Myerstown, Pa., and the other is a landfill in Bristol, Pa. The policies at issue were for excess liability coverage between 1956 and 1971 at Bristol and 1964 to 1971 for Whitmoyer, which is now owned by SmithKline Beecham P.L.C.

For both sites, the jury determined Rohm & Haas could not recover from the insurers because Rohm & Haas knew when it bought the coverage that it would incur a loss. The jury also found that for the Whitmoyer site, Rohm & Haas "deliberately concealed material information with the intent to deceive" the insurers.

Litigation between the company and its insurers involving 15 other sites is pending in a New Jersey state court. Gary Westerberg, a Chicago attorney with Lord, Bissell & Brook, who represented the London insurers, said it was too early to predict the verdict's impact on New Jersey litigation.

Ellen Friedell, assistant general counsel for Rohm & Haas, said the company is disappointed with the verdict and planned to file post-trial motions challenging it late last week.

Cleanup costs for the two sites are estimated to exceed $100 million.

The other pro-insurer decision was handed down by U.S. District Judge Janet Bond Arterton in Connecticut, quashing Hartford, Conn.-based United Technologies' efforts to recover cleanup costs from American Home Assurance, a unit of American International Group Inc.

The decision involved cleanup costs for contamination of soil and ground water at two sites owned by the manufacturer: one in Windsor Locks, Conn.; and the other in City of Industry, Calif. American Home Assurance wrote first-party property coverage for the sites from 1975 to 1986.

Judge Arterton ruled that United Technologies failed to provide timely notice of claims to American Home. Contamination at the Windsor Locks site was discovered in 1979, and American Home was notified in late 1987, court papers show.

Under Connecticut law, United Technologies will have an opportunity at trial to show that such late notice did not harm the insurer.

The judge also ruled that for the City of Industry site, United Technologies cannot recover for ground water cleanup costs under the coverage because ground water is not considered company property.

Rohm & Haas et al vs. Continental Casualty Co., et al, Court of Common Pleas, Philadelphia County; April 1, 1997; No. 3449

United Technologies Corp., Carrier Corp., and United Technolgies Automotive Inc. vs. American Home Assurance, U.S. District Court for the District of Connecticut; March 31, 1997; No. 292 CV 00267.