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OLD ENVIRONMENTAL CLAIMS IN SUIT TIME-BARRED

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JERSEY CITY, N.J.-Environmental claims dating back decades can be time-barred by reviewing the facts of the case, a New Jersey Superior Court judge has ruled in a summary judgment

The ruling sets a "bright-line test" or clear way to determine discovery dates in environmental cases in the state, says the lawyer representing the insurers in the case.

The summary judgment, which applies to just a few of many policies included in the suit, will likely be appealed later in the case, said a lawyer for the policyholder.

In PPG vs. Accident & Casualty Insurance Co. et al., PPG Industries Inc. is seeking more than $500 million in coverage from more than 100 insurers to clean up more than 50 polluted sites.

A case management order established three test sites for trial, including one in Hudson County, N.J.

CNA Insurance Cos. and other insurers sought summary judgment against PPG based on alleged contractual time limitations in policies covering the Hudson County site, court papers say.

The insurers argued that the contract stated that any suit seeking damages should be brought within a year of the "discovery by the assured of the occurrence which gives rise to the claim," court papers say.

PPG argued for a liberal interpretation of the clause, saying it was ambiguous. The limitations period should not be triggered until losses exceeded its $1 million deductible, and there is nothing to show that it expected such an extensive loss, the company argued.

PPG's first notice of claim was the suit it brought against the insurers in March 1995.

However, facts determined in discovery show that PPG was likely aware of the extensive damage and the large cleanup costs it faced at several times since the late 1950s and certainly no later than 1990, court papers say.

"Common sense compels that the insurer has a right to be made aware of the claim before the last dollar of the deductible is reached; to hold otherwise simply flies in the face of logic," ruled Judge Patricia K. Costello.

The decision provides a "bright-line test" to determine time bars in environmental cases, said Peter E. Kanaris, a partner at Daar, Fisher, Kanaris & Vanek P.C. in Chicago. He represented the insurers.

In most environmental cases, juries decide time bars, but in this case, the judge says it can be determined as a matter of law, he said.

The summary judgment concerns just a few policies issued between 1963 and 1965 that had the distinctive limitation wording, said Michael Zanic, a partner at Kirkpatrick & Lockhart in Pittsburgh, who represented PPG.

The other policies PPG is claiming will not be affected by the judgment, he said.

There is little case law of any kind determining the limitations and the summary judgment will likely be appealed by the policyholder at the end of the case, Mr. Zanic said.

The suit will continue with discovery for the other test sites.

PPG vs. Accident & Casualty Insurance Co. et al., Superior Court of New Jersey, Law Division, Hudson County; No. HUD L-1845-95.