Global Warming: Have the Coverage Wars Begun?
Global Warming. Has there ever been a topic that generated so many seminars and articles by lawyers hopeful of getting work? (well yes, there was Y2K). So will climate change claims be Asbestos II or just a flash in the pan?
Unlike asbestos, clergy abuse, intellectual property or other progenitors of mass coverage litigation in recent years, my guess is that climate change is not so much likely to be a discrete coverage controversy as a phenomenon that influence how societies, businesses and individuals interact that will, in turn, generate diverse types of first and third party claims. In the near term, we may have just seen the first shot fired in the Climate Change Coverage Wars.
You may have missed it (like most insurance matters, the underlying claim generated far more headlines than the ensuing coverage suit) but on July 9, 2008, an insurer of one of the defendants in the sinking Alaska village case filed a DJ in Alexandria, Virginia asking a state court to rule that its CGL policies do not cover the Village of Kivalina’s climate change claims.
On February 26, 2008, the Native Village of Kivalina, Alaska sued Exxon and various energy companies in federal court in San Francisco, alleging that the defendants’ production of fossil fuels was causing global warming that had in turn melted the Arctic ice that had historically protected the Inupiat village from coastal winter storms, threatening the Village’s future. Among the defendants is AES Corporation, a Virginia-based energy conglomerate that operates various coal-fired plants. The Village seeks to impose liability on theories of public and private nuisance and sought monetary damages for each defendant’s contribution to global warming.
AES tendered the Kivalina law suit to Steadfast Insurance, which has insured it since 2003 under CGL policies with $1 million limits. Steadfast agreed to defend under a reservation of rights and has since filed a Complaint for Declaratory Relief in the Arlington County Circuit Court in Virginia.
The DJ asks the state court to find that Steadfast does not owe coverage on the grounds that (1) global warming is not the result of any “accident” given the industry’s long-standing knowledge of risks associated with greenhouse gases; (2) in light of the long-standing nature of the problem, it is clearly a “loss in progress” subject to a Montrose endorsement in the policy; (3) the emission of greenhouse gases is “air pollution” subject to a total pollution exclusion in the Steadfast policy.
Steadfast is represented by David Florin and Andrew Marks of D.C.’s Crowell & Moring in association with Tom McKay and Bill Stewart of Cozen O’Connor.
