Limitation to Specified Tanks Upheld
In Cain Petroleum Inc. v. Zurich American Insurance Company, Court of Appeals of Oregon, A134133 (December 3, 2008), the Oregon Court of Appeals upheld a distinction in a “Storage Tank System Third Party Liability and Cleanup Policy” between scheduled and unscheduled underground storage tanks (“USTs”). The policy provided coverage for environmental cleanup costs and third party liability caused by releases from a “scheduled storage tank system” at a “scheduled location” after a “retroactive date.” It was undisputed that the location at issue was a scheduled location and that the location included three scheduled tanks installed in 1994. It was also undisputed that the retroactive date on the policy was 1991. Finally, it was undisputed that the contamination at the site did not come from any of the three scheduled USTs.
Plaintiff’s primary argument was that the policy was “irremediably ambiguous” because the retroactive date was meaningless to the property at issue, one of 17 properties, because the tanks at that location were installed after the retroactive date. Plaintiff argued this created an ambiguity because there was a potential for coverage based on a leak from before the tanks were installed. Plaintiff argued that because of this ambiguity the policy should be interpreted to cover tanks and prior tanks at a scheduled location so long as the release happened after the retroactive date.
The Oregon Court of Appeals rejected this argument. Following Oregon’s interpretative rules, the Court found that the policy was not ambiguous. The Court found that Plaintiff’s proposed interpretation was not plausible because it is directly contradictory to policy language that the policy was location and storage tank specific. Since Plaintiff’s proposed interpretation contradicted specific policy language, it was by definition not reasonable.
The Court also rejected an argument that the insurer was barred from taking its position by the doctrine of judicial estoppel. Plaintiff argued that because the insurer had taken a contrary position in a case in Alaska, that it should be estopped from asserting that the policy does not apply to older tanks at a scheduled location. The Court found that since the insurer did not prevail in the Alaska case, that judicial estoppel does not apply.
