Case:

This is the case of CC Metals & Alloys, LLC v. American International Specialty Lines Insurance Company et al.

Court:

In the U.S. District Court for the Western District of Kentucky.

Summary:

The Plaintiff, CC Metals & Alloys filed an insurance coverage lawsuit in Kentucky Western District Court.

The suit, against American International Specialty Lines Insurance Company, a unit of the AIG, and Fortitude Reinsurance Company Ltd., accused the defendants of "abruptly changing" a nearly two decades old coverage position relating to pollution clean-up costs, which CC Metals & Alloys said was done in bad faith.

The Plaintiff sought a declaratory judgment against the insurers and full coverage under an existing pollution legal liability select clean-up cost cap policy.

Case Background:

CC Metals and Alloys (CCMA) is one of the biggest North American producers of silicon-containing ferroalloys and inoculants. Its alloys are typically used to produce a number of products, including bathtubs, sinks, and other bath fixtures; automobile parts, welding rods, tractor parts, and lawnmowers.

According to the initial complaint, CCMA states that sometime in 2000 it hired LAN Associated Inc., an environmental services company, to assist it in coming up with a remedial plan to mitigate losses against certain environmental risks that were present at its facility in Calvert City, Kentucky.

Once the plan was created, CCMA then sought coverage under its AIG policy to fund the remedial cleanup efforts in 2003, a policy that CCMA said extended coverage for certain types of cleanup costs until December 2023.

In the complaint, CCMA said that for 18 years, it was routinely reimbursed by its insurer for "all submitted costs incurred by CCMA to implement the remedial plan." However, CCMA says that in October 2020, AIG changed its coverage position and began to deny coverage for "operations, maintenance, and monitoring costs."

AIG and Fortitude Reinsurance Company Ltd. filed a motion to dismiss the case but the court was not persuaded by the arguments, as such their request was denied.

On Monday, U.S. District Judge Claria Horn Boom went further to reject the insurers' attempt to avoid CCMA’s claims related to future cleanup costs, because as judge Boom stated, these claims were not "purely hypothetical."

Conclusion:

On Monday, Judge Claria Horn Boom ruled that CCMA’s bad faith claims have been sufficiently plead in the complaint and evidence produced that shows the insurers had recklessly disregarded CCMA’s interest.

This case will now move forward to trial.