The U.S. Supreme Court on Monday declined to review an insurer's challenge to a ruling that requires it to cover claims against a wood treatment product maker over a man's cancer diagnosis allegedly linked to decades of chemical exposure.

Supreme Court Leaves Fourth Circuit Ruling Intact

The justices, as customary, did not provide an explanation for denying the petition filed by Argonaut-Midwest Insurance Co., also known as Argo Group. This decision upholds a Fourth Circuit ruling from this summer that found Argonaut-Midwest is obligated to provide coverage under a commercial general liability policy issued to Koppers Performance Chemicals Inc.

The Fourth Circuit's opinion concluded that the insurance policy applied broadly to Koppers' operations, not just within Hawaii, as previously determined by the district court. The panel found that "coverage applies to Koppers generally," covering its liabilities across the U.S., its territories, and Canada.

Background of the Coverage Row Over Wood Treatment

The case arose from a lawsuit filed by Phillip H. Riley, who claimed he developed cancer after prolonged exposure to Koppers' wood treatment chemicals through his family's business in South Carolina. Initially, Argo refused to defend Koppers in Riley's lawsuit, arguing that Koppers was not a named insured under the relevant policy. After settling with Riley, Koppers later sought to recover its costs by suing its insurers in South Carolina federal court.

In 2022, the district court granted summary judgment in favor of Argo, ruling that the insurance policies Koppers obtained from a Hawaiian broker were limited to the company’s properties in Hawaii. The court found that the coverage did not extend nationwide.

Koppers appealed the decision, contending that the policies' territorial scope included the entire U.S. and its territories, not just Hawaii. The Fourth Circuit agreed, reversing the lower court's ruling and holding that the insurer owed coverage to Koppers under the broader territorial definition.

Argo’s Arguments for Supreme Court Review

In its petition to the Supreme Court filed on September 25, Argo argued that the Fourth Circuit had "deviated from established insurance law in Hawaii." The insurer claimed that the appellate court misinterpreted the policy terms and disregarded Hawaii's complaint allegation rule, which stipulates that insurers are only required to defend claims explicitly covered by the policy.

Argo asserted that the Fourth Circuit overstepped by imposing a duty to defend, even though Koppers' pleadings fell short of clearly demonstrating coverage. "The Fourth Circuit disregarded the complaint allegation rule, disregarded controlling language in the policy, minted a novel standard of Hawaii law, and imposed a duty to defend where no such duty previously existed," Argo wrote in its petition. The insurer further argued that the Fourth Circuit's decision conflicts with rulings by the Hawaii Supreme Court, the Ninth Circuit, and district courts in Hawaii.

Coverage Row Over Wood Treatment : Implications of the Court's Decision

The Supreme Court's refusal to take up the case leaves the Fourth Circuit’s interpretation of the insurance coverage intact, meaning Argo is responsible for covering Koppers’ defense costs. The ruling underscores the principle that any ambiguity in an insurer's duty to defend under Hawaii law should be resolved in favor of the insured, as the Fourth Circuit panel emphasized.

Coverage Row Over Wood Treatment : Legal Representation

Koppers is represented by Laura F. Locklair of Boyle Leonard & Anderson PA. Representatives for Argo Group did not immediately respond to requests for comment on the Supreme Court's decision.