This week in one of my cases in which we represent an insurer seeking subrogation recovery, after briefing and oral argument, the District Court, Eastern District of California, denied defendants’ omnibus motions to dismiss and strike our Complaint which we filed on behalf of our insurance carrier client in an environmental waste subrogation recovery action.

The Complaint alleges claims under CERCLA (sections 112 and 113), the California Hazardous Substance Account Act, and common law equitable indemnity, apportionment of fault, contribution and subrogation.   In summary, our insurance carrier client paid substantial money on behalf of its insured to cleanup an environmental waste spill – the subrogation action is to recover the costs incurred from the actual parties that are alleged to be at fault for causing the spill.

In their motions to dismiss and strike defendants argued every imaginable argument possible, including, for example, issues relating to standing as a claimant, defendants’ arranger and/or transporter status, satisfying CERCLA section 113 requirements that there be either current or prior litigation or administrative or judicially approved settlement that resolves liability to the United States or a State, allegations of agency between the various defendants, whether the waste oil was a “hazardous substance” or subject to the petroleum exclusion, consistency or not inconsistency with the national contingency plan, preemption, and on and on. 

After lengthy oral argument at hearing the Court issued its Memorandum and Order denying both the motion to dismiss and the motion to strike in their entirety. The Judge’s Memorandum and Order essentially follows all of our arguments and citations in opposition to the motions.

As you may be aware insurer environmental subrogation continues to be a developing and sometimes complicated area of law including for example the important Ninth Circuit 2013 decision in CHUBB Custom Ins. v. Space Systems/Loral, Inc.  Federal statutory, state statutory and state common law claims differ, and it remains important that standing be established, procedural requirements are followed, necessary demands are timely made, and costs are incurred for appropriate environmental waste cleanup expenses that are not inconsistent with the national contingency plan and with appropriate approval and settlement and release from liability.  There also remain unresolved legal issues in the area of environmental subrogation litigation.

The case now continues with disclosures and discovery.

Have a great day. Dave Tate

This video is about new SEC actions for alleged violation of books, records, accountants, and internal controls requirements – issues and opportunities.

Blog posts and videos emphasizing new developments, people’s actions, the crossover in legal, risk, governance, business, accounting and other topic areas, and what it means.  Please follow this blog by clicking “Follow” to the left, and you can find my LinkedIn, Twitter and other connections by clicking on the “About This Blog, Me, And My Connections” link above and to the left.  I also expect that with some recent upgrades and changes in my studio I will be moving toward color backgrounds, and then eventually to green screen and other enhancements which I have been experimenting with for a while.  Enjoy. Dave Tate, Esq.

Blog posts and videos emphasizing new developments, people’s actions, the crossover in legal, risk, governance, business, accounting and other topic areas, and what it means. This video is about the development in non-GAAP accounting alternatives for private companies, and possibly nonprofits and benefit plans. Please follow this blog by clicking “Follow” to the left, and you can find my LinkedIn, Twitter and other connections by clicking on the “About This Blog, Me, And My Connections” link above and to the left.  Enjoy. Dave Tate, Esq.

Click on the following link for my scoop.it paper which compiles current developments on law, risk, governance, business and people, Tate Talk – Law, Risk, Governance, Business and People | Scoop.it.

Dave Tate, Esq. (San Francisco)

While watching the Cardinals beat the Seahawks (yes, pretty unbelievable) today I was looking for a business insurance or risk management article of interest to share. And I was on insurance broker and consultant Charles Wilson’s website. I receive and read Charles’ RiskSmart Tips. I came across Charles’ article (actually an article by Charles’ son) about Charles’ experience with West Nile Virus. The topic of this post is unusual for me – I thought that you might will find the very short story worth reading – because you just never know. Here is the link to Charles’ experience, Click Here.

And here is the link for Charles’ RiskSmart Solutions website, Click Here.

Have a Merry Christmas, and a happy, safe and prosperous New Year.

Dave Tate, Esq.

As a litigation attorney who is also a certified public accountant, I am looking to connect with carriers and businesses that are looking for attorney representation in litigation cases that involve profit & loss, financial fraud, accounting, royalty, or numbers, etc. related issues, and also trustee/fiduciary duty liability cases – please view the video:

There have been several new developments and materials produced during this past week or so relating to boards, risk, audit committees and strategy. The following are three of them:

1. The Financial Reporting Council (FRC) has published for consultation changes to the UK Corporate Governance Code, guidance for boards of listed companies and standards for auditors covering risk management and reporting – supplementary guidance for directors of all banks is also being issued – click here for the announcement and background discussion.

And, click here, for the detailed Consultation Paper.

I will be following and reporting further about this development. In recent times we have seen increasing discussions about risk management, and in some instances specific new regulations such as I discussed in my not-so-long-ago post about new offshore drilling 24/7 risk management and employee risk involvement requirements. I am convinced that education and public discussion about risk management needs to increase, and that risk management practices need to further develop and improve, and be implemented, hopefully voluntarily.

Also consider using the following materials that I have prepared:

Form tool: Risk & Uncertainty Management Form – Processes & Oversight Dave Tate Esq 10202013

2. An article by Norman Marks about reflections on strategic risk, including comments and articles by other thought leaders. Norman regularly posts worthwhile news and comments.

3. Governance leaders call to action for enhancing the audit committee report. I’m disappointed in this new endeavor. Essentially, the call to action encourages audit committees to clarify the scope of the audit committee’s duties; clearly define the audit committee’s composition; and provide relevant information about factors considered when selecting or reappointing an audit firm, selecting the lead audit engagement partner, determining auditor compensation, how the committee oversees the external auditor, and how the committee evaluates the external auditor.

I found the first point, to clarify the scope of the audit committee’s duties, to be of the most potential interest; however, the discussion about what this might involve is only preliminary in nature and lacks detailed comments. Instead, consider using the following materials that I have prepared:

Form tool: 2 Page Board Director Guidelines Dave Tate Esq 10262013

Form tool: Audit Committee Annual Self-Evaluation Form David Tate Esq 10112013

Form tool: Board of Directors Annual Self-Evaluation Form David Tate Esq 10162013

Dave Tate (San Francisco), http://tatetalk.com

Tate Talk – Law, Risk, Governance, Business and People | Scoop.it.

Please click on the following link for an updated Board annual self-evaluation form for your use, Board of Directors Annual Self-Evaluation Form David Tate Esq 10162013.

Dave Tate, Esq. (San Francisco/California)

I’m litigating a subrogation case on behalf of an insurer to recover costs paid by the insurer for environmental waste cleanup. The case is against the actual wrongdoers: the company that originally generated the waste, a waste packer, and a transporter. The insurer paid amounts relating to the incident and cleanup to its insured for property loss, third party governmental entities, a third party non-governmental entity, and vendors. I thought that you might find a summary of this topic interesting as the law on an insurer’s standing and rights to recover environmental waste cleanup costs paid is still developing. The following summary is from a Ninth Circuit and California law perspective.

There are two primary sources of law that may give an insurer rights to recover environmental waste cleanup costs paid: the Comprehensive Environmental Response, Compensation, and Liability Act “CERCLA” and California State law both statutory and common law. Of course in appropriate circumstances an insured also has its direct standing and rights to recover damages and costs from wrongdoers, which as an option the insured and insurer also might want to discuss and evaluate.

Under CERCLA there are two primary statutes that may provide the insurer with standing and rights to recover from third party wrongdoers amounts that the insurer has paid for environmental waste cleanup: 42 USC §9612 [CERCLA §112] and 42 USC §9613 [CERCLA §113]. You might be aware that in CHUBB v. Space Systems/Loral, Inc. earlier in 2013 the Ninth Circuit held that CHUBB as an insurer did not itself have subrogation standing or rights under 42 USC §9607 [CERCLA §107], although the insured might still have direct rights and standing under §107. Courts generally, including the Ninth Circuit, are more often reading and interpreting CERCLA narrowly based on its express wording.

In pertinent part CERCLA §112(c), subrogation, provides:

(2) Any person, including the Fund, who pays compensation pursuant to this chapter to any claimant for damages or costs resulting from a release of a hazardous substance shall be subrogated to all rights, claims, and causes of action for such damages and costs of removal that the claimant has under this chapter or any other law.

In CHUBB the court held that a claimant as defined at 42 USC §9601(5) is a person who presents a written demand for reimbursement of monetary costs under the statute [i.e., CERCLA].

Depending on the facts and circumstances of each case several uncertainties can remain about the application of §112 for later court determination at least including for example the definition of the term claimant, the timing of the demand for reimbursement, where or to whom the demand for reimbursement can be made, who can make the demand for reimbursement, the nature and timing of the action (i.e., a separate legal action or in an existing action) in which the §112 claim should be made, and which rights or the nature of the rights of the claimant to which the insurer is subrogated. Meanwhile however, the insurer should state a claim for reimbursement under §112.

In pertinent part CERCLA §113(f), contribution, provides:

(1) Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) [CERCLA §107] of this title, during or following any civil action under section 9606 [CERCLA §106] of this title or under section 9607(a) [CERCLA §107] of this title. Such claims shall be brought in accordance with this section and the Federal Rules of Civil Procedure, and shall be governed by Federal law. In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate. Nothing in this subsection shall diminish the right of any person to bring an action for contribution in the absence of a civil action under section 9606 [CERCLA §106] of this title or section 9607 [CERCLA §107] of this title.

Similar to §112, depending on the facts and circumstances of each case uncertainties can remain about the application of §113 for later court determination at least including for example the standing and rights for recovery that an insurer compared to a directly liable party has under §113 through subrogation, the nature and timing of the action (i.e., a separate legal action or in an existing action) in which the §113 claim should be made, and the nature of “contribution” which has its own procedural requirements and limitations. Nevertheless however, the insurer should still state a claim for reimbursement under §113.

You should also keep in mind that in appropriate circumstances a wrongdoer or potentially responsible party against whom you might proceed under CERCLA might be able to settle claims against it in a manner that shields or protects that wrongdoer from any further liability to any party or entity for arising from the environmental waste or incident.

Under California state law there are two primary sources that provide for an insurer’s right and standing to recover from third party wrongdoers costs paid for environmental waste cleanup: the Hazardous Substance Account Act (“HSAA”), Cal. Health and Safety Code §§25300-25395, and California common law. Common law claims which I am not going to discuss here include standard indemnity, contribution, allocation and apportionment of fault, and subrogation claims.

In pertinent part the HSAA at Cal. Health and Safety Code §25363 and subsection (e) thereof provides that any person who has incurred removal or remedial action costs may seek contribution or indemnity from any person who is liable. In resolving claims for contribution or indemnity, the court may allocate costs among liable parties using those equitable factors which are appropriate.

Similar to the discussions above pertaining to CERCLA, depending on the facts and circumstances of each case uncertainties can remain about the application of §25363 for later court determination at least including for example the standing and rights for recovery that an insurer compared to a directly liable party has under §25363 through subrogation, the nature and timing of the action (i.e., a separate legal action or in an existing action) in which the §25363 claim should be made, and with respect to contribution the nature of “contribution” which has its own procedural requirements and limitations. Nevertheless however, the insurer should still state a claim for reimbursement under §25363.

Note that there may also still be issues that are undecided about possible CERCLA preemption. And, similar to the above discussion pertaining to CERCLA, you should also keep in mind that in appropriate circumstances a wrongdoer or potentially responsible party against whom you might proceed might be able to settle claims against it in a manner that shields or protects that wrongdoer from any further liability to any party or entity for arising from the environmental waste or incident.

I hope you found this discussion helpful. Dave Tate, Esq. (San Francisco/California)