Insurance and Finance Update - Written by Jere Beasley on Thursday, May 2, 2013 10:16 - 0 Comments

National Union Wins Battle In $49 Million Carbon Black Lawsuit

Our law firm tried a in 2001 in an Alabama federal court that resulted in a $20.7 million verdict against Continental Carbon Co. The plaintiffs in the case, a number of businesses located in Columbus, Ga., and the City of Columbus, sued Continental Carbon for damages. Their damages were caused by the spewing of carbon black, a petroleum-based material used to reinforce tires and other rubber products, into the air by Continental Carbon from its Phenix City, Ala., plant. The carbon black emissions damaged the plaintiffs’ property in Columbus, which is across the Chattahoochee River from the plant.

This verdict led to the filing of five more suits against Continental Carbon, alleging similar damages. A federal appeals court upheld the verdict in our case, and the U.S. Supreme Court refused to grant Continental Carbon’s petition for certiorari. The company subsequently paid the full amount of the verdict plus interest. David Byrne, a in our firm, along with Jeff Friedman from Birmingham and Eddie Jackson from Jasper, tried the case for the Plaintiffs. They did an outstanding job in a very complex and difficult case.

Continental Carbon tried to force its liability insurance carrier to cover the and pay the judgment and filed suit. A federal appeals court has now affirmed a Texas district court’s ruling that Continental Carbon’s insurer is not obligated to cover $28 million in legal fees and the $20.7 million judgment stemming from the pollution suits over the company’s carbon black plant. In its order, the Fifth Circuit upheld a January 2012 decision by U.S. District Judge Kenneth M. Hoyt that National Union Fire Insurance Co. of Pittsburgh, Pa., owes neither defense nor indemnity to Continental based on a provision in the policies excluding coverage for pollution . The court’s order reads:

After hearing the parties’ arguments on appeal, and after reviewing the briefs, the record, the insurance policies at issue, the applicable statutory and case law, and the district court’s summary judgment and reasoning, we affirm the district court’s judgment and adopt its analysis in full.

The decision is just the latest victory for National Union in the long-running that has spanned several jurisdictions. An arbitration panel, an Oklahoma federal court and Texas state and appellate courts have also sided with the insurer. In granting National Union’s motions for summary judgment last year, Judge Hoyt found that nothing in the underlying complaints or the nine insurance policies at issue — the umbrella policies and four primary policies — showed an obligation to Continental Carbon under the circumstances. He also agreed to strike outside evidence Continental had been offered coverage, finding that Texas law’s eight corners rule barred any evidence outside the “four corners” of the complaint and the policy.

National Union had refused to cover Continental Carbon for the $20.7 million verdict and for some $28 million in other legal fees. The dispute reached arbitration in 2010, and in June of that year a panel of insurance experts ruled in National Union’s favor on the core issues in the dispute. But Continental Carbon sued National Union in Oklahoma federal court shortly thereafter, seeking to vacate the arbitration award. That court dismissed the company’s suit, and, in January 2011, a Texas state court affirmed the arbitration award. In April 2012, a Texas state appeals court also declined to toss the arbitration award.

Since our clients in the underlying case collected the full amount of the jury verdict plus interest, our lawyers weren’t involved in any of the insurance coverage issues between Continental Carbon and National Union. The insurance coverage case is National Union Fire Insurance Co. of Pittsburgh, Pa. v. Continental Carbon Co., which is in the U.S. Court of Appeals for the Fifth Circuit.


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