Opinion ID: 2614519
Heading Depth: 2
Heading Rank: 1

Heading: suit[s] includes cercla actions initiated by prp letters

Text: Insurers argue that the suit[s] that are covered under the liability policies issued to the Cities only provide coverage for formal actions initiated in a court of law. Therefore, Insurers contend that the policies do not provide coverage for administrative actions such as the EPA action against the Cities that was initiated by the PRP letters. We disagree. We find that the term suit is ambiguous, and we hold that an EPA action under CERCLA is sufficiently coercive to constitute a suit as that term is used in the insurance policies. In reaching this conclusion, we are persuaded by and follow the analysis of the Supreme Court of Michigan in Michigan Millers Mut. Ins. Co. v. Bronson Plating Co., 445 Mich. 558, 519 N.W.2d 864 (1994). The Bronson court took note of a split of authority regarding the definition of the term `suit,' and its application to nontraditional legal proceedings. See Bronson, 519 N.W.2d at 869. Finding that not all dictionary definitions of suit included a reference to some type of court proceeding, the Bronson court stated that [t]he existence of these alternative and more general definitions of `suit' persuasively suggests that a typical layperson might reasonably expect the term to apply to legal proceedings other than a court action initiated by a complaint. Bronson, 519 N.W.2d at 869. As the Bronson court further explained, the coercive nature of CERCLA renders the receipt of a PRP letter the functional equivalent of a suit brought in a court of law. Id. at 871. By enacting CERCLA, Congress deliberately and painstakingly developed a system in which a PRP has every incentive to `voluntarily' cooperate with the EPA, before actual litigation, and where significant legal prejudice may develop if the PRP fails to do so. Id. at 870. For example, under CERCLA, the EPA has the authority to develop an essentially binding record and to design and implement actions that the PRPs may later be held liable for. Id. As the Bronson court noted, the EPA's development of an administrative record in a CERCLA action is particularly important because liability under CERCLA is strict liability, and defenses are virtually nonexistent. Id. at 871 n. 14. [17] Thus, as the Supreme Court of Iowa has remarked, [e]arly involvement in the settlement discussions is ... often crucial to protect one's interests. A.Y. McDonald Industries. Inc. v. Insurance Co. of N. Am., 475 N.W.2d 607, 629 (Iowa 1991) (holding that the term suit in an insurance contract encompasses any attempt to gain an end by legal process, including an administrative action under CERCLA). Thus, we hold that the term suit as used in the insurance policies encompasses not only traditional lawsuits filed in court but also coercive administrative actions such as those initiated by PRP letters under CERCLA.