Court Opinion

ID: 868013
Source: CourtListenerOpinion
Date Created: 2013-05-16 17:37:41.255994+00
Date Added: 2024-06-11T11:50:28.318255
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                 Fifth Circuit

                                                                         FILED
                                                                         May 15, 2013

                                     No. 12-30651                       Lyle W. Cayce
                                                                             Clerk

LOUISIANA GENERATING L.L.C.; NRG ENERGY INCORPORATED,

                                         Plaintiffs-Appellees - Cross-Appellants
v.

ILLINOIS UNION INSURANCE COMPANY,

                                                  Defendant-Appellant - Cross-Appellee
------------------------------------------------------------------------
ILLINOIS UNION INSURANCE COMPANY,

                                         Plaintiff-Appellant - Cross-Appellee

v.

NRG ENERGY INCORPORATED; LOUISIANA GENERATING L.L.C.,

                                 Defendants-Appellees - Cross-Appellants
_______________________________________________________________________

Cons w/ 12-30877

LOUISIANA GENERATING, L.L.C.; NRG ENERGY, INCORPORATED,

                                         Plaintiffs-Appellees - Cross-Appellants

v.

ILLINOIS UNION INSURANCE COMPANY,

                                         Defendant-Appellant - Cross-Appellee
                                             No. 12-30651

----------------------------------------------------------------------------------------------
ILLINOIS UNION INSURANCE COMPANY,

                                          Plaintiff-Appellant - Cross-Appellee

v.

NRG ENERGY, INCORPORATED; LOUISIANA GENERATING, L.L.C.;

                            Defendants-Appellees - Cross-Appellants
________________________________________________________________________

Cons w/ 12-30879

LOUISIANA GENERATING, L.L.C.; NRG ENERGY, INCORPORATED,

                                         Plaintiffs-Appellees

v.

ILLINOIS UNION INSURANCE COMPANY,

                                         Defendant-Appellant

----------------------------------------------------------------------------------------------
ILLINOIS UNION INSURANCE COMPANY,

                                         Plaintiff-Appellant

v.

NRG ENERGY, INCORPORATED; LOUISIANA GENERATING, L.L.C.;

                                         Defendants-Appellees

                      Appeals from the United States District Court
                          for the Middle District of Louisiana

Before DAVIS, GRAVES, and HIGGINSON, Circuit Judges.

                                                     2
                                  No. 12-30651

JAMES E. GRAVES, JR., Circuit Judge:
      This case concerns whether Illinois Union Insurance Company (“ILU”) has
a duty to defend Louisiana Generating LLC (“LaGen”) in an underlying suit filed
against it by the Environmental Protection Agency (“EPA”) and the Louisiana
Department of Environmental Quality (“LDEQ”) for alleged Clean Air Act
(“CAA”) and state environmental law violations. The district court held that
under the insurance policy at issue, there is a duty to defend. We affirm.
                  I. Factual and Procedural Background
      The underlying suit in this duty to defend case between LaGen and ILU
revolves around Big Cajun II (“BCII”), a coal-fired electric steam generating
plant owned by LaGen in Louisiana. In February 2005 and December 2006 the
EPA sent LaGen Notices of Violation (“NOVs”) alleging that certain major
modifications performed without a permit at BCII in 1998 and 1999 caused net
emissions increases in violation of the CAA. In January 2009, NRG Energy,
LaGen’s parent, purchased a Custom Premises Pollution Liability Insurance
Policy (“the policy”) from ILU to cover a large number of its facilities, including
BCII. The effective date of the policy is January 22, 2009.
      On February 18, 2009, the EPA filed the underlying suit over the
modifications made to BCII, asserting violations of the CAA and Louisiana
environmental laws.      LDEQ intervened in the suit, asserting essentially
identical allegations and claims. The suit alleges that the previous owner of
BCII did work on the plant that increased certain emissions which under
applicable law would be considered “major modifications” and would have
required a Prevention of Significant Deterioration of Air Quality permit (“PSD
permit”) before being completed.        The suit also alleges that the plant
modifications failed to employ best available control technology (“BACT”) to limit
emissions, as required by the CAA and Louisiana law. The complaints allege
that since acquiring BCII, LaGen has continued to operate the plant without

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                                  No. 12-30651

seeking a PSD permit for the modifications. As a result, the complaints assert,
BCII has emitted excess amounts of regulated pollutants into the air.
      The parties primarily dispute whether any relief sought by the EPA and
LDEQ is potentially covered by the policy. The underlying EPA suit sets forth
several prayers for relief which ask the district court to:
      1.    Permanently enjoin the defendant from operating Units 1 and
            2 of the Big Cajun II Power Plant, except in accordance with
            the Clean Air Act and any applicable regulatory
            requirements;

      2.    Order the defendant to remedy its past violations by, among
            other things, requiring the defendant to install and operate,
            as appropriate BACT at Units 1 and 2 of the Big Cajun Power
            Plant, for each pollutant subject to regulation under the Clean
            Air Act;

      3.    Order the defendant to apply for permits that are in
            conformity with the requirements of the PSD and the
            Louisiana Title V Operating Permits program;

      4.    Order the defendant to conduct audits of its operations to
            determine if any additional modifications have occurred which
            would require it to meet the requirements of PSD and report
            the results of these audits to the United States;

      5.    Order the defendant to surrender emission allowances or
            credits to offset and mitigate the illegal emissions under the
            PSD and Louisiana Title V Operating Permits program;

      6.    Order the defendant to take other appropriate actions to
            remedy, mitigate, and offset the harm to public health and the
            environment caused by the violations of the Clean Air Act
            alleged above;

      7.    Assess a civil penalty against the defendant of up to $27,500
            per day for each violation of the Clean Air Act and applicable
            regulations which occurred between January 31, 1997 and
            March 15, 2004; $32,500 for each violation that occurred

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                                      No. 12-30651

              between March 15, 2004 and January 12, 2009; and $37,500
              for each violation occurring after January 12, 2009;

       8.     Award the United States its costs of this action; and,

       9.     Grant such other relief as the Court deems just and proper.
As we discuss below, on appeal ILU argues that none of the prayers for relief are
covered, while LaGen argues that there is coverage for paragraphs 5, 6 and 7 of
the EPA’s prayer for relief.
       LaGen sought coverage from ILU under the policy for legal fees associated
with the underlying EPA suit, and ILU denied that the EPA suit was covered by
the policy. LaGen filed suit in Louisiana federal court seeking a declaratory
judgment that ILU has a duty to defend and indemnify LaGen in the EPA suit.1
The district court bifurcated the trial between the duty to defend and the duty
to indemnify. Both parties moved for partial summary judgment on the issue of
the duty to defend, asserting that the policy was clear as a matter of law. In a
January 30, 2012 order, the district court granted summary judgment for LaGen
with regard to the duty to defend and denied the motion for summary judgment
filed by ILU. The district court held that ILU failed to prove that there was no
possibility the claims in the underlying EPA suit would be covered and thus had
a duty to defend.
       ILU moved for a new trial or alternatively for certification of the
interlocutory ruling for immediate appeal pursuant to 28 U.S.C. § 1292(b), or in
the further alternative, to certify the ruling for immediate appeal as a final
judgment pursuant to Federal Rule of Civil Procedure 54(b). In a May 15, 2012
order, the district court treated that motion as one for reconsideration under
Rule 54(b) and denied it. The district court granted the motion for certification

       1
        ILU had previously instituted a separate suit seeking a declaratory judgment that it
had no duty to defend or indemnify under the policy in New York federal court. The matters
were consolidated in the Middle District of Louisiana.

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                                      No. 12-30651

of both the district court order and the denial of reconsideration pursuant to §
1292(b). ILU filed a petition in this court seeking permission to appeal the
interlocutory orders pursuant to § 1292(b), and LaGen filed a cross-petition for
permission to appeal the district court’s holding that costs relating to injunctive
relief were not covered by the policy. We granted both petitions for permission
to appeal.2
                                    II. Discussion
       The only issue decided by the district court on summary judgment was the
duty to defend. Thus, the only question on appeal concerns whether the district
court correctly held that ILU has a duty to defend LaGen in the underlying suit
filed by the EPA and LDEQ.
       A.       Standard of Review and Choice of Law
       This court reviews the district court’s grant of summary judgment de novo,
applying the same legal standards as the district court. Travelers Lloyds Ins. Co.
v. Pac. Emp’rs Ins. Co., 602 F.3d 677, 681 (5th Cir. 2010). Summary judgment
is appropriate when there is no genuine issue of material fact and the movant
is entitled to judgment as a matter of law. Id. The district court’s interpretation
of an insurance contract is a question of law subject to de novo review. Id.
Additionally, a court of appeals is not limited to a district court’s reasons for its
decision, but may affirm a district court ruling “on any ground supported by the
record.” See Ballew v. Cont’l Airlines, Inc., 668 F.3d 777, 781 (5th Cir. 2012).
           The policy contains a choice of law clause specifying that “All matters
arising hereunder including questions relating to the validity, interpretation,

       2
        The parties also pursued other avenues of appeal, resulting in multiple appeals from
the same two district court orders. ILU previously filed a motion to dismiss LaGen’s cross-
appeal in one of the cases, No. 12-30651, disputing the timeliness of LaGen’s cross-appeal in
that case. There is no dispute that LaGen’s petition for cross-appeal was timely in No. 12-
90053, the case in which this court granted permission to both parties to appeal pursuant to
§ 1292(b), and the multiple appeals have been consolidated. Thus, ILU’s motion to dismiss
LaGen’s cross-appeal is now denied as moot.

                                             6
                                  No. 12-30651

performance, and enforcement of this Policy shall be determined in accordance
with the law and practices of the State of New York.” Thus, New York law
governs the interpretation of the policy.
      B.    Coverage for Claims and Remediation Costs
      On appeal, ILU argues that it has no duty to defend because the
underlying EPA suit does not seek any form of relief that potentially falls within
the policy’s coverage.   ILU argues that the forms of relief covered by the
policy–including relief for property damage and remediation costs–are
unavailable to the EPA as a matter of law because the CAA only allows the EPA
to seek prospective relief and does not allow the EPA to seek compensatory
damages.    ILU further asserts that the policy excludes coverage for any
injunctive relief. LaGen responds by arguing not only that the underlying suit
does assert a claim for property damage and does seek remediation costs as
defined by the policy, which is not limited to compensatory damages, but also
that the district court erred when it stated that injunctive relief is excluded from
the policy’s coverage.
      In New York, whether there is a duty to defend is determined by
comparing the allegations in the underlying complaint to the terms of the policy.
See BP Air Conditioning Corp. v. One Beacon Ins., 871 N.E.2d 1128, 1131 (N.Y.
2007); Fitzpatrick v. Am. Honda Motor Co., 575 N.E.2d 90, 91-92 (N.Y. 1991).
An insurance policy must be read as a whole in order to determine “its purpose
and effect and the apparent intent of the parties.” See Murray Oil Prods., Inc.
v. Royal Exch. Assurance Co., 235 N.E.2d 762, 764 (N.Y. 1968). When the terms
of the policy are clear and unambiguous, they should be given their “plain and
ordinary meaning.” Teichman v. Cmty. Hosp. of W. Suffolk, 663 N.E.2d 628, 630
(N.Y. 1996). In New York, “it is well settled that an insurer’s duty to defend [its
insured] is exceedingly broad and an insurer will be called upon to provide a
defense whenever the allegations of the complaint suggest . . . a reasonable

                                         7
                                      No. 12-30651

possibility of coverage.” BP Air Conditioning, 871 N.E.2d at 1131 (alterations in
original) (internal quotation marks omitted). If a complaint “contains any facts
or allegations which bring the claim even potentially within the protection
purchased, the insurer is obligated to defend.” Id. (quoting Technicon Elecs.
Corp. v. Amer. Home Assurance Co., 74 N.Y.2d 66, 73 (N.Y. 1989)); see
Fitzpatrick, 575 N.E.2d at 92. Finally, “If any of the claims against the insured
arguably arise from covered events, the insurer is required to defend the entire
action.” Frontier Insulation Contractors, Inc. v. Merchs. Mut. Ins. Co., 690 N.E.2d
866, 869 (N.Y. 1997).
       The policy states that it provides coverage for “Claims, remediation costs,
and associated legal defense expenses . . . as a result of a pollution condition” at
a covered location.3 “Claim” in turn is defined as “the assertion of a legal right,
including but not limited to a government action(s), suits or other actions
alleging responsibility or liability on the part of the insured for. . . property
damage, or remediation costs as a result of pollution conditions to which this
insurance applies.” “Government action” is defined as “action taken or liability
imposed by any federal [or] state . . . government agency or body acting under
the authority of environmental laws.” The policy covers pollution conditions,
which it defines in relevant part as “the discharge, . . . dispersal, release, escape,
migration, or seepage of any . . . gaseous or thermal irritant, contaminant, or
pollutant . . . on, in, into, or upon. . . the atmosphere. . . .” “Property damage” is
defined to include, inter alia, “[n]atural resource damages,” which in turn is
expressly defined as including “injury to . . . air.” “Remediation costs” is defined
as “reasonable expenses incurred to investigate, quantify, monitor, mitigate,
abate, remove, dispose, treat, neutralize, or immobilize pollution conditions to
the extent required by environmental law.”

       3
         Internal quotation marks have been omitted from quotations of the policy throughout
this opinion.

                                             8
                                   No. 12-30651

      Reading all of these provisions together and giving them their plain
meaning, the underlying EPA suit includes allegations and prayers for relief
that could potentially result in covered remediation costs. Government agencies
acting under the authority of environmental laws allege that LaGen violated
those laws, resulting in increased emissions of pollutants into the atmosphere,
and seek to require LaGen to mitigate and remediate those emissions. The EPA
complaint clearly alleges a covered “pollution condition” at BCII when it asserts
that “significant amounts of NOx and SO2 pollution each year have been, and still
are being, released [from BCII] into the atmosphere.” The policy states that ILU
“agrees to pay . . . [c]laims, remediation costs, and associated legal defense
expenses” as a result of a pollution condition. “Claims” and “remediation costs”
are thus two bases for coverage under the policy. In addition, a covered “claim”
includes “government action(s) . . . alleging responsibility or liability on the part
of [LaGen] for. . . remediation costs as a result of” a pollution condition.
“Remediation costs” are thus unquestionably covered, whether they are the relief
sought by a claim or whether they are incurred independent of a claim, and ILU
agreed to pay “associated legal defense expenses” with regard to either situation.
“Remediation costs” are defined very broadly to include expenses incurred to
redress pollution in compliance with environmental law, including, inter alia,
costs associated with investigating, mitigating or abating pollution.           This
language providing coverage for remediation costs potentially covers the
multiple prayers for relief in the EPA complaint which seek to require LaGen to
mitigate, offset and remediate the alleged past pollution, including the requests
that the court “[o]rder the defendant to surrender emission allowances or credits
to offset and mitigate the illegal emissions,” and “[o]rder the defendant to take
other appropriate actions to remedy, mitigate, and offset the harm to public
health and the environment caused by the violations of the Clean Air Act
alleged....” These requests for mitigation, offsetting and remediation suggest a

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                                  No. 12-30651

reasonable possibility of coverage under the policy. See BP Air Conditioning,
871 N.E.2d at 1131. Because part of the suit is “potentially within the protection
purchased, the insurer is obligated to defend.” Id. (quoting Technicon Elecs.
Corp., 74 N.Y.2d at 73).
      At oral argument, counsel for LaGen clarified that LaGen was not
asserting that costs associated with installation of government mandated
equipment and other actions taken solely to bring the plant into compliance are
covered under the policy. However, contrary to ILU’s arguments, installation of
the required equipment and application for the required CAA permits are not
the only relief sought by the EPA, nor are they the only relief that could
eventually be ordered by a court to remediate, offset or mitigate the past
emissions. In addition to and distinct from installation of equipment and
application for permits, part of what the EPA complaint seeks is remediation of
past pollution, and under the clear definitions in the policy, costs associated with
that remediation could be covered by the policy. At oral argument, counsel for
ILU conceded that if LaGen engaged in voluntary action to remediate past
pollution, those costs would be covered by the terms of the policy. Nothing in the
plain language of the policy provides that those same costs are not covered if
they are done as a result of a lawsuit filed by a government enforcement agency.

      C.    Coverage for Injunctive Relief
      We also reject ILU’s argument that injunctive relief is excluded from
coverage by the Fines and Penalties exclusion.          The Fines and Penalties
provision excludes coverage for “Payment of criminal fines, criminal penalties,
punitive, exemplary or injunctive relief.” ILU argues that any costs associated
with injunctive relief ordered by a court in the underlying EPA suit are excluded
by the reference to “injunctive relief.” LaGen argues that in construing the term
“injunctive relief,” the term must be read according to the rule that “a series of

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                                    No. 12-30651

specific words describing things or concepts of a particular sort are used to
explain the meaning of a general one in the same series.” See 242-44 E. 77th St.,
LLC v. Greater New York Mut. Ins. Co., 815 N.Y.S.2d 507, 510 (N.Y. App. Div.
2006) (quoting Matter of Riefberg, 58 N.Y.2d 134, 141 (N.Y. 1983)); Metro. Life
Ins. Co. v. Noble Lowndes Int’l, Inc., 84 N.Y.2d 430, 438 (N.Y. 1994) (applying
this canon of construction to an exclusion in an insurance policy). Read in
context, LaGen argues that the exclusion covers only types of relief that are akin
to punitive fines and penalties, and cannot exclude coverage for all injunctive
relief.
          Under New York law, “policy exclusions are given a strict and narrow
construction, with any ambiguity resolved against the insurer.” Belt Painting
Corp. v. TIG Ins. Co., 795 N.E.2d 15, 17 (N.Y. 2003). “To negate coverage by
virtue of an exclusion, an insurer must establish that the exclusion is stated in
clear and unmistakable language, is subject to no other reasonable
interpretation, and applies in the particular case.” Cont’l Cas. Co. v. Rapid-Am.
Corp., 609 N.E.2d 506, 512 (N.Y. 1993); Belt Painting Corp., 795 N.E.2d at 17;
see Frontier Insulation, 690 N.E.2d at 868-69 (noting that insurer bears “heavy
burden” in negating coverage by an exclusion); Throgs Neck Bagels, Inc. v. GA
Ins. Co. of N.Y., 671 N.Y.S.2d 66, 71 (N.Y. App. Div. 1998) (holding that to
negate coverage under an exclusion, insurer must show that its construction is
the “only construction that [could] fairly be placed thereon”). Further, an
insurer may not construe a policy exclusion in a way that would “render the
underlying coverage nugatory in a host of cases where it would reasonably be
expected to apply.” Throgs Neck Bagels, 671 N.Y.S.2d at 70.
          Applying these standards, ILU cannot show that its interpretation of the
exclusion is the only possible reasonable construction, as it must do to negate
coverage. See Cont’l Cas. Co., 609 N.E.2d at 512. Reading the policy as a whole,
including construing the exclusion narrowly, see Belt Painting Corp., 795 N.E.2d

                                         11
                                   No. 12-30651

at 17, LaGen’s interpretation of the Fines and Penalties exclusion as applying
only to criminal and punitive fines and penalties is a reasonable reading of the
exclusion. Conversely, under ILU’s interpretation, the policy would illogically
provide coverage for “remediation costs” but would exclude coverage if that
remediation is required by a court order. Further, the term “environmental law”
is defined in the policy as including not only “any federal, state, [or] local laws”
governing liability for pollution, but also expressly includes “governmental,
judicial or administrative orders . . . governing the liability or responsibilities of
the insured with respect to pollution conditions.” The policy, then, expressly
provides that it covers remediation costs to mitigate pollution conditions to the
extent required by judicial and administrative orders. ILU’s interpretation of
the “injunctive relief” language of the exclusion as excluding costs associated
with all injunctive relief clearly and directly conflicts with these basic, express
terms of the policy.
      Further, if the Fines and Penalties exclusion is a complete bar for coverage
of costs associated with injunctive relief, the exception would potentially swallow
the coverage afforded by the policy. The policy would not cover claims under
major federal environmental statutes, such as the CAA and the Clean Water Act,
when they are being enforced by the EPA or state agencies seeking injunctive
relief to mitigate and remediate past pollution. Again, in New York, an insurer
may not construe a policy exclusion in a way that would “render the underlying
coverage nugatory in a host of cases where it would reasonably be expected to
apply.” Throgs Neck Bagels, 671 N.Y.S.2d at 70. Under ILU’s interpretation of
the Fines and Penalties exclusion, the policy would provide little coverage for
some of the major types of environmental law liability that a reasonable
policyholder would expect; thus, it must be rejected. See Thomas J. Lipton, Inc.
v. Liberty Mut. Ins. Co., 34 N.Y.2d 356, 361 (N.Y. 1974). The fact that the
remediation of past pollution sought by the EPA may result only in orders for

                                         12
                                  No. 12-30651

injunctive relief does not disturb our conclusion that the EPA’s claims in the
underlying suit could result in covered remediation costs.
      D.    The Timing of the Suit
      Lastly, ILU argues that it has no duty to defend because the claims were
“first made” when the EPA first issued the NOVs with regard to BCII, which was
before the effective date of the policy, rather than when the EPA filed suit.
      As we have said, when the terms of the policy are clear and unambiguous,
they should be given their plain meaning. Teichman, 663 N.E.2d at 630. The
policy language with regard to this issue is clear. The policy provides coverage
for claims or remediation costs as a result of pollution conditions “provided the
claim is first made, or the insured first discovers such pollution condition during
the policy period . . . .” The policy further states that, “Any pollution conditions
specifically referenced, or identified in documents listed, on the Schedule of
Known Conditions Endorsement are deemed to be first discovered during the
policy period.” It is not disputed that the NOVs concerning the pollution
condition at BCII were identified on the Schedule of Known Conditions
Endorsement. It is difficult to determine what the purpose of listing the NOVs
relating to BCII on the endorsement would be if not to include claims and
remediation costs relating to that known pollution condition within the policy’s
coverage. Thus, according to the plain language of the policy, the “pollution
condition” at BCII identified in the NOVs is “deemed to be first discovered
during the policy period” and potential remediation costs associated with that
pollution condition are covered by the policy.
      E.    Civil Penalties
      The parties also dispute whether the CAA civil penalties sought by the
EPA are covered by the policy. The district court held that the civil penalties are
potentially covered and found a duty to defend partly on that basis. ILU argues
that civil penalties, like punitive damages, cannot be indemnified under New

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                                  No. 12-30651

York law as a matter of public policy. LaGen argues first that Louisiana law
applies to this question, and second that civil penalties are insurable under New
York law.
      Because of the express choice of law provision in the policy, which provides
that “All matters arising hereunder relating to the validity, interpretation,
performance, and enforcement of this Policy shall be determined in accordance
with the law and practices of the State of New York,” we find that this issue is
governed by New York law. We are not persuaded by LaGen’s argument that
the language found in the Fines and Penalties exclusion, which provides that the
exclusion “will not apply to coverage for punitive damages where such coverage
is allowable by law” is a separate choice of law provision governing punitive
damages. The state cases cited by LaGen in support of this proposition did not
involve a general express choice of law provision, as the contract at issue does,
and are thus inapposite. See Int’l Surplus Lines Ins. Co. v. Pioneer Life Ins. Co.
of Illinois, 568 N.E.2d 9, 12 (Ill. 1990) (also noting that the relevant language
was “not contained” in an exclusion, but was included in a separate endorsement
extending the policy to punitive damages); United States Gypsum Co. v. Admiral
Ins. Co., 643 N.E.2d 1226, 1250-51 (Ill. Ct. App. 1994) (adopting the holding of
Int’l Surplus Lines).
      However, whether civil penalties can be indemnified by insurance appears
to be an unsettled question of New York state law. The New York Court of
Appeals has recognized “the continuing and unabated force of our public policy
precluding indemnification for punitive damages. . . .”        Zurich Ins. Co. v.
Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 319 (N.Y. 1994). It is not clear
whether New York law would distinguish between punitive damages and CAA
civil penalties in this context. See State v. Travelers Indem. Co. of Rhode Island,
508 N.Y.S.2d 698, 701 (N.Y. App. Div. 1986) (distinguishing civil penalties and
strict liability damages from punitive damages); Zurich Ins. Co., 84 N.Y.2d at

                                        14
                                  No. 12-30651

316-17 (defining when New York considers damages to be “punitive”); State v.
INA Underwriters Ins. Co., 507 N.Y.S.2d 112, 115 (N.Y. Sup. Ct. 1986) (noting
that an insurer could not be directly liable for civil penalties under New York oil
spill law, but might be liable for indemnification according to the terms of an
insurance policy).
       We have already held that there is a duty to defend because the EPA’s
and LDEQ’s claims may potentially result in covered remediation costs. New
York law provides that if any claim in an action is potentially covered, the
insurer must defend the entire suit. See Frontier Insulation, 690 N.E.2d at 869.
Because we find that ILU has a duty to defend on other grounds, we decline to
decide on interlocutory appeal whether New York law allows indemnification for
CAA civil penalties.

                                III. Conclusion
      For the above-stated reasons, we AFFIRM the district court’s holding that
under the policy ILU has a duty to defend LaGen in the underlying EPA and
LDEQ suit and REMAND for further proceedings consistent with this opinion.
ILU’s motion to dismiss LaGen’s cross-appeal is DENIED as moot.

                                        15