A.Y. McDonald Industries, Inc. v. Insurance Company of North America

A.Y. McDonald Industries, Inc. (A.Y. McDonald) (plaintiff) manufactured brass valves at its brass foundry until 1983. When the manufacturing process was completed, A.Y. McDonald would dump brass residue and sand on the foundry site. Brass residue contains lead. A.Y. McDonald entered a consent order with the Environmental Protection Agency (EPA) under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). Under CERCLA, the EPA can issue an administrative order requiring a responsible party to clean up hazardous-waste sites. Under the consent order, A.Y. McDonald was required to remediate environmental damages caused by brass manufacture. Due to these remedial actions, A.Y. McDonald incurred ongoing expenses. A.Y. McDonald filed a petition, seeking a declaration that the costs associated with remediation and a civil penalty assessed against A.Y. McDonald would be covered by A.Y. McDonald’s comprehensive general-liability (CGL) insurance policies with Insurance Company of North America (ICN) (defendant) and other insurance companies (defendants). A.Y. McDonald’s CGL policies required the defendants to cover “all sums which the insured shall become legally obligated to pay as damages because of . . . property damage.” The question of whether the response costs and civil penalty incurred by A.Y. McDonald were covered under the CGL policies was certified by the federal district court to the Supreme Court of Iowa.