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Rohm and Haas Co. v. Continental Casualty Co.

781 A.2d 1172 (2001)

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Rohm and Haas Co. v. Continental Casualty Co.

Pennsylvania Supreme Court

781 A.2d 1172 (2001)

Facts

In 1964 Rohm and Haas Co. (Rohm) (plaintiff) purchased Whitmoyer Laboratories (Whitmoyer), a veterinary-pharmaceutical manufacturer. Rohm soon discovered Whitmoyer’s manufacturing process created arsenic waste as a byproduct and the site was extensively contaminated with arsenic. Rohm notified commonwealth authorities and participated in remedial measures but continued operations at Whitmoyer. Six months after purchasing Whitmoyer, Rohm added Whitmoyer to Rohm’s existing comprehensive general-liability insurance with Continental Casualty Co. (Continental) (defendant). Rohm told its insurance broker and the primary-coverage insurer at Continental about the arsenic contamination. Rohm purchased additional policies for excess coverage from Continental. The excess insurers did not request information about environmental pollution, nor did Rohm notify them about the arsenic contamination. Rohm became increasingly aware of the potential for liability, and Rohm took steps to prevent general public disclosure. In 1978 Rohm sold Whitmoyer. In 1980 the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) was enacted, imposing strict liability on all former owners of polluting facilities. The Environmental Protection Agency (EPA) notified Rohm of its liability for $21 million of Whitmoyer’s cleanup costs. In 1988 Rohm asserted a claim for those costs from the excess insurers at Continental. Continental denied the claim, and Rohm filed suit against Continental. At trial, Continental asserted that the contamination was material to its decision to issue excess coverage. No evidence was produced of a plan at Rohm to deceive Continental. The jury found for Continental, responding to a special interrogatory that Rohm intentionally failed to disclose material facts about Whitmoyer’s arsenic pollution when Rohm purchased the excess policies in a deliberate intent to deceive. The trial court entered judgment notwithstanding the verdict (JNOV) for Rohm. Continental appealed, and the superior court reversed. Rohm appealed.

Rule of Law

Issue

Holding and Reasoning (Flaherty, C.J.)

Dissent (Castille, J.)

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