Sunoco subsidiary sues insurer for refusing to cover climate change litigation

A sign of a Sunoco gas station, damaged by Hurricane Matthew, is seen in Melbourne, Florida, U.S. October 7, 2016. REUTERS/Henry Romero

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  • The issue of hedging is largely untested in climate change cases
  • AIG’s national union says pollution exclusion nullifies Aloha Petroleum’s claim
  • Aloha says exclusion cannot remove explicit ‘product’ damage coverage

(Reuters) – Aloha Petroleum, a subsidiary of Sunoco, is suing its former liability insurer in federal court in Hawaii, saying the company is evading its duty to defend Aloha against climate change cases that local governments in Honolulu and of Maui have filed against the big oil companies.

According to the lawsuit filed Wednesday by attorneys for Cades Schutte, AIG’s National Union Fire Insurance Company of Pittsburgh has a duty to defend and indemnify Aloha under commercial general liability policies issued between 1978 and 1985, but denied any hedging potential based on the exclusion of pollution. .

“To date, Aloha has incurred more than $880,000 in defense costs in the climate change lawsuits, and Aloha expects it to continue to incur significant additional defense costs as it continues. as the litigation progresses,” the complaint reads.

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Aloha’s attorneys and AIG representatives did not immediately respond to requests for comment on Friday.

The case is particularly interesting because there is little precedent on whether the pollution exclusion applies to greenhouse gases that are responsible for climate change.

In a presentation last year for the Defense Research Institute, Goldberg Segalla’s Larry Mason noted that the Virginia Supreme Court found the exclusion applied in a 2012 climate change case, but its decision was ” often criticised’ and should be interpreted restrictively.

Also last year, Seth Lamden, now with Blank Rome, noted that state appeals courts in Illinois and a federal court in Wisconsin found the exclusion ambiguous as it applied specifically to carbon dioxide. emissions or legally permitted emissions from legal products. Lamden said in an email Friday that he was not aware of any new decisions.

Aloha’s complaint offers a distinct reason why the exclusion should not apply: it alleges that the policy “specifically provides coverage for ‘product perils,’ which includes bodily injury or property damage resulting of the products of the named insured”.

“Notwithstanding these express contractual obligations, the Union Nationale declines to provide defense or indemnification coverage … with respect to climate change lawsuits,” the complaint states.

In the underlying lawsuits, local governments allege that Sunoco, Shell, ExxonMobil and other big oil companies knew about the climate-related impacts of burning fossil fuels, but deliberately hid them from the public.

Similar lawsuits are underway by states and local governments across the country, including state actions in Rhode Island, New York, Baltimore, and cities and counties in California and Colorado.

The case is Aloha Petroleum Ltd. vs. National Union Fire Insurance Co. of Pittsburgh PA, US District Court for the District of Hawaii, No. 22-0372.

For Aloha Petroleum: Michael Heihre and Michi Momose of Cades Schutte

For the national union: no information available on the lawyer

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