[Rantman] Insurance case ruling: CO2 emissions warming is not accidental.

[rPauli]

Virginia court ruling today says carbon liability insurers do not have 
to pay for known consequences of carbon emissions.

Congress failed to set an energy policy that addresses carbon emissions, 
and the courts are very slow to moving on the issue directly.

But the insurance industry may be able to make something happen: they 
just got a ruling saying they are not required to pay the considerable 
legal fees to help a coal company defend a climate nuisance lawsuit. - 
the AES coal company wanted their insurance company to pay legal fees 
for defending the suit Kivalina v. Exxon, et al. (Global warming from 
emissions? It was an accident!)

The coal company was not accidentally releasing co2 emissions leading to 
global warming. This was known and foreseeable -- and the insurer - 
which was sued to indemnify against liability -- did not have to pay. 
"...utility was intentionally emitting carbon dioxide and knew that it 
contributed to global warming"

This may mean the cost of defending against future lawsuits will be 
carried by the carbon energy companies directly - this may concern 
stockholders in energy companies.

The 9th Circuit is due to rule on Kivalia v. ExxonMobile et, al. -- that 
emissions from 32 coal, gas and oil companies have contributed to rising 
sea levels that endanger the Alaskan Native-American village of Kivalina.

Minor but significant.

RP

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http://www.mckennalong.com/news-advisories-2604.html

AES Corp v. Steadfast
September 16, 2011

In a major victory for insurers, the Virginia Supreme Court held that 
insurance companies do not have to defend utility companies accused of 
intentional wrongdoing in connection with climate change liability 
lawsuits. In AES Corp. v. Steadfast Insurance Co.,[1] the court 
concluded that the underlying climate change claims in the Kivalina 
lawsuit did not constitute an “occurrence” under AES’ commercial general 
liability (CGL) policies.

----

The Kivalina plaintiffs, an Inupiat village located off the coast of 
Alaska, allege that greenhouse gas emissions from AES and other oil, 
energy, and utility companies have contributed to climate change which, 
in turn, has eroded the village’s coastline and rendered it 
uninhabitable. The complaint alleges that AES intentionally emits 
millions of tons of carbon dioxide and thereby “intentionally or 
negligently” created a nuisance, global warming. Kivalina further 
asserts that AES “knew or should have known” that its activities would 
result in the environmental harm to Kivalina.

After being sued, AES asked its insurer, Steadfast Insurance Company, to 
defend. Steadfast refused and thereafter filed a declaratory judgment 
action in Virginia (where AES is headquartered). Steadfast denied 
coverage based on three grounds: (1) the Kivalina complaint did not 
allege “property damage” caused by an “occurrence” under its policies; 
(2) the alleged injuries arose before Steadfast’s coverage incepted; and 
(3) the GHG emissions alleged inKivalina were “pollutants” excluded from 
coverage by virtue of the policies’ pollution exclusion.


-----

Implications for Companies and Insurers with Potential Climate 
Change-Related Tort Exposure:

1. Notwithstanding the favorable outcome for the insurer, the AES 
decision may not be dispositive in coverage cases filed in less 
favorable jurisdictions for insurers or in cases where the allegations 
pled and/or the language of the relevant insuring agreements differs 
from those at issue in AES. Company Executives and Risk Managers are 
advised to seek specific advice from their brokers and counsel regarding 
whether their individual policies afford coverage.

2. As additional climate change cases are filed, either under state tort 
law or based on other legal theories that may emerge, new insurance 
coverage cases may follow in other jurisdictions involving different 
legal standards.

3. Climate change litigation (both liability and related coverage 
litigation) is likely to continue to evolve as claimants and interest 
groups respond and adapt to court rulings like AES.

4. Companies relying on the availability of insurance proceeds to defray 
costs associated with climate litigation may have to consider the 
implications on reporting obligations.

also Sept 16, 2011 NYTimes reports:
Va. Court Rules That Insurance Doesn't Cover Global Warming Claims
New York Times
The Virginia Supreme Court ruled in the closely watched case that 
Steadfast Insurance does not have a duty to defend AES Corp., a utility 
which is a defendant in a major climate case, Kivalina v. Exxon Mobil 
Corp., et al., which is currently before the ...
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