Today the trial court judge in the long-running environmental coverage contribution battle between Lloyd’s and several other carriers for Zidell Marine rejected a constitutional challenge mounted by Lloyd’s to one of the newest provisions of the Oregon Environmental Cleanup Assistance Act (OECAA). This case has had many zigs and zags but to briefly sum up, Zidell sued its carriers for failing to defend it in a cleanup action brought by the state, both for defense costs and for the cost of the cleanup. Several of the carriers including Beneficial settled with Zidell. Lloyd’s did not. Lloyd’s later was tagged in the coverage action (which itself has gone on for years with multiple trips up the appellate chain) for millions of dollars; Lloyd’s then sued Beneficial and others arguing that those carriers did not contribute to the overall “pie” in proportion to their coverage. In June of this year new amendments to the OECAA went into effect. One provision of the amendments provides that a carrier that has settled with a policyholder in “good faith” is protected from a contribution suit by other, non-settling carriers. Beneficial and the other defendants in the Lloyd’s contribution case filed a motion to dismiss arguing that under that new provision, Lloyd’s has no cause of action. Lloyd’s in turn argued, among other things, that a) the statute does not apply if there has been a “final judgment” in the underlying coverage case; b) the statute is unconstitutional; c) there are questions of fact about whether the Beneficial et al. settlements were in “good faith.” In today’s decision the trial court held that there has been no “final judgment” in the coverage case between Zidell and Lloyd’s, meaning that the statute applies, and rejected the constitutional argument. She held, however, that there are some questions of fact and allowed discovery into whether the settlements were in good faith. More appeals appear inevitable, so stay tuned. However, this appears to be the first enforcement by a trial court of the new provisions of the OECAA, and the first rejection of a constitutional challenge to one of the new provisions, and it’s certainly notable for that alone.
