In a landmark decision affecting environmental insurance claims, the Oregon Supreme Court clarified the scope of the “contribution bar” under the Oregon Environmental Cleanup Assistance Act (OECAA). In Continental Casualty Co. v. Argonaut Ins. Co., 373 Or. 389 (2025), the Court held that OECAA’s good-faith settlement bar applies only if a settlement resolves the same environmental claim for which the targeted insurer seeks contribution.
For policyholders, the decision preserves flexibility to settle with co-insurers on distinct claims without foreclosing a targeted insurer’s contribution rights. But this decision may also lead to more prolonged contribution litigation—an outcome the legislature aimed to minimize when enacting OECAA.
Why It Matters to Policyholders
After Schnitzer Steel secured a $15 million federal judgment for unreimbursed defense costs from Continental for environmental liabilities related to the Portland Harbor Superfund Site (PHSS), Wausau entered into a subsequent settlement with Schnitzer covering additional liabilities related to PHSS. Wausau argued that this later settlement barred Continental’s contribution claim under ORS 465.480(4)(a), even though Continental had already filed suit to recover its share of paid defense costs.
The Supreme Court disagreed, holding that the contribution bar applies only when a settlement covers the same environmental claim that the targeted insurer already paid. Because Schnitzer’s earlier judgment against Continental had already resolved its defense cost claim against Continental, Continental’s contribution claim could not be extinguished by Wausau’s later, broader settlement with Schnitzer.
By interpreting “the environmental claim” to refer to the specific claim paid by the targeted insurer—not any broader or different claim—the Court struck a balance between OECAA’s goal of ensuring prompt, full coverage and preserving targeted insurers’ rights to contribution.
Key Takeaways
- Contribution rights remain intact unless a co-insurer’s settlement clearly resolves “the environmental claim” that the targeted insurer has already paid.
- General or broad settlements—even if made in good faith—do not bar contribution unless they unambiguously cover the same, already-paid claim.
- Policyholders retain flexibility to settle distinct aspects of their claims (e.g., indemnity or future defense costs) without impairing the targeted insurer’s contribution rights.
- Because co-insurers face lingering exposure despite good-faith payments, the decision may deter early or global settlements and lead to prolonged contribution litigation.
- Ambiguous settlement language may inadvertently preserve contribution exposure and create friction between insurers, potentially drawing policyholders into collateral disputes.
- Precise claim characterization and clear documentation in settlement agreements are critical to avoid post-settlement litigation and preserve the benefits of good-faith resolutions.
Read the full article to explore the court’s detailed reasoning and what it means for environmental insurance coverage in Oregon.