The Ninth Circuit Court of Appeals in Chubb Custom Insurance Co. v. Space Systems/Loral, Inc., 710 F.3d 946 (9^th Cir. 2013), affirmed the dismissal of a CERCLA (Comprehensive Environmental Response, Compensation and Liability Act) cost recovery action by an insurer against parties alleged to be responsible for the contamination. The insurer brought its claim under both §107 and §112 of CERCLA, which address cost recovery and subrogation claims.  The court explained that there was no right of subrogation because the insured was not a “claimant” as that term is used in CERCLA and §112 permits subrogation claims only on behalf of persons who have stated a CERCLA claim.  The court further held that an insurer is limited to bringing a subrogation claim pursuant to §112 and cannot use §107 to avoid the requirements of §112.

In discussing how the CERCLA subrogation provision works and how the provision relates to common law rules of subrogation, the court provided guidance to future insurers regarding how to avoid the problem that resulted in dismissal of this claim.  In response to plaintiff’s argument that allowing the claim to go forward would be consistent with the purposes of CERCLA, particularly, the goal of requiring responsible parties to pay for the cleanup, the court argued that the insured is in a better position to enforce such claims and insurers should require insureds to pursue claims against responsible parties.