Case study

Beck Redden Helps Put Texas in a National Majority on CGL Interpretation in CERCLA Context

July 8, 2015 Case Study

McGinnes Industrial Maintenance Corp. v. Phoenix Insurance Co.

On June 26, 2015, the Supreme Court of Texas put the Lone Star State in the national majority with respect to the word “suit” in CGL policies. Most states to decide the question have held that an insurer cannot escape its contractual responsibilities by claiming that an EPA action is technically administrative and thus not really a suit. But California and a few other states in the minority take the opposite position. In McGinnes Industrial Maintenance Corp. v. Phoenix Insurance Co., Texas rejected the California view and sided with the strong majority.

This case came to the Supreme Court of Texas by certified question from the Fifth Circuit. The issue has divided the various states, but Texas had not staked out a position on the matter. Beck Redden appellate partners David Gunn and Russell Post presented the oral argument twice – first to a panel of the Fifth Circuit, and then after certification to all nine Justices of the Supreme Court of Texas. They had assistance on the briefing from Don Kidd of the Perdue & Kidd firm in Houston and Jodi Spencer Johnson of the Thacker Martinsek firm in Cleveland.

Chief Justice Hecht wrote the majority opinion: “The United States Court of Appeals for the Fifth Circuit asks whether ‘suit’ includes superfund cleanup proceedings conducted by the Environmental Protection Agency (the ‘EPA’) under the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (‘CERCLA’). We agree with the overwhelming majority of jurisdictions to have considered the issue that the answer is yes.”

David M. Gunn 713.951.6290
Russell S. Post 713.951.6292