Insurance Companies Liable for Acid Pits

A claim filed by the state of California in 1993 against seven insurance companies recently was decided in favor of the state. The case, described by a federal court as the most complicated environmental cleanup in the world, involved a toxic waste site referred to as the Stringfellow Acid Pits, located in southern California.

In its decision, the court stated that the insurance companies were liable for the costs of cleanup. The ruling could lead to payouts of $50 million or more by the insurance companies involved. They include CNA, Wausau, Yosemite, Horace Mann (ACE), Continental Insurance, Continental Casualty, and Stonebridge.

Lawyers for the insurance companies argued that the state failed to disclose the condition of the Stringfellow site in its entirety when the policies were written. They contended that the state knew the site would cause environmental problems when they took out the policies. The state countered by saying that it believed it was not liable because a private commercial firm was handling the site. Jurors sided with the state.

Several other insurance companies settled before or during the trial, including Lloyd's, OneBeacon, Chubb, AIG, St. Paul, TIG, Hartford, Unigard, Highlands, and Peerless. Together, they agreed to pay more than $120 million.

Used as a dumping ground for pesticides, solvents, and heavy metals from 1956 until 1972, Stringfellow was one of the first federally funded Superfund cleanup sites in the nation. It received its name from James Stringfellow, who operated the site while it was open.