Certified subsequently pleaded guilty to the criminal charge of negligently releasing into the ambient air a hazardous air pollutant, i.e., asbestos, thereby negligently placing other persons in imminent danger of death or serious bodily injury in violation of 42 U.S.C. § 7413(c)(4).

Certified was sentenced to a probationary period and agreed to pay restitution.

During the criminal action, Certified sought a defense and coverage under insurance policies issued by American Safety Casualty Insurance Company and Indian Harbor Insurance Company.

The insurers disclaimed any duty to defend or indemnify Certified in the criminal action.

After the criminal action concluded, Certified initiated a declaratory judgment and breach of contract action seeking to recover its defense costs.

The trial court declared that the insurers had no obligation to defend or indemnify, and Certified appealed.

The American Safety Policy

The American Safety policy included:

Environmental Consultant's Professional Liability 

coverage, which provided that American Safety had the right and duty to defend Certified against:

any "claim" … seeking . . . covered damages. 

It defined claim as:

any written demand, notice, request for defense, request for indemnity, or other legal or equitable proceeding against [Certified]

for

covered damages 

The Indian Harbor policy included:

Professional Liability

coverage, which required Indian Harbor to defend Certified:

against any suit

, defined as:

a civil proceeding. 

Its

Contractors Pollution Legal Liability

coverage required Indian Harbor to pay:

those sums that [Certified] becomes legally obligated to pay as compensatory damages . . . as a result of a claim' first made against [Certified] 

and provided that Indian Harbor had the duty to defend Certified:

against any "suit" seeking those compensatory damages. 

The appellate court affirmed.

In its decision, the appellate court ruled that the American Safety policy, governed by Georgia law, was "unambiguous" and did not require American Safety to provide a defense with respect to the criminal action under the environmental professional liability coverage. The appellate court rejected Certified's contention that its "claim" was its demand requesting a defense and indemnity from American Safety for its negligent acts and that the "covered damages" were its attorneys' fees and other costs it incurred in the criminal action.

The appellate court ruled that Certified's claim against American Safety was not a "claim" within the meaning of the policy inasmuch as it was not made "against" Certified but, rather, was made "by" Certified.

The appellate court reached the same result under the Indian Harbor policy, which was governed by New York law, holding that the Indian Harbor policy was "unambiguous" and did not require Indian Harbor to provide a defense to the criminal action under either the professional liability or pollution liability coverage.

The appellate court reasoned that because there was no civil proceeding against Certified, there was no "suit" and, therefore, Indian Harbor had no duty to defend under the professional liability coverage.

Moreover, the appellate court concluded, because the pollution liability coverage also provided that Indian Harbor had a duty to defend Certified against a "suit" seeking compensatory damages, and because there was no suit against Certified, Indian Harbor also had no duty to provide a defense under that coverage.

The case is Certified Environmental Services, Inc. v. Endurance American Ins. Co., No. 1510 CA 17-01125 (N.Y. App.Div. 4th Dep't Feb. 2, 2018). Attorneys involved include: CAMARDO LAW FIRM, P.C., AUBURN (KEVIN M. COX OF COUNSEL), FOR PLAINTIFF-APPELLANT. TRAUB LIEBERMAN STRAUS & SHREWSBERRY LLP, HAWTHORNE (BRIAN M. MARGOLIES OF COUNSEL), FOR DEFENDANTS-RESPONDENTS.