Zuckerman Spaeder Clients Defeat Claim for Insurance Coverage for Liability in Public Nuisance Case
Zuckerman Spaeder achieved a significant victory for Certain Underwriters at Lloyd’s and three other insurer clients in an insurance coverage action in which ConAgra sought over $100 million for its settlement of a lead paint public nuisance claim.
On February 26, 2020, the San Francisco Superior Court granted summary judgment for Zuckerman Spaeder’s clients and the 47 other insurers named in the suit. The court agreed that ConAgra’s claim for coverage was barred under California law prohibiting coverage for losses caused by the willful act of the insured. Zuckerman Spaeder had a lead role in the briefing and argued the winning point at the summary judgment hearing.
ConAgra and two other lead paint manufacturers, Sherwin Williams and NL Industries, previously were held liable for the public nuisance claim, brought in California state court by Santa Clara County and other governmental entities (the “Santa Clara Action”). The trial court held the companies liable for causing a public nuisance by promoting lead paint for indoor use, ordered the companies to pay into a fund to abate lead in homes. The trial court’s liability findings were affirmed on appeal and the lead paint companies’ petitions to the California and United States Supreme Courts were denied. The lead paint companies then settled with the governmental entities for $305 million.
In the coverage case, ConAgra argued that its insurers were required to pay for its share of the settlement because it could not be held responsible for the conduct of its predecessor, W.P. Fuller and Co., which made and promoted the paint, and that it did not know that Fuller’s promotions would succeed and cause harm to children. The San Francisco Superior Court rejected these arguments, ruling that coverage was barred because Fuller had “actual knowledge that lead paint on residential interior surfaces would pose a public health hazard” when it promoted the paint for indoor use, and thus coverage for the resulting liability was uninsurable under California law.
Zuckerman Spaeder also represents insurers in similar coverage cases involving Sherwin Williams’ and NL Industries’ liability and settlement of the Santa Clara Action. Those actions are pending in state courts in Ohio and New York. Summary judgment motions have been briefed and argued and are pending decision.
The Zuckerman Spaeder team is led by partners Carl Kravitz and Jason Knott.