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Sunoco subsidiary sues insurer for refusing to cover climate-change litigation

An indicator of a Sunoco gas station, damaged by Hurricane Matthew, sometimes appears in Melbourne, Florida, U.S. October 7, 2016. REUTERS/Henry Romero

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  • Summary
  • Lawyers
  • Related documents
  • Question of coverage is basically untested in climate-change cases
  • AIGs National Union said pollution exclusion nixed Aloha Petroleum’s claim
  • Aloha says exclusion cant eliminate explicit coverage for damage from products

(Reuters) – Sunoco subsidiary Aloha Petroleum is suing its former liability insurer in federal court in Hawaii, saying the business is shirking its duty to guard Aloha contrary to the climate-change cases that local governments in Honolulu and Maui have filed against Big Oil companies.

Based on the complaint filed Wednesday by attorneys at Cades Schutte, AIGs National Union Fire INSURANCE PROVIDER of Pittsburgh includes a duty to guard and indemnify Aloha under Commercial General Liability policies issued between 1978 and 1985, but denied any prospect of coverage in line with the pollution exclusion.

Up to now, Aloha has incurred a lot more than $880,000 in defense costs regarding the the Climate Change lawsuits, and Aloha expects that it’ll continue steadily to incur significant additional defense costs, because the litigation progresses, the complaint says.

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Alohas attorneys and representatives of AIG didn’t immediately react to requests for touch upon Friday.

The case is of particular interest since there is a paucity of precedent on if the pollution exclusion pertains to greenhouse gases which are in charge of climate change.

In a presentation this past year for the Defense Research Institute, Larry Mason of Goldberg Segalla noted that the Virginia Supreme Court discovered that the exclusion applied in a 2012 climate-change case, but its decision has been often criticized and really should be narrowly construed.

Also this past year, Seth Lamden, now with Blank Rome, noted that state appellate courts in Illinois and a federal court in federal court in Wisconsin have discovered the exclusion ambiguous as put on skin tightening and specifically, or even to legally permitted emissions from lawful products. Lamden said within an email Friday that hes unaware of any newer decisions.

Alohas complaint supplies a separate reason the exclusion shouldn’t apply: it alleges that the policy specifically provides coverage for products hazard, which include bodily injury or property damage arising from the named insureds products.

Notwithstanding these express contractual obligations, National Union won’t provide defense or indemnity coveragewith respect to the climate change lawsuits, the complaint said.

In the underlying lawsuits, the neighborhood governments allege that Sunoco, Shell, ExxonMobil along with other big oil companies knew about climate-related impacts from burning fossil fuels but deliberately hid them from the general public.

Similar suits are pending by states and local governments in the united states, including actions by hawaii of Rhode Island, NEW YORK, Baltimore and cities and counties in California and Colorado.

The case is Aloha Petroleum Ltd. v. National Union Fire Insurance Co. of Pittsburgh PA, U.S. District Court for the District of Hawaii, No. 22-0372.

For Aloha Petroleum: Michael Heihre and Michi Momose of Cades Schutte

For National Union: No attorney information available

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Our Standards: The Thomson Reuters Trust Principles.

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