A new development, of sorts, in development of state law on whether a PRP letter constitutes a “suit” under legacy long-tail CGL policies: the Fifth Circuit has certified the question over to the Texas Supreme Court in McGinnes v. Phoenix Insurance. Texas remains as one of the few states not to have addressed the question. Most states have answered in the affirmative; a few have said “no.” Indeed the federal district court in McGinnes appears to have sided with the minority, holding that because CERCLA did not exist when the policies were issued, the parties could not have intended that the definition of “suit” would be broad enough to encompass administrative actions like a PRP letter. That approach begs the question whether a policy should be interpreted based on modern “lay” understandings of terms, or based on lay understanding at the time of the policy. Most courts (including Oregon) interpret GL policies — which, after all, never “expire” — based on current versions of the dictionary. But the way the Fifth Circuit phrased the insurer’s view on Texas law suggests that Texas law may be different, or at least may be open on that point. As a very large state with a lot of industrial activity, Texas cases tend to get cited a lot and can have an outsized impact on insurance industry litigation strategy nationally. The Texas Supreme Court is not required to accept the referral, so we will follow this to see what develops.
Update: The Texas Supreme Court has accepted the certified questions.