A decades-old dispute over environmental cleanup coverage between Century Indemnity Company and Brooklyn Union Gas Company took another turn on June 5, 2025, when New York’s Appellate Division, First Department partially overturned a jury verdict in favor of the utility company. The court ordered a new trial - limited to the issues of notice and the duty to investigate - continuing one of the insurance industry’s longest-running coverage battles related to historic industrial pollution.
At the center of the dispute are three former manufactured gas plant (MGP) sites - Fulton (1880–1928), Citizens (1860–1963), and Metropolitan (1872–1928) - that Brooklyn Union once operated along Brooklyn’s Gowanus Canal. The plants, no longer in use, left behind contamination that the New York State Department of Environmental Protection and the US Environmental Protection Agency ordered Brooklyn Union to address in the early to mid-2000s. Those orders triggered a complex insurance fight over whether Brooklyn Union provided timely notice under its excess liability policies with Century Indemnity.
Century had issued six one-year excess liability policies to Brooklyn Union between 1941 and 1969, each with a $100,000 self-insured retention and renewed annually. Four of those policies required notice “[u]pon the happening of an occurrence or accident that appears reasonably likely to involve liability on the part of [defendant]” (an objective standard). The other two required notice “upon [defendant] learning of any occurrence which in its judgment is likely to result in a claim in excess of the retained limit” (a subjective standard).
In January 1993, New York City issued a notice of intent to sue Brooklyn Union regarding coal tar contamination at the Coney Island MGP site - which is not at issue in this case. One month later, the utility notified Century about occurrences at the three Gowanus sites. Between 2002 and 2005, the company received formal remediation orders for those sites, with expected costs far exceeding the $100,000 retention amounts.
Century filed suit in 2001 seeking a declaration that it had properly disclaimed coverage based on late notice. Brooklyn Union countersued to compel coverage. The dispute has since involved extensive motion practice and two prior appeals. In 2009, the First Department upheld the denial of Century’s motion for summary judgment on late notice, citing unresolved questions, including whether Brooklyn Union considered pro rata allocation in its analysis of whether the cleanup might trigger excess coverage before February 1993.
In 2019, the court confirmed that losses from long-term, continuous contamination should be allocated pro rata across the policy periods, in line with Consolidated Edison Co. of New York v Allstate Ins. Co., 98 NY2d 208. It also found ambiguity as to whether per-occurrence limits in multi-year policies or renewals applied annually or across the entire term, and denied summary judgment to Century on that issue.
Following a 2022 trial, the jury found for Brooklyn Union, concluding that excess coverage was available and that Century’s defenses - including untimely notice - lacked merit. On appeal, Century argued that the trial court erred by instructing the jury to apply pro rata allocation to damages and retention amounts even though there was no evidence that Brooklyn Union actually relied on such a calculation in its 1993 notice decision. The appellate court agreed, ruling that the jury should have considered all relevant factors in determining whether excess coverage was reasonably likely to be implicated.
The court also held that the jury should have been allowed to decide whether Brooklyn Union was on inquiry notice and whether it acted appropriately in investigating the occurrences - an issue the trial court should not have decided as a matter of law.
The decision rejected Century’s argument against the equal apportionment of Gowanus Canal cleanup costs among the three sites, pointing out that regulators themselves would apportion the costs equally. The court also declined to apply the doctrine of contra proferentem to resolve ambiguity in the per-occurrence limits, citing Brooklyn Union’s sophistication. The company, the court noted, had a large in-house insurance department, handled dozens of claims monthly, self-insured for large amounts, and retained legal and brokerage support.
The court further concluded that, given the remand, plaintiff’s objections to the exclusion of expert testimony were academic.
The original action, which began in 2001, involved significant commercial policies and environmental liabilities.
While much of the jury verdict remains intact, the appellate ruling ensures that the question of whether Brooklyn Union provided timely notice - and fulfilled any duty to investigate - will be re-examined. The outcome will continue to be closely watched by insurers and reinsurers handling legacy pollution and long-tail liability exposures.
