In a decision issued April 10, 2025, the Oregon Supreme Court affirmed that Continental Casualty Company retains the right to seek contribution from another insurer for environmental cleanup defense costs it paid, even after the co-insurer entered into a settlement with the insured. The court’s ruling in Continental Casualty Co. v. Argonaut Insurance Co., 373 Or 389 (2025), settles a significant dispute over how Oregon’s Environmental Cleanup Assistance Act (OECAA) governs contribution rights in multi-insurer environmental claims.
The litigation arose from the long-running cleanup of the Portland Harbor Superfund Site, a 10-mile stretch of the Willamette River designated by the US Environmental Protection Agency under CERCLA. Among the parties named as potentially responsible for the contamination was Schnitzer Steel Industries, Inc., and its affiliate Schnitzer Investment Corporation.
Schnitzer sought coverage from several insurers that had issued comprehensive general liability (CGL) policies over the years. These included:
The insurers agreed to a cost-sharing arrangement, with Continental covering 70 percent of Schnitzer’s defense costs, Wausau 20 percent, and Century 10 percent. Continental took the lead on defense.
In 2010, a dispute over attorney billing rates prompted Schnitzer to sue Continental in federal court. Schnitzer invoked ORS 465.480(3)(b), a provision in the OECAA that allows an insured to designate one insurer—the “targeted insurer”—to respond to the entire claim, regardless of other coverage. Schnitzer targeted Continental and sought full reimbursement of defense costs, including higher rates charged by its selected counsel.
After trial, the federal court entered judgment for Schnitzer, awarding approximately $8.6 million in unpaid defense costs, along with $2.8 million in prejudgment interest and $3.75 million in attorney fees—totaling over $15 million. The court also declared that Continental was responsible for 100 percent of Schnitzer’s defense costs going forward, subject to policy limits. The Ninth Circuit affirmed in 2016. Continental completed its payments by 2018.
Later, in 2016, Continental filed a contribution action under ORS 465.480(4)(a) against Wausau and Century, seeking reimbursement for the defense costs it had paid as Schnitzer’s targeted insurer.
In 2019, while the contribution action was pending, Wausau settled separately with Schnitzer, releasing Wausau from liability for both past and future defense and indemnity obligations related to the Portland Harbor matter. The settlement was expressly contingent on Wausau securing judicial dismissal of Continental’s contribution claim.
Wausau argued that ORS 465.480(4)(a) barred contribution, which prohibits such claims against any insurer that has entered into a good-faith settlement agreement with the insured regarding the environmental claim.
The trial court denied Wausau’s motion to dismiss, finding that Schnitzer had no remaining claim for the defense costs Continental had already paid and which had been reduced to a federal judgment. Because those costs were no longer part of any “claim” Schnitzer could settle, the court ruled that the settlement with Wausau could not bar Continental’s contribution rights. It later ordered Wausau to pay Continental approximately $3.6 million in legal fees and interest.
Wausau appealed. The Oregon Court of Appeals reversed, interpreting “the environmental claim” broadly to include all aspects of Schnitzer’s environmental liability—defense and indemnity. It found the settlement was “regarding the environmental claim” under the statute and that it therefore barred Continental’s contribution action.
But in a unanimous en banc decision authored by Justice Garrett, the Oregon Supreme Court reversed the Court of Appeals, reinstating the trial court’s judgment in Continental’s favor.
The high court emphasized the statutory language—specifically the definite article “the” in “the environmental claim.” That phrase, it held, refers to the specific claim that has already been paid by the insurer seeking contribution—in this case, the defense costs Continental had covered pursuant to the federal judgment.
The court held that Schnitzer had no remaining claim for those costs to settle with Wausau, and that a settlement regarding other, different claims—such as indemnity or future defense—did not extinguish Continental’s statutory contribution rights for the costs already paid.
“Wausau has not ‘entered into a settlement agreement with the insured regarding the environmental claim,’ and Continental’s right to contribution is not barred,” the court concluded.
The justices did not decide whether a settlement can bar contribution when reached before a contribution claim is filed. But they held clearly that when a claim has already been paid and reduced to judgment, a subsequent settlement between the insured and another insurer cannot retroactively eliminate contribution rights for that portion of the claim.
The decision preserves the intended balance of Oregon’s OECAA: encouraging prompt payments by allowing policyholders to target a single insurer, while protecting that insurer’s right to seek equitable contribution from other potentially liable carriers. It also provides key guidance to insurers navigating the strategic and financial implications of settlement and litigation in environmental claims.
For insurers active in the long-tail claims space—especially those managing cleanup-related exposures under legacy CGL policies—the ruling reaffirms a fundamental protection: pay now, and your statutory right to share the burden with other carriers won't vanish simply because of a post-payment deal between the insured and another insurer.
