## Facts

- Rohm and Haas acquired a manufacturing facility in 1964 and soon learned the site was extensively contaminated with arsenic in soil and groundwater.
- Rohm notified governmental authorities and participated in remediation while continuing operations at the site.
- Rohm added the facility to existing primary CGL coverage and later purchased excess liability policies from multiple insurers.
- Rohm disclosed the contamination to its broker and primary carrier, but did not disclose it to the excess insurers when procuring excess coverage.
- Rohm sold the facility in 1978.
- After enactment of CERCLA, the EPA identified Rohm as a potentially responsible party for approximately $21 million in cleanup costs.
- In 1988, Rohm sought coverage under the excess policies for the environmental liabilities; the excess insurers denied coverage, asserting known-loss, fraudulent procurement, and late notice.

## Issues

1. Whether the known-loss (loss-in-progress) doctrine barred coverage because Rohm knew of contamination and a substantial probability of liability when it purchased excess insurance.
2. Whether the excess policies were voidable for fraudulent misrepresentation or concealment of material pollution facts, made with intent to deceive.
3. Whether Rohm’s delay in notifying excess insurers violated notice conditions and prejudiced the insurers, barring coverage.

## Decision

- The Supreme Court of Pennsylvania affirmed the intermediate appellate court and reinstated the jury’s verdict for the insurers.
- The court held JNOV for Rohm was improper because the evidence supported submitting known-loss, fraud, and late notice to the jury.
- The court concluded the insurers had no coverage obligation under the excess policies for the environmental liabilities at issue.

## Legal Principles

- Insurance covers fortuitous risks; coverage may be barred where, at policy inception, the insured knows of an ongoing loss or faces a substantial probability of liability (known-loss doctrine).
- The absence of a later-enacted statutory liability scheme does not preclude known-loss where the insured already knows of serious contamination reasonably likely to lead to liability or cleanup obligations.
- An insurer may avoid coverage for fraudulent procurement where the insured intentionally misrepresents or conceals a material fact, the fact is material to underwriting or pricing, and the concealment is made with intent to deceive; omission can constitute a misrepresentation.
- Policy notice provisions requiring prompt notice may bar coverage where the insured’s delay is unreasonable and prejudices the insurer’s ability to investigate or participate in remediation, settlement, or defense decisions.
- JNOV is inappropriate where the verdict winner has evidence supporting reasonable inferences for the jury on contested factual questions; courts may not reweigh credibility or evidence.

## Conclusion

The court reinstated the jury’s finding that Rohm’s pre-policy knowledge of extensive contamination, intentional nondisclosure to excess insurers, and delayed notice supported known-loss, fraud, and late-notice defenses, defeating excess coverage for the cleanup liabilities.


Rohm & Haas Co. v. Cont’l Cas. Co., 781 A.2d 1172 (Pa. 2001)