Clarifying the Contribution Bar under ORS 465.480(4)(a): Settlement of the Same Environmental Claim Required to Extinguish Contribution Rights

Introduction

Continental Casualty Co. v. Argonaut Ins. Co., 373 Or 389 (2025), is a landmark decision of the Oregon Supreme Court refining how settlement agreements interact with contribution rights under the Oregon Environmental Cleanup Assistance Act (OECAA), ORS 465.475–465.484. The dispute arose after Continental Casualty Company (“Continental”), as the “targeted insurer,” paid millions of dollars in defense costs for its insured, Schnitzer Steel Industries, at the Portland Harbor Superfund Site. Continental then sought contribution from co-insurers, including Employers Insurance Company of Wausau (“Wausau”). Wausau had later entered into a settlement with Schnitzer, and argued that under ORS 465.480(4)(a) that settlement barred Continental’s right to contribution. The Supreme Court reversed the Court of Appeals and affirmed the trial court, holding that only a settlement “regarding the environmental claim” that Continental actually paid can extinguish its contribution rights.

Summary of the Judgment

The Supreme Court of Oregon, sitting en banc and writing through Justice Garrett, reversed the Court of Appeals and affirmed the trial court’s ruling that Wausau’s post-contribution-action settlement with Schnitzer did not bar Continental’s right to contribution. The court interpreted ORS 465.480(4)(a) to require that a settlement “regarding the environmental claim” must be of the same environmental claim that the targeted insurer has paid—here, the defense costs reduced to judgment and satisfied by Continental. Wausau’s settlement of Schnitzer’s remaining indemnity exposures and any future defense costs did not cover that specific claim, so Continental’s contribution suit could continue.

Analysis

Statutory Framework

• ORS 465.480(3)(a) (“all‐sums” provision): obliges each insurer to pay “all sums” for which it is liable under its policy, independent of other coverage.

• ORS 465.480(3)(b) (“target” election): allows an insured to select one CGL policy to respond to the entire environmental claim.

• ORS 465.480(4)(a): grants a targeted insurer the right to seek contribution “from any other insurer that is liable or potentially liable to the insured and that has not entered into a good-faith settlement agreement with the insured regarding the environmental claim.”

Precedents Cited

Allianz Global Risks v. ACE Property & Casualty Ins. Co. (367 Or 711): elucidated the OECAA’s purpose of freeing insureds from allocation disputes and shifting bad‐faith or uncooperative coverage disputes onto insurers through “all‐sums” and contribution mechanisms.
Testimony on SB 814: explained by counsel for Schnitzer Steel that the contribution bar was designed to encourage good‐faith settlements and prevent “a different insurer seeking to make the settling insurer pay even more.”

Legal Reasoning

The court’s key interpretive focus was on the phrase “the environmental claim” in ORS 465.480(4)(a). By employing the definite article (“the”), the legislature signaled a narrowing reference to the same environmental claim the targeted insurer had paid. Thus:

An insurer that has paid “all or part of an environmental claim” may seek contribution.
If another insurer has entered into a good‐faith settlement “regarding the environmental claim” (i.e., the very claim that was paid), contribution is barred.

The Court of Appeals had taken “the environmental claim” to mean any environmental claim the insured held against a co-insurer, regardless of whether it was the claim actually paid by the targeted insurer. The Supreme Court rejected that construction, holding it inconsistent with the statute’s text, structure, and policy. Because Continental had already paid and satisfied Schnitzer’s defense costs (the part of the environmental claim at issue), Schnitzer no longer possessed that claim against Wausau. Wausau’s later settlement did not concern those sums and thus did not bar Continental’s contribution suit.

Impact on Future Cases and the Area of Insurance Law

Insurer Strategy: Targeted insurers can rely on contribution rights for the precise defense or indemnity costs they have paid, even if other insurers settle residual claims later.
Settlement Dynamics: Co-insurers must contemplate that settling a subset of environmental exposures may not shield them against contribution actions for amounts already paid by the targeted insurer.
Clarity in Policy Drafting: Insurers may consider explicit policy provisions addressing contribution and settlement interplay to avoid future disputes.
Legislative Oversight: The decision may prompt the legislature to revisit ORS 465.480(4)(a) if broader settlement bars are desired.

Complex Concepts Simplified

Targeted Insurer: The insurer that the insured picks to cover an entire environmental loss when multiple policies apply.
Contribution: A legal mechanism allowing a targeted insurer to recover from co-insurers a fair share of defense and indemnity costs paid.
Definite Article (“the”): In legal drafting, using “the environmental claim” points to a specific claim already defined, not any possible claim.
Good‐Faith Settlement: A negotiation in which the insurer and insured each give up something, intended to resolve liabilities fairly; settlements reached after a contribution suit may not bar claims unless they address the very same paid claim.

Conclusion

Continental Casualty Co. v. Argonaut Ins. Co. establishes that under ORS 465.480(4)(a) only a good‐faith settlement of the exact environmental claim that a targeted insurer has already paid will extinguish that insurer’s right to contribution. By focusing on the definite article “the,” the Oregon Supreme Court ensured that contribution remains available where co-insurers settle different exposures or future costs, thereby preserving fairness in the cooperative insurance framework the OECAA intends. The decision provides insurers clear guidance on how settlement timing and scope affect contribution rights in environmental coverage disputes.