Tucson-Area Water Contamination Victims Triumph in Ariz. Appeals Court Ruling Against Insurer

A three-judge panel of the Arizona Court of Appeals, Division Two, has
ruled that an insurer for the City of Tucson will likely have to pay the cost of a $35 million settlement to 1,618 area residents who reportedly said they were made sick by contaminated drinking water, according to the law firm of Baron & Budd P.C.

In June 1989, residents reached a settlement agreement with the City of Tucson and the Tucson Airport Authority based on the contamination of groundwater near their homes through the migration of a toxic chemical called trichloroethylene or TCE. Classified as a probable human carcinogen by the U.S. government, TCE was reportedly used to clean airplanes in the area from the mid-1940s through the early 1950s.

The insurer for the city and the airport authority, Associated Aviation
Underwriters (AAU), reportedly claimed during a two-phase trial in Pima County Superior Court that its policy did not cover the types of toxic chemical injuries asserted by the residents. Lawyers for AAU also reportedly argued that the settlement amount was unreasonable. Both claims were rejected at trial, and AAU appealed to the Arizona Court of Appeals.

Steve Baughman Jensen, an attorney for the residents, said that although the appeal directly involved only 17 of 1,618 total claimants, the ruling will probably be later applied to the other 1,600 cases.

“We are thrilled that we finally may be seeing light at the end of the
tunnel,” said Jensen. “This ruling also is significant because, for the first time in Arizona, an appeals court is recognizing that the damage caused by toxic exposure is actually an ‘injury’ that should be covered by insurance.”

Specifically, the appellate court ruled that the physical damage caused by TCE exposure and the continuing “injurious process” initiated by TCE exposure create a “bodily injury” that triggers insurance liability.

In the same ruling, the Court of Appeals also reversed a trial court
ruling that residents were not entitled to financial compensation because they hadn’t specifically asked for it. The 1989 settlement provides for individual payments to residents ranging from $13,000 to $50,000. With interest, the total amount of the judgments for the 1,618 residents could exceed $75 million.

The Court of Appeals remanded to the Superior Court of Pima County for final disposition, but AAU may reportedly first ask the Arizona Supreme Court to review the Court of Appeals’ ruling.