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Government's Affirmative Defense on Insurance Coverage Rejected

A contractor was granted summary judgment on the government's affirmative defense alleging the contractor and its subcontractor failed to obtain required insurance because the defense as pled differed from the one the government articulated in its motion papers, and the relevant clauses did not require the contractors to obtain insurance against pollution and groundwater contamination. The dispute centered on the contractor's claim for indemnification of the costs to investigate and remediate groundwater pollution arising from contracts to develop short-range attack missiles. The government asserted an affirmative defense that alleged the contractors misrepresented to the government that they had obtained all necessary insurance and the contractors' recovery was precluded to the extent the insurance would have covered the claimed expenses.

Two Reasons

The contractor, however, was entitled to summary judgment on the defense for two principal reasons. First, the affirmative defense pled in the government's answer alleged that, to assert a claim based on groundwater contamination, the subcontractor "was required to obtain insurance for that risk," and its failure to do so "amount[ed] to a misrepresentation." In contrast, the defense the government argued in its motion papers appeared to assert a different type of misrepresentation that focused on the subcontractor's statements regarding insurance exclusions. The government's defense in its motion papers, therefore, appeared to be based on operative facts different from those in the defense pled in the answer. Second, the affirmative defense pled in the government's answer --that the contractors misrepresented the insurance coverage --lacked evidentiary support. The insurance clauses did not require insurance against pollution generally, or against groundwater contamination specifically. Therefore, absent a regulatory or contractual requirement for the disputed insurance coverage, the affirmative defense could not stand. (Boeing Co., ASBCA, 93,247)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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