“Damages” Given Broad Interpretation

From 1949 to October 1983, A.Y. McDonald Industries Inc. manufactured brass valves in an Iowa foundry. Excess sand used was dumped on site. A residue of brass containing a lead component was mixed with the sand. In December 1984, the US Environmental Protection Agency brought an action against McDonald that culminated in a 1987 consent order requiring McDonald to build a clay cap over part of the property, expand groundwater monitoring, and develop and implement a 30year postclosure plan. During the period, McDonald was covered under several comprehensive general liability (CGL) policies that obligated the insurers for property damage. McDonald sought recovery of the response costs and a civil penalty. When rejected by the insurers, McDonald sued them in the Iowa courts. The suit was removed to the US federal court, which requested the Supreme Court of Iowa to certify the question of liability.