XL Environmental Claims was retained by the insurance carrier for a large real estate investment trust in the Southern US. The insured had purchased a large retail shopping center in the early '90s. This "strip mall" had among its long-standing clients a dry cleaner which had operated on the spot since the early '60s while the shopping center expanded around it. Consistent with good practice, the insured had arranged for an environmental site assessment ("ESA") of the property prior to its purchase. The insured retained a small, unknown firm, which provided the lowest bid to perform the work, that ultimately provided the property with a "clean bill of health." Several years after purchasing the property, the insured was asked to perform another ESA as part of an effort to secure additional financing. This ESA revealed significant soil and groundwater contamination beneath the dry cleaning facility, which had apparently been disposing of its spent solvents via a floor drain. Shortly after the discovery of the contamination, the dry cleaner, a small sole-proprietorship, declared bankruptcy and abandoned the facility.

While coordinating the complete assessment of the facility, XL Environmental Claims identified several deficiencies in both the technical content of the ESA prepared by the initial consultant, as well as gaps in the limitations of liability imposed by its contract with our insured. We advised the consultant to place its liability carrier on notice, and have since ensured the participation of that company in the cleanup cost. As a result, while our insured is still responsible for the remediation, it now has another party contributing a significant portion of the costs.