In 1954, Pittston Company purchased property that, until the 1930's, had been used as an oil refinery. Pittston would use the property as an oil storage and transfer facility.

Between 1954 and 1983, Pittston experienced three known, major oil spills at the property. Pittston was able to provide evidence that these spills were substantially cleaned up. No citations or demands were made against Pittston by regulatory authorities.

In 1979, Pittston commissioned an environmental study that showed the property had been substantially contaminated by oil, most likely from the prior operation when environmental concerns and controls were not as stringent.

In 1983, Ultramar purchased the property and operation. As part of the purchase, Pittston agreed to indemnify Ultramar for contamination damages. Ultramar purchased insurance coverage for pollution and added Pittston as an additional insured.

Ultramar operated the facility briefly, but in 1985 closed the operation because of the contamination. Ultramar was forced to begin a decontamination, clean-up process. As a result, Ultramar made a claim against Pittston for clean-up costs. Accordingly, Pittston filed claims with their insurance carriers.

Subsequently, Ultramar and Pittston reached an agreement between them, whereby Pittston was responsible for 80% of the costs and Ultramar 20%.

Pittston's insurers denied coverage based upon the "known" loss exclusion. Pittston began legal action against the insurers and Ultramar later joined the action.

The District Court of the State of New Jersey issued a Summary Judgment in favor of the insurers which basically stated that liability for events or damages occurring prior to the 1979 study commissioned by Pittston were covered. Coverage for damages occurring after the 1979 study were precluded from coverage as "known" loss.

This decision was appealed to the US Court of Appeals where it was overturned and remanded back to the lower courts for trial.

Pittston Company, Ultramar America Limited, Ultramar Pittston Company, Ultramar American Limited, Ultramar Petroleum, Inc. v. Allianz Ins. Company, et. al., US Court of Appeals for the Third Circuit, Nos. 96-5166 and 96-5167, August 27, 1997. CCH 1997 Fire and Casualty Cases, Paragraph 6242.