Mine Owner Can’t Recoup Excess Cleanup Costs

(CN) - A former Colorado gold-mine owner cannot seek damages greater than the $20 million he already recovered in a settlement over the costs of cleaning up contaminated water that had leaked from his mine, the 10th Circuit ruled.

Former mine owner Robert Friedland tried to recoup environmental cleanup costs from two companies that helped build the Del Norte mine, after he was already reimbursed for those costs by two insurance companies in a $20 million settlement. Friedland spent $28 million in defense costs to reach a $20 million settlement with the state of Colorado and the United States, according to the ruling. He then tried to apply the settlement money to his defense costs in order to divide damages in what Judge Tacha called an "attempt to create divisible harm where it otherwise does not exist."

Friedland wanted the district court to assign the $20 million settlement to both defense costs and cleanup costs in order to leave some recoverable damages for his case against TIC and GeoSyntec. But under the Comprehensive Environmental Response, Compensation, and Liability Act, contribution actions such as Friedland's are governed by federal law and permit the district court to allocate response costs using equitable factors, the opinion states.

The Denver-based appeals court refused to apply the collateral source rule to the case, which would prohibit crediting TIC and GeoSyntec the amount of settlement money Friedland already received. The rule is designed to "provide the innocent party with the benefit of any windfall," the court ruled, and Friedland's case is a contribution action, not a personal injury complaint with an innocent party.

Judge Tacha said the district court was right to credit the insurance money to the defendants, because Friedland himself had already admitted that the insurance money covered the costs of the settlement, leaving him with no recoverable damages.

TIC and GeoSyntec are entitled to a credit in the amount of the settlement, because the damages they face are identical to the damages for which Friedland already sought coverage, the three-judge panel ruled.

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