132 F.3d 526 (9th Cir. 1997), 96-35713, Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co., Ltd.

Docket Nº:96-35713.
Citation:132 F.3d 526
Party Name:97 Cal. Daily Op. Serv. 9608, 97 Daily Journal D.A.R. 15,387 ENRON OIL TRADING & TRANSPORTATION COMPANY, Plaintiff-Appellant, v. WALBROOK INSURANCE COMPANY, LIMITED; El Paso Insurance Company; Dart Insurance Company Limited; Dart & Kraft Insurance Company; Bryanston Insurance Company; Louisville Insurance Company; Ludgate Insurance Company, Limited
Case Date:December 23, 1997
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 526

132 F.3d 526 (9th Cir. 1997)

97 Cal. Daily Op. Serv. 9608,

97 Daily Journal D.A.R. 15,387

ENRON OIL TRADING & TRANSPORTATION COMPANY, Plaintiff-Appellant,

v.

WALBROOK INSURANCE COMPANY, LIMITED; El Paso Insurance

Company; Dart Insurance Company Limited; Dart & Kraft

Insurance Company; Bryanston Insurance Company; Louisville

Insurance Company; Ludgate Insurance Company, Limited;

"Winterthur" Swiss Insurance Company; Mutual Reinsurance

Company, Limited; Bermuda Fire & Marine Insurance Company;

Compagnie Europeene D'Assurances Industrielles S.A.; St.

Katherine Insurance Company, Limited; Underwriters at

Lloyd's of London, etc., et al., under policy #552/02129100;

British National Life Insurance Society, Limited;

Insurance Corporation of Ireland, Limited; Yasuda Fire and

Marine Insurance Company, Assicurazioni Generali S.P.A.;

Lexington Insurance Company; Scan Reinsurance Company,

Limited; CNA Reinsurance of London, Limited; Pine Top

Insurance Company, Limited; The Dominion Insurance Company,

Limited; Folksam International Insurance Company, Limited;

Ancon Insurance Company, Limited; Brittany Insurance

Company, Limited; Allianz Versicherungs Aktiengesellschaft;

Eisen Und Stahl Ruckversicherungs Aktiengesellschaft;

Chemical Insurance Company; Employers Insurance of Wausau;

Evanston Insurance; Insurance Company of Florida;

International Surplus Lines Insurance Company; Granite

State Insurance Company; Transit Casualty; Travelers

Indemnity Company, Defendants-Appellees.

No. 96-35713.

United States Court of Appeals, Ninth Circuit

December 23, 1997

Argued and Submitted Sept. 12, 1997.

Page 527

[Copyrighted Material Omitted]

Page 528

Jean E. Faure and Glenn E. Tremper, Great Falls, Montana, for the plaintiff-appellant.

Patrick R. Watt and Kirk D. Evenson, Great Falls, Montana, for the defendants-appellees.

Appeal from the United States District Court for the District of Montana; Paul G. Hatfield, District Judge, Presiding. D.C. No. CV-90-00122-PGH.

Before: SCHROEDER and BEEZER, Circuit Judges, and SCHWARZER, [*] Senior District Judge.

SCHWARZER, Senior District Judge.

The principal issue before us is whether, under Montana law, the pollution exclusion in a commercial general liability policy excludes coverage for losses sustained as a result of the addition of a foreign substance to crude oil transported in a pipeline. We hold that it does not.

BACKGROUND

This action was brought by Enron Oil Trading & Transportation Co. ("Enron") in Montana state court against the defendants, who were its excess insurers under a liability policy. Enron seeks indemnity for amounts it paid Ashland Oil Company ("Ashland") in settlement of an action Ashland brought against Enron (formerly UPG, Inc.) and others. Ashland's complaint in that action alleged that it had suffered losses--explosions and malfunctions of its pipeline--as a result of the injection of foreign substances, so-called "B-G mix," by Enron and others into the pipeline carrying crude oil to Ashland Refinery. 1 Ashland's complaint stated claims of negligence, strict liability, breach of contract and warranty, fraud and tariff violations. That action was settled by Enron for approximately $5 million prior to trial. Enron's primary insurer provided a defense and contributed $500,000 to the settlement. The excess insurers, however, refused to participate in the settlement and this action followed.

The insurers removed the action pursuant to 28 U.S.C. § 1441(d) and 28 U.S.C. § 1330. Enron then moved for summary judgment and the insurers countered with a motion for judgment on the pleadings under Fed.R.Civ.P. 12(c). The insurers contended that coverage under their policies was barred, first, by the "pollution" exclusion, and second, by Montana's public policy barring recovery by insureds of indemnity for intentional acts. The district court rejected the insurers' first ground but granted their motion on the second ground. We have jurisdiction under 28 U.S.C. § 1291, and we affirm in part, reverse in part and remand.

DISCUSSION

I. Standard of Review

We review de novo a dismissal under Rule 12(c). McGann v. Ernst & Young, 102 F.3d 390, 392 (9th Cir.1996), cert. denied, ---...

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