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 |
Page 526
Argued and Submitted Sept. 12, 1997.
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[Copyrighted Material Omitted]
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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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