177 F.3d 210 (3rd Cir. 1999), 97-5735, Chemical Leaman Tank Lines, Inc. v. Aetna Cas. and Sur. Co.

Docket Nº:CHEMICAL LEAMAN TANK LINES, INC., Appellant in No. 97-5735,
Citation:177 F.3d 210
Case Date:May 25, 1999
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 210

177 F.3d 210 (3rd Cir. 1999)

CHEMICAL LEAMAN TANK LINES, INC., Appellant in No. 97-5735,



Underwriters At Lloyds, London Subscribing to Insurance

Policies Numbers WAR 6771, WAR 6772/A C62P 10-117, L62P

10-117, 64P 3-121, L64P 3-121A, L64P 3-121B, C64P 3-121B,

C65P 5-119, C65P 5-119A, L65P 5-119A, L66P 5-119A, C67P

4-158, L67P 4-158, C68P 2-116, L68P 2-116, C68P 2-116A, C68P

2-116B, L68P 2-116A, L68P 2-116B, C71-03-03-13,

L71-03-03-13, C71-03-03-13A, C71-03-03-13B, L71-03-03-13A,

L71-03-03-13B, C74-03-18-02, 77-01-19-23, 77-01-19-23A,

C77-01-19-23B, 79-04-19-10, C80-02-19-09, C80-02-19-09B,

L80-02-09A, L80-02-19-09A, L80-02-19-09B, C83-02-19-09,

L83-02-19-09A, L83-02-19-09B, L83-02-19-09C.

Chemical Leaman Tank Lines, Inc.


Aetna Casualty And Surety Company; Robin Anthony Gildart

Jackson, an Underwriter at Lloyds, London, individually and

in his capacity as representative Underwriter at Lloyds,

London for certain subscribing Underwriters at Lloyds,

London who subscribed to certain liability insurance

policies issued to plaintiff Chemical Leaman Tank Lines,

Inc.; Accident and Casualty Company of Winterthur, (now

known as Winterthur Swiss Insurance Company); Alba General

Insurance Company Ltd.; Allianz Cornhill International

Insurance, PLC (formerly known as Allianz International

Insurance Company Ltd.); Argonaut Northwest Insurance

Company; Assicurazioni Generali Spa; Baloise Fire

Insurance Company; Bellefonte Insurance Company Ltd.; CNA

International Reinsurance Co. Ltd. (formerly known as CNA

Reinsurance of London Company Ltd.); Delta Lloyd Non-Life

Insurance Company; Dominion Insurance Company Ltd.; Drake

Insurance Company Ltd. (now known as Sphere Drake Insurance

plc); Excess Insurance Company Ltd.; Fidelidade Insurance

Company; Gan Minster Insurance Company Ltd. (formerly known

as Minster Insurance Company Ltd.); Helvetia Accident Swiss

Insurance Company (now known as ELVIA Swiss Insurance

Company Ltd.); London and Edinburgh Insurance Company,

Ltd.; National Casualty Company; National Casualty

Insurance of America, Ltd.; New London Reinsurance Company,

Ltd. (now known as NRG Victory Reinsurance Ltd.); River

Thames Insurance Company Ltd.; Scottish Lion Insurance

Company; Sphere Insurance Company Ltd., (now known as

Sphere Drake Insurance plc); St. Paul International

Insurance Company Ltd. (formerly known as St. Katherine

Insurance Co. Ltd.); Swiss Union General Insurance Company

Ltd.; Mitsui Marine & Fire Insurance Company (Europe) Ltd.

(formerly known as Taisho Marine & Fire Insurance Company

(U.K.) Ltd.); Tokio Marine & Fire Insurance Company (U.K.)

Ltd.; Turegum Insurance Company; Unionamerica Insurance

Company Ltd.; World Auxiliary Insurance Corporation Ltd.;

Yasuda Fire & Marine Insurance Company of Europe Ltd.,

(formerly known as Yasuda Insurance Company (U.K.) Ltd.)

(hereafter collectively referred to as "Jackson &

Companies"), Appellants in No. 97-5736.

Nos. 97-5735, 97-5736.

United States Court of Appeals, Third Circuit

May 25, 1999

Argued Sept. 15, 1998.

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Kevin B. Clark, John P. Dean (Argued), Conrad J. Smucker, Lisa K. Coleman, Willkie Farr & Gallagher, Washington, D.C., for Chemical Leaman Tank Lines, Inc., Appellant in No. 97-5735.

Henry Lee (Argued), Olympia Bizekis, Allen R. McKay, Mendes & Mount, New York, N.Y., and William S. Wachenfeld, Adam M. Smith, Mendes & Mount, Newark, NJ, for Robin Anthony Gildart Jackson, et al., Appellants in No. 97-5735.

3 Laura A. Foggan Elizabeth A. Eastwood Peter J. Skalaban, Jr. Wiley, Rein & Fielding 1776 K Street, N.W. Washington, D.C. 20006 Attorneys for Insurance Environmental Litigation Association, Amicus Curiae

Before: STAPLETON and ROTH, Circuit Judges, and LONGOBARDI, [*] District Judge


STAPLETON, Circuit Judge:


This appeal marks the second appearance of this case before our Court and comes after more than nine years of litigation. 1 Seeking indemnification for costs connected to the environmental cleanup of its Bridgeport, New Jersey, facility, Chemical Leaman initially filed this declaratory judgment and damages action against its primary and excess insurers in April, 1989.

Chemical Leaman is a tank truck company specializing in the transportation of various chemicals and other liquids. Since 1960, it has provided tank truck cleaning services at its Bridgeport truck terminal facility. In 1969, the New Jersey Department of Health ordered Chemical Leaman to construct a waste water treatment and/or disposal plant to alleviate the strong odors emanating from the on-site ponds and lagoons where Chemical Leaman disposed of water from the cleaning process. Chemical Leaman continued to use the ponds and lagoons system until it installed a water treatment system in 1975. By 1977, Chemical Leaman had drained and filled the ponds and lagoons.

In 1981, the New Jersey Department of Environmental Protection ordered Chemical Leaman to investigate the extent and degree of groundwater contamination at and around the Bridgeport site. The investigation revealed that the ponds and lagoons were primary sources of groundwater contamination. In 1984, the federal Environmental Protection Agency ("EPA") placed the Bridgeport site on the National Priorities List of Superfund sites pursuant to Section 105 of the Comprehensive Environmental Response, Compensation and Liabilities Act ("CERCLA"), 42 U.S.C. § 9605. The EPA alleged that Chemical

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Leaman was strictly liable for injury to, destruction of, or loss of natural resources, as well as the reasonable costs of assessing such damage to natural resources, and for all costs of removal or remedial action incurred by the United States or the State of New Jersey.

In July 1985, Chemical Leaman entered into a consent order with the EPA, admitted liability under CERCLA, and agreed to remediate the Bridgeport site or pay for its remediation. Additionally, this order directed Chemical Leaman to undertake a Remedial Investigation and Feasibility Study ("RI/FS") of the groundwater. Chemical Leaman has incurred substantial costs in conducting this study and expects to accrue considerable future removal costs and damages.

After entering this consent order, Chemical Leaman notified its various insurers. Chemical Leaman had purchased comprehensive general liability ("CGL") policies from Aetna, its primary insurer, for one-year periods covering April 1, 1959, through April 1, 1985. Under these policies, Aetna agreed to pay on behalf of Chemical Leaman all sums that Chemical Leaman became legally obligated to pay as damages because of property damage. Additionally, Aetna agreed to defend Chemical Leaman in suits seeking recovery for such property damage. From April 1, 1971, through April 1, 1985, Aetna's policies contained a pollution exclusion, indicating that the policies did not apply to the discharge of pollutants unless such discharge was "sudden and accidental." Chemical Leaman had also purchased multi-year excess liability insurance policies through Lloyd's insurance market spanning the period April 1, 1958, through April 1, 1986. These excess policies covered property damage but did not contain a similar defense obligation. The excess policies covering April 1, 1971, through April 1, 1985 contained pollution exclusions similar to those in Aetna's CGL policies.

When these insurers denied coverage, Chemical Leaman, a Delaware corporation with its principal place of business in Pennsylvania, filed suit against Aetna, a Connecticut corporation with its principal place of business in Connecticut, and "Certain Underwriters at Lloyd's, London subscribing to Insurance Policies [specifically enumerated]." (LMIa47) The complaint claimed that diversity jurisdiction was proper and alleged that "Certain Underwriters" were "various insurance companies organized and existing under the laws of the United Kingdom." (LMIa48)

On August 9, 1989, the parties stipulated to a change in the complaint "substitut[ing] 'Robin Anthony Gildart Jackson, an Underwriter at Lloyd's, London on behalf of himself and all other Underwriters at Lloyd's, London, subscribing to [specifically enumerated policies], [and forty specifically named insurance companies]' in place of and instead of defendants 'Certain Underwriters at Lloyd's, London subscribing to Insurance Policies [specifically enumerated].' " (LMIa57-59) The stipulation stated that any final judgment against Jackson would be binding on those underwriters subscribing to the enumerated policies and thus within the scope of Jackson's purported representation. In a similar vein, the stipulation indicated that a final judgment in favor of Jackson would inure to the benefit of those same underwriters. 2 Jackson, the underwriters he is alleged to represent, and the specifically named insurance companies are underwriters of Chemical Leaman's various excess policies purchased through Lloyd's insurance market. This stipulation was signed by the attorneys for Chemical Leaman, Jackson, and the named insurance parties. On August 29, 1989, the District Court entered an order amending the complaint and designating Jackson and the named insurance

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companies (hereinafter collectively "the excess insurers") as defendants.

Following extensive discovery, the parties filed cross-motions for summary judgment on various grounds. The District Court held that New Jersey...

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