Michigan Millers Mut. Ins. Co. v. Bronson Plating Co.
| Decision Date | 12 July 1994 |
| Docket Number | No. 17,No. 95639,95639,17 |
| Citation | 445 Mich. 558,519 N.W.2d 864 |
| Parties | , 63 USLW 2096 MICHIGAN MILLERS MUTUAL INSURANCE COMPANY, Plaintiff-Counter-Defendant/Appellant, v. BRONSON PLATING CO., Defendant-Counter-Plaintiff/Appellee, v. FEDERAL INSURANCE COMPANY, one of the Chubb Group Of Insurance Companies, Auto-Owners Insurance Company, Commercial Union Insurance Company, Great Southwest Fire Insurance Company (now known as Vanliner Insurance Company), Hartford Accident & Indemnity Company, Indiana Insurance Company, Indiana Lumbermens Mutual Insurance Company, Liberty Mutual Insurance Company, and Hamilton Mutual Insurance Company, Added Counter-Defendants/Appellants. Calendar |
| Court | Michigan Supreme Court |
Defendants appeal the Court of Appeals determination that defendants' duty to defend was triggered by plaintiff Bronson Plating Company's receipt of a letter from the United States Environmental Protection Agency, informing Bronson of its potential liability at the contaminated North Bronson Industrial Area site. Defendants argue that receipt of the notice did not give rise to a duty to defend because the letter did not signal the initiation of a "suit" within the meaning of the subject insurance policies.
We find that the term "suit," as used in the insurance policies at issue, is ambiguous and capable of application to legal actions, other than court proceedings, that are the functional equivalent of a suit brought in a court of law. We further hold that the notice of potential liability received by Bronson in this instance, signaled the initiation of a legal proceeding that was the functional equivalent of a traditional court action, and thereby triggered the insurers' duty to defend. We affirm.
The pertinent facts of this declaratory judgment action are not in dispute. Since the 1940s, the Bronson Plating Company has engaged in the electroplating of various metal parts at its facility at the North Bronson Industrial Area in Bronson, Michigan. In its electroplating process, Bronson has utilized a variety of chemicals and compounds, including nickel, nickel-chrome, lead, caustic soda, sulfuric acid, and hydrochloric acid. The process involved the release of large quantities of waste water, and this waste was identified by the EPA and the Michigan Department of Natural Resources as a possible source of environmental contamination of the North Bronson Industrial Area.
Bronson had purchased comprehensive general liability insurance from Michigan Millers Mutual Insurance Company, and three of its policies were in effect consecutively from January 1970 through January 1977. Each of these policies provided that the insurance company shall have the "duty to defend any suit against the insured seeking damages on account of ... bodily injury or property damage[ ]" 1 (emphasis added). In addition to its insurance contracts with Michigan Millers, Bronson was insured under several primary and umbrella/excess policies issued by other insurance companies, 2 2 each of which contained similar language with respect to the insurer's duty to defend.
In April 1986, the EPA, acting under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 3 notified Bronson by letter that it may be liable for contamination of the North Bronson Industrial Area (the "site"). This communication, frequently referred to as a "potentially responsible party" (PRP) letter, advised Bronson that the EPA had "documented the release ... of hazardous substances ... at the ... site, and is planning to spend public funds to control and investigate these releases." In its PRP letter, the EPA, inter alia, requested Bronson's voluntary participation in connection with certain studies, and cautioned that Bronson's failure to do so could result in it being held jointly and severally liable for any costs that were expended. Pursuant to its letter, the EPA also demanded that Bronson supply relevant information, it encouraged good-faith negotiations between Bronson and the agency and with other potentially responsible parties, and it explained that failure to comply "may result in a civil enforcement action being brought against you by EPA."
Although the PRP letter to Bronson was not issued until April 1986, Bronson began notifying its insurers in November 1985 that the EPA considered it to be a possible source of groundwater contamination at the site. 4 Bronson's letter to Michigan Millers was dated March 21, 1986, and demanded
pursuant to the terms of any applicable policies of insurance issued by you, ... that you undertake your responsibility to defend, indemnify and hold Bronson Plating harmless from and against any and all damages ... or any liability ... arising out of the listing of the North Bronson Industrial Area on the NPL by [the] EPA....
While the other insurers declined to do so, Michigan Millers agreed to provide a defense for Bronson, subject, however, to a reservation of its rights. Michigan Millers then commenced the instant declaratory judgment action, seeking a judicial determination, inter alia, that it was not obligated to defend Bronson because no "suit" had been commenced. Bronson filed a counterclaim and joined the other named insurance companies as counterdefendants. In its countercomplaint, Bronson sought a declaration that its insurers had a duty both to defend and indemnify Bronson.
The trial court then considered cross-motions for summary disposition and, addressing only the duty to defend issue, ruled that the insurers had no obligation under the insurance policies to provide a defense "in the absence of a complaint filed in a Court against Bronson by the EPA or the DNR."
Thereafter, a divided panel of the Court of Appeals reversed. 5 The panel majority registered its agreement with the reasoning and result in Polkow v. Citizens Ins. Co. of America, 180 Mich.App. 651, 447 N.W.2d 853 (1989), rev'd on other grounds, 438 Mich. 174, 476 N.W.2d 382 (1991), 6 and declared: "[W]e hold in this case ... that a 'suit' has been brought." 197 Mich.App. 482, 491, 496 N.W.2d 373 (1992).
We then granted leave to appeal, limited to the question whether the EPA letter notifying Bronson of its potential liability for alleged environmental contamination constitutes a "suit" that gives rise to the insurers' duty to defend under the terms of the applicable insurance contracts. 7 443 Mich. 880, 506 N.W.2d 877 (1993).
Defendants argue that the PRP letter received by Bronson did not constitute the initiation of a "suit," triggering their duty to defend. To resolve defendants' claim, we must first determine whether "suit," as used in the subject insurance policies, is an ambiguous term admitting of more than one construction, i.e., whether the term may refer to some legal action other than a court proceeding initiated by a complaint. Second, if the term is ambiguous and capable of broader definition, whether it may reasonably be understood to encompass the PRP letter received by Bronson.
When interpreting insurance policies under Michigan law, we are guided by a number of well-established principles of construction. Foremost among those is the maxim that an insurance policy must be enforced in accordance with its terms. Upjohn Co. v. New Hampshire Ins. Co., 438 Mich. 197, 207, 476 N.W.2d 392 (1991). A court may not read ambiguities into a policy where none exist. Auto-Owners Ins. Co. v. Churchman, 440 Mich. 560, 567, 489 N.W.2d 431 (1992).
Although the term "suit" was not defined within the relevant insurance policies, that fact, alone, is not conclusive evidence...
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