68 F.3d 658 (3rd Cir. 1995), 93-5777, Chemical Leaman Tank Lines, Inc. v. Aetna Cas. and Sur. Co.

Docket Nº: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 Wintert
Citation:68 F.3d 658
Party Name:CHEMICAL LEAMAN TANK LINES, INC. v. The AETNA CASUALTY AND SURETY COMPANY; and Certain 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
Case Date:October 12, 1995
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
FREE EXCERPT

Page 658

68 F.3d 658 (3rd Cir. 1995)

CHEMICAL LEAMAN TANK LINES, INC.

v.

The AETNA CASUALTY AND SURETY COMPANY; and Certain 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, L83-02-09C

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; Alba General Insurance Company Ltd.; Allianz Cornhill International Insurance PLC, formerly Known as Allianz International Insurance Company Ltd.; Anglo-French Insurance Company Ltd.; Argonaut Northwest Insurance Company; Assicurazioni Generali SPA; Baloise Fire Insurance Company; Bellefonte Insurance Company Ltd.; British National Life Insurance Society Ltd.; CNA International Reinsurance Co. Ltd., formerly Known as CNA Reinsurance of London Ltd.; Delta Lloyd Non-Life Insurance Company; Dominion Insurance Company Ltd.; Drake Insurance Company Ltd.; Edinburgh Insurance Company; Excess Insurance Company Ltd.; Fidelidade Insurance Company; Folksam International Insurance Company (U.K.) Ltd.; Helvetia Accident Swiss Insurance Company; Indemnity Marine Assurance Company, Ltd.; Lexington Insurance Company Ltd.; London & Overseas Insurance Company, Ltd.; London & Edinburgh Insurance Company, Ltd.; London & Scottish Assurance Corporation, Ltd.; Gan Minster Insurance Company, formerly Known as Minster Insurance Company Ltd.; National Casualty Company; National Casualty Insurance of America, Ltd.; New London Reinsurance Company, Ltd.; North Atlantic Insurance Company Ltd., formerly Known as British National Insurance Co. Ltd.; Orion Insurance Company Ltd.; Pine Top Insurance Company Ltd.; River Thames Insurance Company Ltd.; Scottish Lion Insurance Company; Sovereign Marine and General Insurance Company, Ltd.; Sphere Insurance Company Ltd.; St. Katherine Insurance Company Ltd.; Stronghold Insurance Company Lts.; Swiss Union General Insurance Company Ltd.; Taisho 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 Ltd.; Unionamerica Insurance Company; United Standard Insurance Company Ltd.; Winterthur Swiss Insurance Company; World Auxiliary Insurance Corporation Ltd.; Yasuda Insurance Company (U.K.) Ltd. (hereinafter collectively referred to as "Jackson & Companies"), Appellants in No. 93-5777

Aetna Casualty and Surety Company ("Aetna"), Appellant in No. 93-5794.

Nos. 93-5777, 93-5794.

United States Court of Appeals, Third Circuit.

Oct. 12, 1995

         Argued Sept. 26, 1994.

          For Superseding Opinion, see 1996 WL 344922.

Page 659

[Copyrighted Material Omitted]

Page 660

         Editorial Note:

         This opinion is published in the advance sheet at this citation, Chemical Leaman Tank Lines, Inc. v. Aetna Cas. & Sur. Co., 68 F.3d 658, was withdrawn from the bound volume because rehearing was granted and the opinion vacated December 15, 1995.

Page 661

         Brian J. Coyle (Argued), Peter E. Mueller, Harwood Lloyd, Hackensack, NJ, Edward M. Dunham, Jr., Daniel W. Cantu-Hertzler, Miller Dunham Doering & Munson, Philadelphia, PA, William H. Jeffress, Jr., Miller, Cassidy, Larroca & Lewin, Washington, DC, for Appellant Aetna Casualty & Surety Company.

         John G. McAndrews, Henry Lee (Argued), Hannah M. O'Driscoll, Gary P. Schulz, Mendes & Mount, New York City, William J. Hanley, Ronca, McDonald & Hanley, Livingston, NJ, for Appellant Robin Anthony Jackson, An Underwriter at Lloyds, London, and Certain London Market Insurance Companies ("London Market Insurers").

         Kevin B. Clark (Argued), John P. Dean, Carlisle E. Perkins, Conrad J. Smucker, Willkie Farr & Gallagher, Washington, DC, for plaintiff-appellee Chemical Leaman Tank Lines, Inc.

         Thomas W. Brunner, John E. Barry, Dennis A. Tosh, Wiley, Rein & Fielding, Washington, DC, for Amicus Curiae Insurance Environmental Litigation Association.

         Deborah T. Poritz, Attorney General of New Jersey, Mary C. Jacobson, Assistant Attorney General, Karen L. Jordan, Deputy Attorney General, Trenton, NJ, for Amicus Curiae State of New Jersey, Department of Environmental Protection and Energy.

         Before: SCIRICA, NYGAARD and McKEE, Circuit Judges.

         OPINION

         McKEE, Circuit Judge.

         Chemical Leaman Tank Lines, Inc. brought this declaratory judgment action in an effort to determine if various policies of insurance issued by defendant insurance companies covered the cost of environmental cleanup of a waste disposal site it maintained in Bridgeport, New Jersey. Although numerous issues are raised on appeal, the primary issue is the appropriate test to determine if Chemical Leaman "expected or intended" environmental damage. We hold that, under New Jersey law, the appropriate inquiry is the insured's objective intent and that the district court erred when it instructed the jury that it must determine if Chemical Leaman subjectively "expected or intended" to damage the environment. Since we determine as a matter of law that Chemical Leaman did expect or intend environmental damage as of November, 1968, we remand for a new trial to determine Chemical Leaman's objective intent during the years remaining in question.

         I. Background

         A. The Bridgeport Site

         Chemical Leaman is a tank truck company specializing in the transportation of hazardous chemicals including carcinogens. The Bridgeport terminal at issue here was one of many terminals that Chemical Leaman maintained across the country. These terminals included facilities where Chemical Leaman would routinely wash the trailers that transported the hazardous chemicals after those

Page 662

chemicals had been delivered. The rinse water contaminated with residue from the inside of the trailers was disposed of in a wastewater treatment system that is at the heart of this lawsuit.

         The Bridgeport wastewater treatment system consisted of a series of unlined ponds dug into the soil to catch and purportedly purify the contaminated washwater. Apparently, the designers of this system believed that the sandy bottom of the unlined ponds would purify the contaminated rinsewater by acting as a kind of natural filter that would strain the impurities from the contaminated water as it percolated into the soil. The facility operated in this manner from 1960 to 1975. It was designed and built by Harry Elston, Chemical Leaman's Manager of Real Estate and Engineering, in consultation with Edwin Wagner, a professional sanitary engineer with experience in the design of waste treatment facilities. Elston made virtually all of Chemical Leaman's decisions regarding waste management and disposal.

         From 1960-62, the wastewater treatment system consisted of a series of three unlined settling and percolation ponds, connected by "tee pipes." Elston testified that the depth of the ponds was limited to five feet to allow sunlight to enhance the growth of aerobic microbes that fed on the trace amounts of chemicals in the rinsewater. This natural process was enhanced by anaerobic microbes acting in the ponds and lagoons to biodegrade the chemical particulates in the rinsewater. Gravity separated heavier materials from lighter ones in the first pond, and the floating contaminants were then periodically skimmed from the top of the ponds, and the settled materials were periodically dredged from the bottom of the ponds. The natural processes of aerobic and anaerobic microbial biodegradation would break down the trace chemical constituents which remained in the rinsewater.

         A "tee pipe" connected the first and second ponds so as to prevent the precipitated and floating materials from passing into the second pond. Thus, only "cleaner" water could reach the second pond. When this rinsewater reached the second pond, the retention, phased gravity separation, percolation and microbial biodegradation process was repeated. Only the rinsewater in the middle depth of that pond was allowed to flow into the third pond. These processes continued in the third pond, which received the "cleanest" water as a result of the processes occurring in the first two ponds. Elston testified at trial that the Bridgeport site was specially selected for its suitability for this kind of percolation system.

         In 1962, Chemical Leaman augmented this system by adding two larger aeration lagoons and a final settling lagoon with a limestone bed. Each of these lagoons was designed to replicate and enhance the treatment afforded by the original three ponds. In addition, the fourth and fifth lagoons were equipped with spray aeration devices to increase the oxygen level in the lagoons and, thereby, increase aerobic microbial biodegradation and evaporation.

         From the very beginning of this system, the final impoundment pond contained an overflow pipe at the top end of the berms which fed into an adjacent swamp. The pipe was apparently intended as a safety valve to prevent a rupture in the berms and a resulting massive loss of rinsewater in the event of a heavy rain. Between 1960 and 1975, there were repeated discharges of...

To continue reading

FREE SIGN UP