Schilberg Integrated Metals Corp. v. Continental Casualty Co.

• Decision Date: 22 April 2003
• Docket Number: (SC 16729).
• Citation: 263 Conn. 245,819 A.2d 773
• Court: Connecticut Supreme Court
• Parties: SCHILBERG INTEGRATED METALS CORPORATION v. CONTINENTAL CASUALTY COMPANY ET AL.

263 Conn. 245

819 A.2d 773

SCHILBERG INTEGRATED METALS CORPORATION v. CONTINENTAL CASUALTY COMPANY ET AL.

(SC 16729).

Supreme Court of Connecticut.

Argued October 22, 2002.

Officially released April 22, 2003.

Sullivan, C. J., and Borden, Katz, Palmer and Zarella, Js. Brian P. Daniels, with whom was John R. Bashaw, for the appellant (plaintiff).

Joel M. Fain, with whom, on the brief, was Erich H. Gaston, for the appellees (defendants). Daniel P. Scapellati, John B. Farley, Laura A. Foggan, pro hac vice, and John C. Yang, pro hac vice, filed a brief for the Insurance Environmental Litigation Association as amicus curiae.

Opinion

ZARELLA, J.

This appeal arises from a dispute over whether various insurance policies issued by the defendant insurers required them to defend the plaintiff insured in an administrative action brought by the Pennsylvania department of environmental resources (department). The plaintiff, Schilberg Integrated Metals Corporation, brought this action against the defendants, Continental Casualty Company, Transportation Insurance Company and Valley Forge Insurance Company, seeking, inter alia, damages for breach of contract after the defendants had declined to provide the plaintiff with a defense in an administrative action brought by the department against the plaintiff. Both the plaintiff and the defendants filed separate motions for summary judgment. The trial court denied the plaintiff's motion, granted the defendants' motion and rendered judgment in favor of the defendants, from which the plaintiff appealed. We affirm the judgment of the trial court.

The record discloses the following undisputed facts and procedural history. The plaintiff is a Connecticut corporation that specializes in scrap copper processing and recovery of metal from insulated wire. In December, 1981, the plaintiff, in conjunction with Phillip Cardinale, arranged for the treatment and disposal of waste containing hazardous substances at a site located in the state of Pennsylvania (site) at which Cardinale had maintained an unauthorized scrap, wire and metal reclamation and waste disposal facility. The arrangement between the plaintiff and Cardinale involved the removal of insulated wire from the plaintiff's Connecticut facility, the processing of the wire at Cardinale's facility in Pennsylvania, and the return of residual copper derived from the processed wire to the plaintiff. The processing of the insulation from the wires resulted in the release of hazardous substances at the site.

In 1988, an inspection of the site revealed significant contamination to the on-site soil.¹ In light of the inspection results, the department took various remedial actions pursuant to its authority under the Pennsylvania Hazardous Sites Cleanup Act (act), Pa. Stat. Ann. tit. 35, § 6020.101 et seq. The department filed an administrative action against several parties, including the plaintiff, seeking reimbursement for the remediation costs it had incurred in connection with its cleanup efforts. The plaintiff, in turn, requested that the defendants, pursuant to the various insurance policies that they had issued to the plaintiff, provide a defense to the department's action. The defendants declined the plaintiff's request.

The provisions of the insurance policies on which the plaintiff bases its claim can be summarized as follows. From 1981 to 1985, the defendants issued to the plaintiff policies containing three types of insurance coverage: comprehensive general liability coverage; umbrella coverage; and excess coverage. Pursuant to those policies, the defendants agreed to provide coverage for any losses sustained as the result of bodily injury or property damage. Furthermore, each of the policies required each defendant to defend the plaintiff in any action seeking damages for bodily injury or property damage, regardless of the merits of the claim. Coverage under the policies was limited, however, by a pollution exclusion clause, which excluded from coverage any claims arising from the discharge of pollutants. The pollution exclusion clause itself was limited by an exception for "sudden and accidental" occurrences. Under this exception, coverage under the policy is not excluded if the discharge of pollutants is "sudden and accidental.. . ."²

Insurance policies issued to the plaintiff by the defendants after 1985 did not include an exception for sudden and accidental occurrences. Rather, the policies issued after 1985 contained an absolute pollution exclusion clause that excluded from coverage any bodily injury or property damage arising out of the discharge of pollutants, regardless of the manner of discharge.³ In response to the defendants' refusal to defend the plaintiff, the plaintiff filed this action against the defendants alleging, inter alia, breach of contract. The defendants filed an answer in which they denied all legal claims and asserted, by way of a special defense, that "[t]here is no coverage for the plaintiff's claims by reason of the pollution exclusions contained in any applicable policy of insurance."

Both the plaintiff and the defendants filed separate motions for summary judgment. In their respective motions, the parties asserted that they were entitled to judgment as a matter of law on the basis of the nature of the allegations asserted by the department in its administrative action against the plaintiff and the substance of the provisions contained in the insurance policies. Specifically, the defendants claimed that the pollution exclusion clauses in the policies did not obligate the defendants to provide a defense for the plaintiff in the department's administrative action. The plaintiff claimed, to the contrary, that the nature of the allegations underlying the department's action against the plaintiff did not eliminate the possibility of coverage and, therefore, that the defendants were obligated to provide a defense. In its motion, the plaintiff also sought summary judgment as to the defendants' special defenses.⁴ The trial court granted the defendants' motion for summary judgment and rendered judgment thereon, concluding that, as a matter of law, the allegations underlying the department's administrative action against the plaintiff fell within the purview of the pollution exclusion clauses contained in the insurance policies issued by the defendants and that, consequently, the defendants had no duty to defend the plaintiff. The plaintiff appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-2.

The sole issue in this appeal is whether the defendants were required to defend the plaintiff in the department's administrative action pursuant to the terms of the various insurance policies issued by the defendants to the plaintiff. The plaintiff advances several arguments in support of its contention that the trial court improperly granted the defendants' motion for summary judgment. The plaintiff argues, first, that the trial court improperly concluded that the defendants' duty to defend was not triggered under the policies containing the sudden and accidental discharge exception to the pollution exclusion clauses. Second, the plaintiff argues that the trial court improperly concluded that the absolute pollution exclusion clauses precluded coverage when the discharge of pollutants resulted from the plaintiff's central business activity. Third, the plaintiff argues that, owing to the defendants' failure to file the pollution exclusion clauses with the appropriate regulatory body, the trial court improperly granted summary judgment in favor of the defendants on the basis of the substance of those clauses. Finally, the plaintiff argues that the trial court improperly denied its motion to compel discovery of certain documents pertaining to the drafting of the policies at issue in order to establish that the policy language was susceptible to more than one interpretation. We address, and reject, each of these arguments seriatim.

"Before addressing the [plaintiff's] arguments, we set forth the applicable standard of review of a trial court's ruling on motions for summary judgment. Summary judgment shall be rendered forthwith if the pleadings, affidavits and other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.. . . The scope of our appellate review depends upon the proper characterization of the rulings made by the trial court. . . . When . . . the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record." (Citations omitted; internal quotation marks omitted.) Dept. of Social Services v. Saunders, 247 Conn. 686, 696-97, 724 A.2d 1093 (1999). In the present case, "[t]he trial court was presented with cross motions for summary judgment based on undisputed facts. Therefore, our review is plenary and we must determine whether the court's conclusions are legally and logically correct and are supported by the record." (Internal quotation marks omitted.) Id., 697.

"In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact." (Internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 550, 791 A.2d 489 (2002).

"We emphasize . . . that [a]lthough the party seeking...