833 F.Supp. 1239 (W.D.Mich. 1993), 189-CV-967, Harrow Products, Inc. v. Liberty Mut. Ins. Co.

Docket Nº:189-CV-967
Citation:833 F.Supp. 1239
Party Name:Harrow Products, Inc. v. Liberty Mut. Ins. Co.
Case Date:August 30, 1993
Court:United States District Courts, 6th Circuit, Western District of Michigan

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833 F.Supp. 1239 (W.D.Mich. 1993)

HARROW PRODUCTS, INC., a Delaware corporation; Leigh Products, Inc., a former Delaware corporation; and Universal Gerwin, a division of Harrow Products, Inc., Plaintiffs,


LIBERTY MUTUAL INSURANCE COMPANY, Insurance Company of North America, Continental Insurance Company, American Insurance Company, and New England Insurance Company, Defendants.

Nos. 1:89-CV-967, 1:90-CV-811.

United States District Court, W.D. Michigan, Southern Division.

Aug. 30, 1993

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Ignatius J. Melito, Siff Rosen, PC, New York City, J. Richardson Johnson, Early, Lennon, Fox, Thompson, Peters & Crocker, Kalamazoo, MI, for New England Ins. Co.

Thomas D. Allen, Kohl, Secrest, Wardle, Lynch, Clark & Hampton, Farmington Hills, MI, for American Ins. Co.

Robert E. Graziani, Timmis & Inman, Detroit, MI, Mark W. Peyser, Marco, Timmis & Inman, Grosse Pointe, MI, for Continental Ins. Co.

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Paul R. Koepff, Mudge, Rose, Guthrie, Alexander & Ferdon, New York City, Gary L. Stec, Harvey, Kruse, Westen & Milan, PC, Grand Rapids, MI, for Ins. Co. of North America.

Walter A. Stewart, Manta & Welge, Philadelphia, PA, Reynolds A. Brander, Jr., Cholette, Perkins & Buchanan, Grand Rapids, MI, for Liberty Mut. Ins. Co.


McKEAGUE, District Judge.

The plaintiffs, Harrow Products, Inc., Leigh Products, Inc., and Universal Gerwin, are three related corporate entities whose interests are, for present purposes, essentially identical. They seek a declaratory judgment to the effect that defendant insurance companies are obliged to defend and/or indemnify them in connection with claims that plaintiffs are responsible for certain groundwater contamination. All parties have moved for summary judgment.



Plaintiffs, collectively referred to as Harrow Products, owned and operated a manufacturing facility in Saranac, Michigan, from the mid-1940's until 1985. The facility is adjacent to property owned by the Village of Saranac, where municipal water supply wells were located. In September 1982, Harrow Products learned that trichloroethylene ("TCE") had been detected by the Michigan Department of Health in the municipal water supply. The Michigan Department of Natural Resources ("MDNR") immediately undertook an investigation to determine the extent and source of the contamination. Harrow Products cooperated with the investigation, which included the installation of monitoring wells on Harrow Products' property. By letter dated February 27, 1985, Harrow Products received notice from the MDNR that its facility was the suspected source of the TCE contamination. Harrow Products notified its primary comprehensive liability insurer, Liberty Mutual Insurance Company, of the potential claim on March 1, 1985. It appears Liberty Mutual was on the risk from at least 1964 until 1987. Under the only policies which the parties have been able to produce, covering the period from December 1, 1982, to December 1, 1987, Liberty Mutual provided defense and indemnification coverage for bodily injury, property damage and personal injury. The limits were $500,000 for bodily injury and personal injury, and $100,000 for property damage.

Liberty Mutual undertook Harrow Products' defense in the MDNR administrative proceedings. On January 21, 1987, the MDNR notified Harrow Products that its contamination of the Village of Saranac water supply was a violation of the Water Resources Commission Act, and requested a remediation plan. Liberty Mutual continued to defend Harrow Products in these matters until March 23, 1989, when it determined to deny coverage based on the applicable policy's pollution exclusion.

Harrow Products gave notice of its troubles to its excess liability insurers in December 1988, and January 1989. Defendant New England Insurance Company had issued four umbrella liability policies providing Harrow Products coverage during the period December 1, 1976 to December 1, 1980, for liability in excess of that covered by Liberty Mutual up to $5,000,000.1 Defendant Continental Insurance Company provided similar excess liability coverage, up to $5,000,000, for the next two years, through December 1, 1982. Defendant American Insurance Company provided excess liability coverage during the period December 1, 1979, through December 1, 1982, for liability in excess of that covered by the underlying policies of New England and Continental up to an additional $5,000,000. And finally, defendant Insurance Company of North America ("INA") provided excess liability coverage from December 1, 1983 through December 1, 1985, for liability in excess of that covered by Liberty Mutual during that period, up to $20,000,000.

On October 19, 1989, the Village of Saranac filed a complaint against Harrow Products in this Court, Village of Saranac v. Harrow Products, Inc., et al.,

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W.D.Mich. No. 1:89-CV-967, seeking damages and recovery of response costs under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), and the Michigan Environmental Protection Act ("MEPA"). Again, Liberty Mutual denied coverage and refused to defend Harrow Products. The excess carriers, too, refused to assume Harrow Products' defense. Hence, Harrow Products filed a third-party complaint against all five insurance companies for a declaration of its rights to coverage vis-a-vis the Village of Saranac claims.

Subsequently, this action was commenced on September 25, 1990, for a declaration of Harrow Products' rights to coverage vis-a-vis the concurrent MDNR administrative proceedings. The two actions have been consolidated. On January 22, 1991, the Village of Saranac claims against Harrow Products were dismissed after the parties agreed to settle them for $475,000.

The issues posed by the parties' cross-motions for summary judgment are essentially four:

(1) Is Harrow Products entitled to coverage, notwithstanding the pollution exclusion in each insurer's policy, either (a) because the complained of release or discharge of TCE was "sudden and accidental," or (b) because the claims brought against Harrow Products may be characterized as "personal injury" claims not affected by the pollution exclusion?

(2) To what extent are/were defendant insurers obliged to undertake Harrow Products' defense in the MDNR administrative proceedings and the Village of Saranac action?

(3) Was Harrow Products' notice to each insurer so untimely as to negate coverage?

(4) When is coverage properly deemed to have been triggered by the "occurrence" of TCE contamination?



The parties' cross-motions for summary judgment ask the Court to evaluate the factual support for their claims and defenses. The Court must look beyond the pleadings and assess the proof to determine whether there is a genuine need for trial. Matsushita Elec. Ind. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The standard for determining whether summary judgment is appropriate is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id., 477 U.S. at 247-248, 106 S.Ct. at 2510 (emphasis in original). If a movant carries its burden of showing there is an absence of evidence to support a claim or defense, then the opponent must demonstrate by affidavits, depositions, answers to interrogatories, and admissions on file, that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). An issue of fact is "genuine" if the evidence is such that a reasonable jury could find for its proponent. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. An issue of fact concerns "material" facts only if establishment thereof might affect the outcome of the lawsuit under governing substantive law. Id. A complete failure of proof concerning an essential element of a claim or defense necessarily renders all other facts immaterial. Celotex, supra, 477 U.S. at 322-23, 106 S.Ct. at 2552-53.



Of the issues presented, the applicability of the pollution exclusion is a threshold question. All of the insurance policies at issue contain a pollution exclusion substantially

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similar to that contained in the Liberty Mutual policies:

This policy does not apply:


(f) to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental; ....2

There is no dispute that the MDNR proceedings and the claims of the Village of Saranac assert that Harrow Products is liable for releasing contaminants or pollutants into or upon land or any water course or body of water. Harrow Products contends, however, that the pollution exclusion contained in all policies does not apply to exclude coverage because there is evidence that the TCE contamination resulted from "sudden and accidental" spills. The nature of the evidence...

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