Norfolk Southern Corporation v. California Union Insurance Company
| Citation | 859 So.2d 201 |
| Decision Date | 26 September 2003 |
| Docket Number | NO. 2002 CA 2696.,NO. 2003 CA 0110.,2002 CA 2696.,2003 CA 0110. |
| Parties | NORFOLK SOUTHERN CORPORATION, NORFOLK SOUTHERN RAILWAY COMPANY, NORFOLK AND WESTERN RAILWAY COMPANY, THE ALABAMA GREAT SOUTHERN RAILROAD COMPANY, SOUTHERN REGION INDUSTRIAL REALTY, INC., CENTRAL OF GEORGIA RAILROAD COMPANY, AND THE CINCINNATI, NEW ORLEANS AND TEXAS PACIFIC RAILWAY COMPANY v. CALIFORNIA UNION INSURANCE COMPANY AND CERTAIN UNDERWRITING MEMBERS OF LLOYD'S, ET AL. |
| Court | Court of Appeal of Louisiana — District of US |
Cory R. Cahn, Benjamin R. Slater, Jr., Benjamin R. Slater, III, New Orleans, LA, And Carmack M. Blackmon, Baton Rouge, LA, Attorneys for Appellees Plaintiffs Norfolk Southern Corporation, et al.
Michael D. Hunt, Freddie Pitcher, Jr., Jane H. Barney, Baton Rouge, LA, And Richard N. Dicharry, New Orleans, LA, Attorneys for Appellants Defendants Certain Underwriting Members of Lloyd's.
Panel composed of Judges FRANK FOIL, BRADY M. FITZSIMMONS AND EDWARD J. GAIDRY.
The Norfolk Southern Corporation and certain of its affiliated railroad companies (collectively, Norfolk)1 filed this lawsuit for declaratory judgment and damages against various underwriting members of Lloyd's London and certain London Market Insurance Companies (collectively, the London Insurers). In its original and amended petitions, Norfolk sought a declaration that it had coverage under several excess comprehensive general liability policies subscribed to by the London Insurers from 1960 to 1986 for the costs of cleaning up various polluted sites around the United States, including the Jennison-Wright site in Toledo, Ohio.2 Two judgments concerning the Jennison-Wright site are challenged in separate appeals numbered 2002 CA 2696 and 2003 CA 0110.3 In appeal number 2002 CA 2696, the London Insurers challenge a summary judgment rendered in favor of Norfolk, finding coverage under the excess policies. In appeal number 2003 CA 0110, the London Insurers challenge a judgment rendered following a cost trial, which judgment determined Norfolk's ultimate net loss and purportedly resolved any issues of exhaustion of self-insured retention limits (SIRs) and/or allocation. Although the cases have not been consolidated for appeal, because many of the issues pertaining to each appeal are interrelated, we address them both in a single opinion. For the reasons that follow, we affirm the summary judgment rendered on the issue of coverage, affirm the trial court's finding as to ultimate net loss, and reverse and render judgment on the issues of exhaustion of SIRs and/or allocation.
Norfolk filed this suit for declaratory judgment and for damages against the London Insurers4 seeking reimbursement for costs expended by Norfolk in remediating various environmental sites located throughout the United States, including the one at issue in this appeal, the Jennison-Wright site in Toledo, Ohio.
The former Jennison-Wright facility (JW site) spans over 23 acres. Norfolk and Western Railway Co. (N&W) owns approximately 16 acres of the site. Penn Central Railroad originally owned the remaining acreage until it was later transferred to Consolidated Rail Corp. (Conrail). Beginning in 1910, N&W leased its property to the Jennison-Wright Corp., which operated a wood treatment facility using creosote. During the wood treatment process that spanned many years, creosote dripped onto and seeped into the ground, ultimately resulting in soil and groundwater contamination.
In November 1989, the Jennison-Wright Corp., which was in the process of remediating the JW site, declared bankruptcy. Subsequently, in April, 1990, the Ohio state EPA notified N&W of its potential liability for the remediation of the JW site based on its ownership interest in the underlying property. Negotiations between N&W and the Ohio state EPA over the site went on for four years. Ultimately, in 1994, the EPA formally approved a Remedial Action Work Plan submitted by a remediation contractor retained jointly by N&W and Conrail. By means of this suit, Norfolk seeks reimbursement for the costs it has expended in remediating the JW site.
Pursuant to the various excess liability policies in effect from 1960 to 1986 issued to Norfolk and Western Railway Co. (N&W) and Norfolk Southern Corp., the London Insurers agreed as follows:
To indemnify the Assured for any and all sums which the Assured shall be legally liable to pay and shall pay as damages and expenses as more fully defined by the term "ultimate net loss" on account of personal injuries and property damage as herein defined arising out of occurrences happening during the policy period and due to the conduct of the Assured's business.
The term "occurrence" was most commonly defined in the policies as "one happening or series of happenings, arising out of or due to one event." The policies do not define the terms "happening" or "event." The policies defined "property damage" to exclude damage to property owned by the assured or property in the care, custody, or control of the assured.5
All of the policies provided excess insurance coverage in successive layers above a substantial SIR in accordance with the terms of the policies. Throughout all policy periods, Norfolk chose to self-insure at the primary level and maintained SIRs of at least $1,000,000 per occurrence.
On November 23, 1999, Norfolk filed a motion for summary judgment as to insurance coverage for the JW site for remediation costs incurred as a result of creosote contamination caused by the operations of its lessee. The London Insurers opposed the motion with evidence allegedly demonstrating disputed issues of material fact. On January 6, 2000, the London Insurers filed a motion for summary judgment based on the alleged undisputed facts regarding Norfolk's losses and the law on allocation and exhaustion of SIRs, which the insurers claimed required a dismissal of Norfolk's claims. The trial court denied the London Insurers' motion and thereafter granted Norfolk's motion. In granting the summary judgment, the trial court concluded that the event triggering coverage under the policies was groundwater contamination. Judgment was signed February 1, 2000.6 Thereafter, the London Insurers filed a motion for review of the interlocutory ruling, asking the trial court to review its grant of summary judgment. Before ruling on the motion, however, the trial court designated the judgment final and appealable. This appeal by the London Insurers followed.
A motion for summary judgment should be granted only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue as to material fact and that mover is entitled to judgment as a matter of law. La. C.C.P. art. 966 B. Appellate courts are to review summary judgments de novo under the same criteria that govern the district court's consideration of whether summary judgment is appropriate. Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to the case.
Calhoun v. Hoffman-La Roche, Inc.,
98-2770, p.4-5 (La. App. 1 Cir. 2/18/2000), 768 So.2d 57, 60-61, writdenied, 00-1223 (La. 6/23/2000), 765 So.2d 1041.
Within their second assignment of error, the London Insurers argue that the trial court erred in granting Norfolk's motion for summary judgment as a matter of law. Specifically, they assert that the court erred in deciding that Ohio substantive law should apply to the claims regarding the JW site and then relying on a Kansas case in purporting to apply Ohio law.
00-0359, pp. 4-5 (La. App. 4 Cir. 5/2/01), 785 So.2d 262, 265, writ denied, 01-1945 (La. 11/9/01), 801 So.2d 375. The London Insurers argue that under any law, these excess policies were not even triggered and could not be found summarily to provide coverage. They argue specifically that liability under the excess policies is only triggered when the losses exceed the limits underlying all of the policies at issue. We disagree.
A review of the record indicates that the property damage for which Norfolk sought coverage at the JW site was the contamination arising out of the wood-preserving operations carried out at the site over the course of many years. Indeed, the trial court specifically found that the event triggering coverage in this case was groundwater contamination. The Jennison-Wright Corp. leased the site for use as a creosote facility from 1910 to 1990. As was the case with two of the Louisiana sites previously addressed by this court,7 the operations conducted at the JW site resulted in the routine deposit of contaminants onto the ground throughout the periods that the facility was in operation. In cases involving long-term environmental damage such as here, the property damage is generally not due to a single...
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