89 F.3d 976 (3rd Cir. 1995), 93-5777, Chemical Leaman Tank Lines, Inc. v. Aetna Cas. and Sur. Co.
|Docket Nº:||referred to as|
|Citation:||89 F.3d 976|
|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|
Argued Sept. 26, 1994.
Petition for Panel Rehearing Granted
and Opinion and Judgment Vacated
Dec. 15, 1995.
Submitted on Petition for
Panel Rehearing Dec. 15, 1995.
Decided June 20, 1996.
Order Denying Rehearing and
Rehearing In Banc July 22, 1996.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Henry Lee (Argued), Gary P. Schulz, John G. McAndrews, Hannah M. O'Driscoll, Mendes & Mount, New York City, William J. Hanley, Ronca, McDonald & Hanley, Livingston, New Jersey, for Appellants at No. 93-5777.
Brian J. Coyle (Argued), Peter E. Mueller, Harwood Lloyd, Hackensack, New Jersey, William H. Jeffress, Jr., Miller, Cassidy, Larroca & Lewin, Washington, DC, Edward M. Dunham, Jr., Miller, Dunham & Doering, Philadelphia, Pennsylvania, for Appellant, Aetna Casualty and Surety Company.
Kevin B. Clark (Argued), John P. Dean, Conrad J. Smucker, Willkie, Farr & Gallagher, Washington, DC, for Appellee, Chemical Leaman Tank Lines, Inc.
Thomas W. Brunner, Wiley, Rein & Fielding, Washington, DC, for Amicus Curiae Appellant, Insurance Environmental Litigation Association.
Karen L. Jordan, Office of Attorney General of New Jersey, Department of Law & Public Safety, Trenton, New Jersey, for Amicus Curiae Appellee, State of New Jersey, New Jersey Department of Environmental Protection & Energy.
Before SCIRICA, NYGAARD and McKEE, Circuit Judges.
OPINION OF THE COURT
SCIRICA, Circuit Judge.
Chemical Leaman Tank Lines, Inc. brought this declaratory judgment action against Aetna Casualty and Surety Company and the London Market Insurers, seeking a declaration that defendants' insurance policies covered the cost of environmental clean-up at Chemical Leaman's Bridgeport, New Jersey facility. After a three week trial, a jury found Chemical Leaman was entitled to partial coverage under several policies. Thereafter the New Jersey Supreme Court decided Morton Intern., Inc. v. General Acc. Ins. Co., 134 N.J. 1, 629 A.2d 831 (1993), cert. denied, 512 U.S. 1245, 114 S.Ct. 2764, 129 L.Ed.2d 878 (1994), which interprets several key provisions of comprehensive general liability insurance policies in the context of environmental pollution. Defendant insurers now appeal, contending the district court incorrectly instructed the jury on whether Chemical Leaman "expected or intended" to cause environmental damage under Morton. We believe Morton requires an inquiry into the insured's subjective intent to cause environmental harm, unless "exceptional circumstances" support a presumption of the insured's subjective intent. Therefore we conclude the district court's jury instructions were proper.
Defendant insurers raise several other issues on appeal. They argue the district court mistakenly limited the applicability of the policies' pollution exclusion clause, incorrectly adopted the "continuous trigger" theory as New Jersey law, and ignored the prejudicial effect of Chemical Leaman's failure to file its claims for coverage in a timely manner. They also dispute the district court's exclusion of evidence relating to environmental contamination at other Chemical Leaman facilities. We will affirm the district court's holdings on the pollution exclusion clause, the "continuous trigger" theory, and timely notice. We also conclude that the exclusion of certain evidence was within the sound discretion of the district court. 1
Contamination at the Bridgeport Facility
Chemical Leaman Tank Lines, Inc., a tank truck company that specializes in the transport of chemicals and other liquids, operates
a number of tank truck cleaning facilities around the country, including one in Bridgeport, New Jersey. At the Bridgeport facility, Chemical Leaman disposed of rinsewater contaminated with chemical residue during the cleaning process into a water treatment system designed by Harry Elston, Chemical Leaman's Manager of Real Estate and Engineering, and Harry Wagner, a professional sanitary engineer. At its inception in 1960, the Bridgeport water treatment system consisted of three unlined ponds connected by "tee pipes." The ponds were intended to purify rinsewater by filtering out contaminants as the water seeped into the soil. The designers of the system believed that the forces of gravity would separate contaminates from the rinsewater, and that natural processes of aerobic and anaerobic microbial degradation would break down trace contaminants. An overflow pipe drained from the final pond of the water treatment system into an adjacent swamp in order to allow water to escape in the case of heavy rains.
In September 1961, an Inspector with the New Jersey Division of Fish Game & Wildlife informed Chemical Leaman that its water treatment system was "not satisfactory." In response, Chemical Leaman constructed two additional aeration lagoons and a settling lagoon with a limestone bed. The lagoons were designed to function in the same manner as the first three ponds. But the overflow pipe still drained from the last lagoon into the neighboring swamp.
Water pollution inspectors with the New Jersey Department of Health observed discharge from the overflow pipe into the swamp in November 1968. They found the discharge to be "highly pollutional" and ordered Chemical Leaman to submit a plan to improve its water treatment system. In May 1969, Chemical Leaman submitted a plan, but state regulators found it to be unsatisfactory. Thereafter state regulators and Chemical Leaman unsuccessfully attempted to reach agreement. Finally, on January 28, 1974, Chemical Leaman and the New Jersey Department of Environmental Protection entered into a consent decree in which Chemical Leaman agreed to construct an approved water treatment facility. In 1975, Chemical Leaman arranged for its wastewater to be treated by Du Pont and ceased to use the system of ponds and lagoons. Subsequently, Chemical Leaman drained the ponds and lagoons, dredged them, and filled them with brickbat, sand and concrete.
In 1980, a routine survey by the New Jersey Department of Environmental Protection discovered groundwater contamination at and around the...
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