New Castle County v. Hartford Acc. and Indem. Co., s. 89-3814

Citation933 F.2d 1162
Decision Date29 May 1991
Docket NumberNos. 89-3814,90-3012 and 90-3030,s. 89-3814
Parties, 21 Fed.R.Serv.3d 1181, 21 Envtl. L. Rep. 21,153 NEW CASTLE COUNTY, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, a corporation of the State of Connecticut, Home Insurance Company, a corporation of the State of New Hampshire, New Hampshire Insurance Company, a corporation of the State of New Hampshire, Continental Casualty Company, a corporation of the State of Illinois, United States Fire Insurance Company, a corporation of the State of New York, Insurance Company of North America, a corporation of the State of Pennsylvania, Continental Insurance Company, a corporation of the State of New Hampshire, United States Liability Insurance Company, a corporation of the State of Pennsylvania, National Union Fire Insurance Company, a corporation of the Commonwealth of Pennsylvania, Twin City Fire Insurance Company, a corporation of the State of Minnesota, Aetna Casualty and Surety Company, a corporation of the State of Connecticut, and Zurich Insurance Company, a Swiss corporation Continental Casualty Company ("CNA'), Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Arthur Makadon (argued), David L. Cohen, Geoffrey A. Kahn, Walter M. Einhorn, Jr., Gilpin W. Bartels, Ballard, Spahr, Andrews & Ingersoll, Philadelphia, Pa., John G. Mulford, Michael J. Goodrick, Theisen, Lank, Mulford and Goldberg, P.A., Wilmington, Del., for CNA, appellant.

Joseph D. Tydings (argued), Jerold Oshinsky, Catherine Serafin Sponseller, Anderson, Kill, Olick & Oshinsky, Washington, D.C., George H. Seitz, III, Prickett, Jones, Elliott, Kristol and Schnee, Wilmington, Del., for New Castle County, appellee.

Clifford B. Hendler (argued), John I. Stewart, Jr., Scott L. Winkelman, William D. Wallace, Crowell & Moring, Dennis M. Flannery, A. Stephen Hut, Jr., Wilmer, Cutler & Pickering, Washington, D.C., for Insurance Co. of North America, appellee.

William J. Cattie, III, Heckler & Cattie, Wilmington, Del., Edward B. Deutsch, Laurence M. McHeffey, Loren L. Pierce, McElroy, Deutsch & Mulvaney, Morristown, N.J., for U.S. Fire Ins. Co., appellee.

Gary W. Aber, Heiman, Aber & Goldlust, Wilmington, Del., James E. Rocap, III, Thomas B. Carr, D. Bradley Clements, Miller, Cassidy, Larroca & Lewin, Washington, D.C., for Aetna Cas. & Sur. Co., appellees.

Dennis D. Ferri, Michael A. Pedicone, Dennis D. Ferri, P.A., Wilmington, Del., Philip A. Ryan, German, Gallagher & Murtagh, Philadelphia, Pa., for U.S. Liability Ins. Co., appellee.

Norman M. Monhait, Morris, Rosenthal, Monhait & Gross, P.A., Wilmington, Del., Roger E. Warin, Virginia L. White-Mahaffey, Anita G. Raby, Janet W. Steverson-Wright, Steptoe & Johnson, Washington, D.C., for The Home Ins. Co., appellee.

Alfred J. Kuffler, Michael B. McCauley, Stephen M. Calder, Kevin G. O'Donovan, David R. Kunz, Palmer, Biezup & Henderson, Philadelphia, Pa., for John Richard Ludbrooke Youell, amicus curiae.

Charles M. Oberly, III, Atty. Gen., State of Del., Robert S. Kuehl, Stuart B. Drowos, Deputy Attys. Gen., Dept. of Justice, Wilmington, Del., for State of Del., amicus curiae.

Ernest D. Preate, Jr., Atty. Gen., Com. of Pa., Harrisburg, Pa., for Commonwealth of Pa., amicus curiae.

Bert W. Rein, Thomas W. Brunner, Sharon Rau Dissinger, Wiley, Rein & Fielding, Washington, D.C., for Insurance Environmental Litigation Ass'n, amicus curiae.

William H. Allen, William F. Greaney, Martin Wald, Covington & Burling, Washington, D.C., for E.I. du Pont de Nemours & Co., ICI Americas, Inc., Intern. Business Machines Corp., Olin Corp., The American Petroleum Institute, and The Chemical Mfrs. Ass'n, amici curiae.

Before BECKER and NYGAARD, Circuit Judges, and RE, Chief Judge, Court of International Trade. *

                                          OPINION OF THE COURT
                                               ----------
                                            TABLE OF CONTENTS
                                                                                     PAGE
                I.    Introduction                                                         1167
                II.   Facts and Procedural History                                         1169
                      A.  PreOperation Events                                             1170
                      B.  The County's Operation of the Tybouts Corner Landfill            1171
                      C.  PostOperation Events                                            1171
                      D.  The Three Underlying Lawsuits Against the County                 1173
                      E.  The Insurance Coverage Litigation                                1173
                      F.  The Significant PostTrial Events                                1174
                III.  Appellate Jurisdiction                                               1176
                      A.  Appeal Number 893814                                            1176
                          1.            The Rule 59(e) Versus Rule 60(b) Issue             1176
                          2.            The Jurisdictional Effect of CNA's CrossClaims    1177
                      B.  Appeal Number 903030                                            1179
                IV.   The Insurance Coverage Issues                                        1180
                      A.  Preliminary Matters                                              1180
                          1.            CNA's Contracts of Insurance                       1180
                          2.            The Burden of Proof in Insurance Cases             1181
                          3.            The Interpretation of Insurance Policies Under     1182
                                          Delaware Law
                          4.            The Issues on Appeal                               1183
                          5.            Our Scope of Review                                1183
                      B.  The "As Damages"                                           1184
                            Clause
                          1.            Background                                         1184
                          2.            CNA's Contentions on Appeal                        1185
                          3.            The County's Response                              1187
                          4.            Legal, Technical Meaning or Plain, Ordinary        1188
                                          Meaning
                      C.  The "Occurrence" Clause                                          1191
                      D.  The           1192
                            "Pollution
                            Exclusion"
                            Clause
                          1.            The Meaning of the Word "Sudden"                   1193
                                        a.    The significance of multiple dictionary      1193
                                                definitions
                                        b.    The rule that all words in a policy should   1194
                                                be given effect
                                        c.    The existence of judicial disagreement       1195
                                        d.    The drafting and marketing history of the    1196
                                                pollution exclusion clause
                                        e.    Conclusion                                   1198
                          2.            The Damage/Discharge Distinction                   1199
                                        a.    The case law                                 1200
                                        b.    The history of the pollution exclusion:      1201
                                                does it shed any light on the import of
                                                the damage/discharge distinction
                                        c.    The economic rationale underlying the        1202
                                                damage/discharge distinction
                                        d.    Evidence suggesting that the discharge of    1202
                                                leachate from Tybouts Corner was not
                                                unexpected
                                        e.    Conclusion                                   1203
                V.    CNA's CrossClaims                                                   1203
                      A.  The Timeliness of CNA's CrossClaims Under the Parties'          1203
                            February 1986 Stipulation
                      B.  The "Settlement Bar" Issue                                       1205
                VI.   Conclusion                                                           1207
                ----------
                          BECKER, Circuit Judge
                
I. INTRODUCTION

These consolidated appeals present important questions about the meaning of the "pollution exclusion" and "as damages" clauses found in post-1970 comprehensive general liability ("CGL") insurance policies. These issues frequently recur in cases involving insurance coverage of environmental damage caused by the discharge of pollutants--a genre of litigation that has become a staple of many federal courts' dockets.

The standard CGL policy provides coverage for "all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage ... caused by an occurrence." 1 An "occurrence" is an "accident" that, during the policy period, results in damage "neither expected nor intended from the standpoint of the insured." The standard CGL policy also contains an exclusionary clause, known as the "pollution exclusion," which disclaims coverage "for bodily injury or property damage arising out of the discharge, dispersal, release or escape" of pollutants. This exclusion, however, is not absolute; it contains an exception providing for coverage where the bodily injury or property damage results from a "discharge" of pollutants that is "sudden and accidental."

These appeals arise from a declaratory judgment action brought in 1985 by New Castle County, Delaware (the "County") in the district court for the District of Delaware against twelve insurance companies that had issued CGL policies to the County. 2 The County sought a declaration of the carriers' duties under their respective policies to defend and indemnify it in three underlying lawsuits. These suits originated from the County's operation of and the discharge of pollutants from the Tybouts Corner landfill, which served from 1969 until 1971 as the County's primary location for the disposal of solid wastes. The three underlying lawsuits allege, in...

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