Gregory v. Tennessee Gas Pipeline Co.
| Decision Date | 12 December 1991 |
| Docket Number | No. 91-4245,91-4245 |
| Citation | 948 F.2d 203 |
| Parties | A.J. GREGORY, Jr. et al., Plaintiffs, v. TENNESSEE GAS PIPELINE COMPANY, Defendant. The CITY OF NATCHITOCHES, LOUISIANA, Defendant/Third-Party Plaintiff-Appellant, v. TITAN INDEMNITY COMPANY, Third-Party Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Michael Osborne, Osborne, McComiskey & Gobert, New Orleans, La., Ronald E. Corkern, Jr., and Daniel T. Murchison, Watson, Murchison, Crews, Arthur & Corkern, Natchitoches, La., for defendant/third-party plaintiff-appellant.
Joseph J. Bailey, and Ronald J. Fiorenza, Provosty, Sadler & Delaunay, Alexandria, La., for Titan.
Appeal from the United States District Court for the Western District of Louisiana.
Before CLARK, Chief Judge, WILLIAMS and BARKSDALE, Circuit Judges.
I.
The City of Natchitoches, Louisiana (City), appeals the district court's grant of summary judgment in favor of Titan Indemnity Company in the City's third party action seeking a declaratory judgment of coverage under a commercial general liability insurance policy. We affirm.
II. Background
The City created Sibley Lake Reservoir (the lake) in the late 1950's to provide a recreational facility and a drinking water supply for the City. The lake was created by impounding Rio Honde, a navigable waterway of the United States. The City admits it owns the bed of the lake, but denies ownership of the bed of the Rio Honde within the bed of the lake. It also denies ownership of the waters, fish, flora, or fauna of the lake. The City does maintain the water level of the lake for its drinking water supply.
Tennessee Gas Pipeline Company (Tennessee Gas) maintains a facility adjacent to the lake and has discharge permits from the U.S. Army Corps of Engineers (Corps) and the state Department of Environmental Quality (DEQ). Tennessee Gas allegedly discharged polychlorinated biphenyls (PCBs) into the lake. Numerous riparian owners brought suit in state court against Tennessee Gas, as well as the City and Waterworks District # 1.
Although the complaints differ in their particulars, they generally allege that the City constructed the lake and that the City owns and controls the lake. Plaintiffs assert that the discharge from Tennessee Gas's facility contaminated the soil, water, flora, and fauna of the lake, that plaintiffs have been repeatedly exposed to PCBs and other hazardous and toxic substances in the contaminated soil, water, fish, flora and fauna of the lake and that plaintiffs have suffered or will likely suffer adverse health effects as a result. Plaintiffs further allege that the contamination has caused a diminution in value of their lakefront property. A few of the plaintiffs have also alleged a loss of business income.
Plaintiffs claim that the City is liable on several grounds. First, the City is strictly liable as the proprietor of an estate of its neighbors. La.Civ.Code art. 667. Second, the City is liable as the owner or custodian of a defective and unreasonably dangerous thing. La.Civ.Code art. 2317. Third, the City knew or should have known of the PCB contamination and was negligent in failing to detect the contamination, to warn plaintiffs of the contamination risks or to clean the lake.
The City filed a third party complaint against Titan Indemnity Company (Titan), alleging that Titan owed it coverage and the duty to defend it against the actions under the terms of a commercial general liability policy issued by Titan. Titan removed the entire action to federal court. The district court retained jurisdiction over all indemnity issues and remanded plaintiffs' cases to state court.
The district court granted Titan's motion for summary judgment, finding that the policy does not cover the claims made by plaintiffs or obligate Titan to defend the City against plaintiffs' actions. The City appeals.
III. Standard of Review
This court reviews the issues presented on appeal from summary judgment de novo. Trial v. Atchinson, T. & S.F.R. Co., 896 F.2d 120, 122 (5th Cir.1990). To warrant summary judgment the evidence must 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." FED.R.CIV.P. 56(c).
Louisiana insurance law governs our interpretation of the insurance policy. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Porter v. American Optical Corp., 641 F.2d 1128, 1141-45 (5th Cir.), cert. denied, 454 U.S. 1109, 102 S.Ct. 686, 70 L.Ed.2d 650 (1981). An insurer's duty to defend is broader than its liability for damage claims. Bell v. Sediment Removers, Inc., 479 So.2d 1078, 1082 (La.Ct.App.1985), cert. denied, 481 So.2d 1350 (La.1986). The pleadings alone determine whether the claims absolve the insurer of the duty to defend. C.L. Morris, Inc. v. Southern American Ins. Co., 550 So.2d 828, 830-831 (La.Ct.App.1989); Aetna Ins. Co. v. Grady White Boats, Inc., 432 So.2d 1082, 1086 (La.Ct.App.1983). An insurer owes a duty to defend unless the claims made against the insured are clearly excluded from coverage in the policy. C.L. Morris, 550 So.2d at 830-31. The insurer must defend the insured if the complaint discloses even a possibility of liability under the policy. Jensen v. Snellings, 841 F.2d 600, 612 (5th Cir.1988). If only one claim falls within the duty to defend then the insurer must defend the entire case and the court should liberally construe the complaints to determine whether any one claim triggers the duty to defend. Id.; Armstrong v. Land & Marine Applicators, Inc., 463 So.2d 1327, 1331 (La.Ct.App.1984). In the instant case the complaints do not allege any claim which involves Titan's duty to defend.
IV. The Policy
In its declarations the policy states the following applicable limits of insurance:
General aggregate limit $ No aggregate
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(other than products-completed operations)
Products-completed operations $ No aggregate
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Personal and advertising injury $500,000
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Each occurrence limit $500,000
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In Coverage A of the insuring agreement, Titan agrees to pay those sums the City becomes legally obligated to pay as damages because of bodily injury or property damage occurring during the term of the policy. Such injury or damage must be caused by an occurrence. The issue as to bodily injury or property damage coverage turns on policy language which excludes:
damage arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants:
(a) At or from premises you own, rent or occupy; ....
* * * * * *
Pollutants mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.
Other exclusions in this part of the policy deny coverage for property damage to the City's own property. They also expressly deal with bodily injury and property damage coverage for the products-completed operations hazard. The products-completed operations hazard is defined to include all bodily injury and property damage occurring away from premises the City owns and arising out of its product or work, except products still in its physical possession or work not yet completed.
Coverage B describes the personal and advertising injury liability assumed. It provides indemnity for damages the City becomes legally obligated to pay because of "personal injury" caused by an offense committed which arises out of the conduct of City business, or because of injury caused by an offense committed in the course of advertising the City's products or services. Personal injury is defined as:
injury, other than bodily injury, arising out of one or more of the following offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. Wrongful entry into, or eviction of a person from, a room, dwelling or premises that the person occupies;
d. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or
e. Oral or written publication of material that violates a person's right of privacy.
V. Bodily Injury and Property Damage Coverage: The
Titan claims that the pollution exclusion in the policy applies to the plaintiffs' claims. Titan asserts that the complaints charge that all alleged damages consist of bodily injury or property damage which were incurred because of the City's ownership or occupancy of the lake and, therefore, the pollution exclusion absolves Titan of any duty to defend.
The City argues that it does not own or occupy the lake and that the pollution did not occur at or from any premises owned, rented or occupied by the City. We disagree.
The City contends that the alleged discharge of pollutants does not occur "at or from" the lake but, instead, occurs at the Tennessee Gas facility and from the Tennessee Gas pipe above the waters. This contention is sophistry. The complaints assert that plaintiffs were injured by the presence of PCBs in the lake. But for the presence of PCBs in the lake, the alleged diminution of property value or loss of business income could not have occurred. Plaintiffs' only allegation is that use of the lake caused their bodily injury and property damage. The claims against the City arise solely from pollutants at or from the lake.
The City's principal contention in its argument that the pollution exception does not apply is based on its denial that it owns the lake, and the fish, flora and fauna associated with the lake. The district court stated that even if...
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