957 F.2d 1153 (4th Cir. 1992), 91-1685, Liberty Mut. Ins. Co. v. Triangle Industries, Inc.

Docket Nº:Zurich-American Insurance Companies, 91-1685 Zurich
Citation:957 F.2d 1153
Party Name:LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. TRIANGLE INDUSTRIES, INCORPORATED, a/k/a ANC Holdings, Incorporated; Triangle PWC, Incorporated, Defendant & Third Party Plaintiffs-Appellants, v. NEW JERSEY PROPERTY-LIABILITY GUARANTY ASSOCIATION, on Behalf of IDEAL MUTUAL INSURANCE COMPANY, in liquidation,
Case Date:March 02, 1992
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 1153

957 F.2d 1153 (4th Cir. 1992)




Incorporated; Triangle PWC, Incorporated,

Defendant & Third Party Plaintiffs-Appellants,



Behalf of IDEAL MUTUAL INSURANCE COMPANY, in liquidation,

Zurich-American Insurance Companies, 91-1685 Zurich

Insurance Company, Third Party Defendants-Appellees,


Wausau Insurance Companies, Employers Insurance of Wausau,

Third Party Defendants.

Westinghouse Electric Corporation, International Business

Machines Corporation, Olin Corporation, American Fiber

Manufacturers Association, American Petroleum Institute,

Chemical Manufacturers Association, Insurance Environmental

Litigation Association, Amici Curiae.

No. 91-1685.

United States Court of Appeals, Fourth Circuit

March 2, 1992

Argued Dec. 3, 1991.

As Amended March 10, 1992.

Page 1154

Stephen M. Orlofsky, Blank, Rome, Comisky & McCauley, Cherry Hill, N.J., argued (Carlo Scaramella, on brief), for defendants and third party plaintiffs-appellants.

Lee Hadas Glickenhaus, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Boston, Mass., argued, for third party defendants-appellees.

William F. Greaney, Covington & Burling, Washington, D.C., for amici curiae American Petroleum Institute and Chemical Mfrs. Ass'n; H. Woodruff Turner, Peter J. Kalis, David M. Aceto, Thomas M. Reiter, William J. Pohlman, Kirkpatrick & Lockhart, Pittsburgh, Pa., for Amici Curiae Westinghouse Elec. Corp., American Fiber Mfrs. Ass'n, Intern. Business Machines Corp., and Olin Corp., on the brief.

Thomas W. Brunner, Marilyn E. Kerst, Steven B. Long, Wiley, Rein & Fielding, Washington, D.C., for amicus curiae Ins. Environmental Litigation Ass'n.

Before ERVIN, Chief Judge, NIEMEYER, Circuit Judge, and SHEDD, United States District Judge for the District of South Carolina, sitting by designation.


NIEMEYER, Circuit Judge:

The question of whether insurance provides coverage for pollution damage is currently an important one that has far-reaching financial implications. 1 The answer determines who in the first instance bears the cost of pollution cleanup, although we recognize that it does not ultimately relieve the entire economy of the financial burden. In this case we conclude that certain insurance policies, interpreted in accordance with the law of New Jersey, do not provide coverage for the unintended environmental damage which allegedly continues to arise from the past regular surface disposal in a landfill of the waste products of a standard manufacturing process. We therefore affirm the judgment of the district court.


Triangle Industries, Inc., and its subsidiary, Triangle PWC, Inc., (collectively referred to as "Triangle") were involved in the fabrication of wire and cable at a processing plant in Glen Dale, West Virginia. As part of the fabrication process, Triangle utilized a method of "pickling" the steel used to make its wires and cables which produced a waste product known as "lime-stabilized waste pickle liquor sludge." Between November 1977 and October 1980, this limestabilized waste pickle liquor

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sludge was trucked by an independent contractor from the Triangle plant in West Virginia to a landfill near St. Clairsville, Ohio, where it was poured onto the ground. 2 Shortly after Triangle ceased disposing of the sludge at the site, the Ohio Environmental Protection Agency conducted tests and discovered that hazardous materials were leaking from the landfill.

After conducting some of its own tests, on December 7, 1984, the United States Environmental Protection Agency notified Triangle, as well as other companies, that it considered them "potentially responsible parties" under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601 et seq. (1988). On October 3, 1985, Triangle and the other potentially responsible parties entered into an administrative consent agreement with the federal agency, in which the companies agreed to begin cleaning up the site.

From January 1, 1981, to April 4, 1987, Triangle maintained a number of insurance policies with three different insurers. All of the policies include covenants to defend and indemnify Triangle against covered property damage, but each policy also expressly excludes coverage for certain categories of pollution damage.

While the particular language of specific policies will be discussed later in some detail, it is useful to note at this point that this case involves, generally, three categories of insurance coverage. First, there are comprehensive general liability policies which contain what will be termed the "original" pollution exclusion clause. One of these policies, issued by Ideal Mutual Insurance Company, covered the years 1981 and 1982. The other, issued by Liberty Mutual Insurance Company, covered the period from January 1, 1982, to July 1, 1982. Second, there are comprehensive general liability policies with a "modified" pollution exclusion clause. Liberty Mutual issued policies of this type to Triangle, covering the period from July 1, 1982, to January 1, 1984. Afterwards, Zurich Insurance Company issued such policies covering the period from January 1, 1984, to April 1, 1987. Third, Zurich issued to Triangle a "claims-made" pollution liability insurance policy with a clause excluding certain sites, which covered the period from May 15, 1984, to May 15, 1985.

On March 7, 1985, Triangle notified all of its insurers that it had been named a potentially responsible party and asked that they bear Triangle's investigatory and legal expenses, furnish Triangle a defense in its attempt to avoid or minimize, through litigation, the requirement of paying for the extensive environmental cleanup, and indemnify Triangle for actual cleanup costs. Of course, Triangle conceded "a reservation of rights by the carriers as to their ultimate responsibilities for indemnification." Because Ideal Mutual was in receivership, the receiver, New Jersey Property-Liability Guaranty Association, responded to Triangle, denying coverage under the policy with Ideal Mutual. Zurich responded on April 1, 1985, explaining that it questioned whether the pollution damage in Ohio was covered by its policies, but would handle "this matter under a full and complete reservation of rights." However, on August 28, 1985, Zurich withdrew its participation in Triangle's defense, effective October 1, 1985. Liberty Mutual responded on February 27, 1986, after Triangle sent them a second letter, agreeing to participate in Triangle's defense despite reservations regarding indemnity. Liberty Mutual continued to assist in Triangle's defense until February 1, 1988, when Liberty Mutual concluded that Triangle was not covered by any of its policies and so too withdrew its...

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