Anaconda Minerals Co. v. Stoller Chemical Co., 91-4187

• Decision Date: 13 April 1993
• Docket Number: No. 91-4187,91-4187
• Citation: 990 F.2d 1175
• Parties: ANACONDA MINERALS COMPANY, Plaintiff, and Arco, Inc., Bethlehem Steel Corporation, Chaparral Steel Company, Marathon Steel Company, Nucor Corporation, Tamco, Inc., Federated Metals Corporation, Plaintiffs-Appellants, v. STOLLER CHEMICAL COMPANY, Jerry H. Stoller, Micronutrients International, Inc., Matt Recycling Company, Defendants. STOLLER CHEMICAL COMPANY, Jerry H. Stoller, Third-Party-Plaintiffs, v. FIREMAN'S FUND INSURANCE COMPANY, The Travelers Indemnity Company of America, American Universal Insurance Company, Great Northern Insurance Company, United States Fire Insurance Company, International Insurance Company, Highlands Insurance Company, Third-Party-Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1175

990 F.2d 1175

ANACONDA MINERALS COMPANY, Plaintiff,

and

Arco, Inc., Bethlehem Steel Corporation, Chaparral Steel

Company, Marathon Steel Company, Nucor

Corporation, Tamco, Inc., Federated

Metals Corporation, Plaintiffs-Appellants, v. STOLLER CHEMICAL COMPANY, Jerry H. Stoller, Micronutrients

International, Inc., Matt Recycling Company, Defendants.

STOLLER CHEMICAL COMPANY, Jerry H. Stoller, Third-Party-Plaintiffs, v. FIREMAN'S FUND INSURANCE COMPANY, The Travelers Indemnity

Company of America, American Universal Insurance Company,

Great Northern Insurance Company, United States Fire

Insurance Company, International Insurance Company,

Highlands Insurance Company, Third-Party-Defendants-Appellees.

No. 91-4187.

United States Court of Appeals, Tenth Circuit.

April 13, 1993.

Glen E. Davies and R.L. Knuth of Watkiss & Saperstein, and H. Michael Keller and Jeffrey E. Nelson of Van Cott, Bagley, Cornwall & McCarthy, Salt Lake City, UT, for appellants/petitioners.

Rex E. Madsen and Jerry D. Fenn of Snow, Christensen & Martineau, Salt Lake City, UT, Karen L. Bizzini and Rhonda H. Mehlman of Shapiro, Posell & Close, Los Angeles, CA, for appellee/petitioner Highlands Ins. Co.

Mark J. Williams of Hanson, Epperson & Smith, Salt Lake City, UT, Daniel A. Bertoldus and Lawrence A. Levy of Rivkin, Radler & Kremer, Uniondale, NY, for appellee/respondent Fireman's Fund Ins. Co.

Michael M. Later and John M. Burke of Kimball, Parr, Waddoups, Brown & Gee, Salt Lake City, UT, for appellee/respondent Travelers Indem. Co.

John M. Chipman and Linda L.W. Roth of Hanson, Nelson, Chipman & Quigley, Salt Lake City, UT, for appellee/respondent American Universal Ins. Co.

Robert L. Stevens of Richards, Brandt, Miller & Nelson, Salt Lake City, UT, for appellees/respondents U.S. Fire Ins. Co. and Intern. Ins. Co.

Thomas W. Brunner, Daniel E. Troy, and Stephen P. Keim of Wiley, Rein & Fielding for amicus curiae Insurance Environmental Litigation Ass'n.

Before EBEL, HOLLOWAY, Circuit Judges and COOK, Senior District Judge. ^*

H. DALE COOK, Senior District Judge, Sitting by Designation.

This action arose out of Arco, Inc.'s ("Arco") ¹ claim against Appellees-Respondents, Stoller Chemical Company, Inc. and Jerry H. Stoller (collectively "Stoller") for indemnification for costs and expenses incurred and to be incurred by Arco in complying with an environmental clean-up order issued by the Environmental Protection Agency.

In 1974 Stoller acquired the stock of the Micronutrients International, Inc. ("MII") plant and became responsible for operating it. The MII plant manufactured micronutrient fertilizer additives. It produced zinc sulfate by mixing flue dust and other similar materials to water and sulfuric acid. Stoller was aware that the flue dust contained lead. The flue dust was stored on the ground and in storage hoppers. Stoller was unaware that there was a problem with this means of storage.

Comprehensive general liability insurance policies were issued to Stoller and/or MII by several insurance carriers (collectively "Insurers") insuring various risks arising out of operations at the MII plant. Arco generated flue dust and arranged for its sale and delivery to the MII plant site.

Stoller sold the plant in 1981 to Matt Recycling Co. ("Matt") and the plant closed in 1982. Sometime after the plant closed the EPA determined that materials stored at the plant were hazardous. As a result, in January of 1986 Arco and Stoller entered into an administrative consent order with the EPA. Pursuant to the consent order Arco and Stoller were directed to perform certain clean-up work at the MII site. This work included removal and proper disposal of flue dust stockpiles which remained at the site.

Arco initiated this action against Stoller asserting indemnification for the $3.2 million incurred by Arco in complying with the consent order. Stoller filed a third-party complaint against the Insurers seeking their defense of and indemnification from Arco's claims.

Arco and Stoller entered into a settlement agreement. Pursuant to the settlement, Stoller stipulated to entry of judgment in favor of Arco in the amount of $2,000,000. In satisfaction of the judgment Stoller agreed to pay Arco the sum of $150,000. In addition, Stoller assigned its claims against Insurers to Arco.

Insurers filed a joint motion for summary judgment alleging that Arco's claims against Stoller were not covered by the policies in issue. The policies covered damage caused by an "occurrence." An occurrence is defined as damage which is "neither expected nor intended from the standpoint of the insured." The policies contained pollution exclusion clauses which excluded coverage for:

bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalies, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land ...

The exclusion does not apply if "such discharge, dispersal, release or escape is sudden and accidental." ²

The district court granted summary judgment in favor of Insurers on the basis that Arco's claim was barred by the pollution exclusion contained in each of the policies. Arco appeals the court's grant of summary judgment to Insurers claiming that the court did not correctly apply Utah law and misconstrued the terms "sudden and accidental" in the policies' pollution exclusion clauses. ³ In addition, Arco has submitted a motion for an order certifying issues of state law to the Utah Supreme Court. For the reasons set forth below we affirm the judgment of the district court and we decline to certify the issues to the Utah Supreme Court.

Subsequent to the filing of this appeal we decided Hartford Accident & Indem. Co. v. United States Fidelity and Guar. Co., 962 F.2d 1484 (10th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 411, 121 L.Ed.2d 335 (1992). In Hartford we construed the same pollution exclusion applying Utah law. The Court will certify only questions which are both unsettled and dispositive. Ormsbee Dev. Co. v. Grace, 668 F.2d 1140, 1149 (10th Cir.1982), cert. denied, 459 U.S. 838, 103 S.Ct. 84, 74 L.Ed.2d 79 (1982).

It is clear from our analysis in Hartford that the controlling law is not unsettled. We stated that because the issue was one of first impression, it was our responsibility to give the pollution exclusion clause the interpretation that we believed would be given by the Utah court. Hartford, 962 F.2d at 1487. Hartford sets forth a review of this issue from decisions of the Utah appellate courts and federal courts in this and other circuits. We noted that where a state Supreme Court has not addressed an issue "we may consider all available resources, including [that state's] appellate court decisions, other state and federal decisions, and the general trend of authority, to determine how the [state] Supreme Court would construe the law ..." Id. at 1487-88 n. 3, quoting Adams-Arapahoe Appellant did not have the benefit of our decision in Hartford at the time this appeal was filed. Arco concedes that the facts in Hartford are not distinguishable from the instant case and asks that we overrule Hartford. We cannot do so. ⁴

                Joint School Dist. No. 28-J v. Continental Ins. Co., 891 F.2d 772, 774 (10th Cir.1989).   We remain convinced that the Utah Supreme Court would construe the pollution exclusion as we did in Hartford.   We, therefore, decline to certify the issue
                

Hartford involved an insurance dispute between El Paso Natural Gas Company and Hartford Accident & Indemnity Corporation. El Paso operated a gas transmission system which used an air compressor lubricating oil. The oil was later found to contain a polychlorinated biphenyl ("PCB"). Unaware that the oil contained PCBs, El Paso intentionally discharged the oil into pits and onto the ground. The contaminated wastes were carried into the surrounding environment. El Paso did not expect or intend this result. Hartford, 962 F.2d at 1486-1487.

Hartford insured El Paso under a general liability policy. The policy contained a pollution exclusion clause essentially identical to the clauses at issue in the instant appeal. El Paso sold its transmission system to Northwest Pipeline Corporation and agreed to indemnify Northwest for any liability caused by El Paso prior to the sale. Northwest then discovered the PCB pollution and reported it to the EPA.

Pursuant to a consent order Northwest cleaned the contaminated sites. Northwest sued El Paso and settled for 6.6 million dollars. El Paso demanded indemnification from Hartford under the general liability policy. Hartford brought a declaratory judgment action against El Paso claiming that the policy's pollution exclusion prevented coverage of pollution.

The district court in Hartford held that the pollution exclusion clause prevented coverage for the contamination. Hartford Accident & Indem. Corp. v. United States Fidelity & Guaranty, 765 F.Supp. 677, 681 (D.Utah 1991). The trial court in the subject action concluded, as did the trial court in Hartford, that because the pollution occurred gradually and the discharge was intended coverage under the policies was barred and Insurers were entitled to judgement as a matter of law. See, Anaconda Minerals Co. v. Stoller Chem. Co., Inc., 773 F.Supp. 1498 (D.Utah 1991). In both cases summary judgment was awarded to the insurance companies. Anaconda at 1508; Hartford, 765 F.Supp. at 681.

As in the Hartford appeal we are now asked to review the meaning of the words "sudden and accidental" in relation to a discharge of pollutants. Arco argues that the term "sudden and accidental" is ambiguous and that the word "sudden" should be construed against the insurer to mean unexpected or unintended instead of abrupt or instantaneous. It asserts that there was no expected or intended damage. It also urges that the term "sudden and accidental" relates to resulting unintended...