Aetna Cas. & Sur. Co. v. Dow Chemical Co.
| Decision Date | 08 June 1998 |
| Docket Number | No. 93-73601.,93-73601. |
| Citation | 10 F.Supp.2d 800 |
| Parties | AETNA CASUALTY & SURETY CO., Plaintiff, v. DOW CHEMICAL COMPANY, Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Charles Browning, Detroit, MI, for Plaintiff.
Michael P. Foradas, Stephen P. Jeffirs, Kirkland & Ellis, Chicago, IL, for Defendant.
This litigation arises out of an environmental insurance dispute. Dow seeks indemnification coverage under a series of comprehensive general liability ("CGL") policies issued to it between 1944 and 1985 and indemnification coverage under excess coverage policies it began purchasing in 1955. Several of Dow's primary insurers, Zurich, Fireman's Fund, and Travelers/Aetna (collectively "Insurers"), have filed motions for summary judgment asserting that Dow's notice of "occurrences," "claims," or "suits" was untimely as a matter of law and caused them prejudice as a matter of law thus precluding indemnification under Dow's policies. Dow responds that Insurers are not entitled to summary judgment because: (1) they have not established that Dow's notice was untimely as a matter of law; and (2) even if determined to be untimely, Insurers have not shown that they were prejudiced by Dow's allegedly untimely notice as a matter of law.
Fireman's Fund has also filed a motion for summary judgment asserting that Dow is not entitled to any indemnification for many of the claims relating to 7 of the 10 Final Sites because Dow breached the voluntary payments clause of its policies. Dow has filed a cross-motion on this issue arguing that: (1) Dow's payments were not "voluntary;" and (2) even if determined to be "voluntary," Michigan law will require Insurers to show that Dow's actions caused them material prejudice, and Insurers cannot show material prejudice.
For the reasons stated below, this Court: (1) DENIES Zurich's motion for summary judgment on late notice; (2) GRANTS IN PART and DENIES IN PART Fireman's Fund's motion for summary judgment concerning Dow's failure to comply with notice conditions; (3) GRANTS IN PART and DENIES IN PART Travelers/Aetna's counter-motion for summary judgment based on the late notice provisions in its policies; (4) DENIES the London Excess Insurers' request in their Joinder for summary judgment based on the late notice provisions in their excess policies; (5) DENIES Fireman's Fund's motion for summary judgment on voluntary payment; and (6) DENIES Dow's cross-motion for summary judgment on the issue of voluntary payment.
Primary Insurers have established, as a matter of law, that Dow's delayed notice actually prejudiced them with regard to claims involved at the Harris/Farley Street site and the Conalco site but have not met their burden with regard to claims involved at the remaining sites. Questions of material fact regarding prejudice also preclude summary judgment on the issue of voluntary payment and the London Excess Insurers' right to summary judgment on the issue of late notice.
Summary judgment is appropriate only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R. Civ. P. 56(c). The central inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). After adequate time for discovery and upon motion, Rule 56(c) mandates summary judgment against a party who fails to establish the existence of an element essential to that party's case and on which that party bears the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The movant has an initial burden of showing "the absence of a genuine issue of material fact." Celotex, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265. Once the movant meets this burden, the non-movant must come forward with specific facts showing that there is a genuine issue for trial. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). To demonstrate a genuine issue, the non-movant must present sufficient evidence upon which a jury could reasonably find for the non-movant; a "scintilla of evidence" is insufficient. Liberty Lobby, 477 U.S. at 252, 106 S.Ct. 2505. The court must believe the non-movant's evidence and draw "all justifiable inferences" in the non-movant's favor. Liberty Lobby, 477 U.S. at 255, 106 S.Ct. 2505. The inquiry is whether the evidence presented is such that a jury applying the relevant evidentiary standard could "reasonably find for either the plaintiff or the defendant." Liberty Lobby, 477 U.S. at 255, 106 S.Ct. 2505.
Primary Insurers Zurich (3/28/49-3/28/50), Fireman's Fund (11/19/56-4/1/76), and Travelers/Aetna (Travelers 1950-1956; Aetna 1976-1983, 1983-1985) seek to avoid indemnification coverage for many of the claims at the Final Sites on the ground that Dow's notice was untimely as a matter of law and caused them prejudice as a matter of law. Zurich's motion addresses only the Cliffs-Dow site. Fireman's Fund's motion addresses each Final Site except the Brookhurst, Wyoming site. Travelers/Aetna's motion addresses all ten Final Sites. Century has joined Travelers/Aetna's motion and several reply briefs and has filed a separate reply. Century's primary policies (1944-1949) are implicated solely at the Cliffs-Dow site.
Some Excess Insurers have filed Joinders. Fireman's Fund's motion has been joined by Interstate Fire & Casualty, Centennial Insurance Co., and Continental Casualty Co. Travelers/Aetna's motion is joined by the AIG Defendants (American Home Assurance Co., Insurance Co. of the State of Pennsylvania, and Union Fire Ins. Co.), Century's "Certain Defendants" (identified in Century's 9/25/97 cross-motion for summary judgment), and the London Excess Insurers (identified in their Joinder) with respect to the Conalco and PPI Sites only.
At issue here are the notice provisions for "occurrences" and "claims" or "suits" contained in the CGL primary and excess policies issued to Dow. There are some important language differences in the notice provisions contained in the primary as opposed to excess policies as well as some language differences in the 1983-1985 Aetna primary policies as opposed to the earlier Aetna primary policies. These differences are addressed below.
Fireman's Fund issued six CGL policies to Dow which were in effect from November 19, 1956 through April 1, 1976. As to "occurrences", the early policies require notice "as soon as practicable" "upon the happening of an occurrence or an accident." See FF Notice Br., Ex. 2. The policies in effect from 1964 through 1976 require notice of an occurrence or accident as soon as practicable "after such occurrence or accident has been reported to [Dow]'s insurance or legal department." See FF Notice Br., Ex. 1. (Emphasis added).1 As to "claims" or "suits," the policies uniformly provide that: "[i]f claim is made or suit is brought against the insured, the insured shall immediately forward to the Company or any of its authorized agents every demand, notice, summons or other process received by the insured or the insured's representatives." See FF Notice Br., Ex. 2.
There is only one Zurich policy at issue here; a CGL policy issued to Dow which was in effect from March 28, 1949 to March 28, 1950. It similarly requires notice of an occurrence as soon as practicable and requires Dow to immediately forward to Zurich "every demand, notice, summons or other process" if "claim is made or suit is brought" against Dow. See Zurich Br., Ex. 3. Travelers' CGL policies, covering the period from March 28, 1950 through November 19, 1956, likewise require notice of an occurrence as soon as practicable and require Dow to immediately forward any claim or suit brought against Dow. See Trav. Notice Br., Ex. 2.
Aetna's CGL policies issued to Dow covering the period from April 1, 1976 through April 1, 1983 contain language similar to that in Fireman's Fund's policies covering the period from 1964 through 1976; i.e., they require notice of an occurrence "as soon as practicable, after such occurrence or accident has been reported to the insured's corporate insurance or legal department at its office in Midland, Michigan." See Trav. Notice Br., Ex. 1. (Emphasis added). Aetna's 1976-1983 policies also require that Dow "immediately forward" to it "every demand, notice, summons or other process received" by Dow if a "claim is made or suit is brought" against Dow. Id.
Aetna's policies covering the period from April 1, 1983 through April 1, 1985 also contain an endorsement which modifies the above language as to notice of an occurrence as follows:
Whenever the Manager of Liability Insurance in the Corporate Insurance Department, located at the General Office of the Dow Chemical Company at Midland, Michigan, 48640, ...
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