American States Ins. v. Mankato Iron & Metal

• Decision Date: 30 November 1993
• Docket Number: Civ. No. 3-92-728.
• Citation: 848 F. Supp. 1436
• Parties: AMERICAN STATES INSURANCE COMPANY, an Indiana Corporation, as Successor-in-Interest to the Western Casualty and Surety Company, a Kansas corporation, Plaintiff, v. MANKATO IRON & METAL, INC., a Minnesota corporation, Defendant.
• Court: U.S. District Court — District of Minnesota

848 F. Supp. 1436

AMERICAN STATES INSURANCE COMPANY, an Indiana Corporation, as Successor-in-Interest to the Western Casualty and Surety Company, a Kansas corporation, Plaintiff, v. MANKATO IRON & METAL, INC., a Minnesota corporation, Defendant.

Civ. No. 3-92-728.

United States District Court, D. Minnesota, Third Division.

November 30, 1993.

COPYRIGHT MATERIAL OMITTED

John M. Anderson, Bassford, Heckt, Lockhart, Truesdell & Briggs, P.A., Minneapolis, MN, for plaintiff.

Kenneth R. White, Farrish, Johnson & Maschka, Mankato, MN, for defendant.

MEMORANDUM OPINION AND ORDER

KYLE, District Judge.

Introduction

This matter arises out of a declaratory judgment action brought by the plaintiff, American States Insurance Company ("American States") to resolve whether coverage exists for certain pollution-related claims under any of the policies that American States's predecessor issued to the insured, Mankato Iron & Metal ("Mankato"). Before the Court presently are American States's motion for summary judgment, brought pursuant to Rule 56 of the Federal Rules of Civil Procedure (Doc. No. 9), and Mankato's motion for certification of a question to the Minnesota Supreme Court, brought pursuant to Rule 103.03(h) of the Minnesota Rules of Civil Appellate Procedure (Doc. No. 13).¹ American States seeks a determination that, as a matter of law, it owes no obligation under the policies issued to Mankato to indemnify or defend Mankato in two environmental cleanup lawsuits filed against Mankato. Mankato asks the Court to certify to the Minnesota Supreme Court the question of whether the "sudden and accidental" language in the pollution exclusion of comprehensive general liability policies is ambiguous when dealing with nonactive polluters. For the reasons set forth below, the Court grants plaintiff's motion for summary judgment and denies defendant's motion for certification.

Background

Mankato is a closely-held corporation that recovers and recycles scrap metal. In particular, Mankato buys and sells automobiles. For a time, secondary to its trade in automobiles, Mankato also bought and sold used automobile batteries for recycling. From April 30, 1979 to December 24, 1981, Mankato sold used batteries and other lead products to Gould, Inc. (Aff. of Greg Pooley ¶¶ 4-5.) Gould recycled these batteries at two secondary lead smelting and battery recycling facilities: one in Omaha, Nebraska, and the other in Savanna, Illinois. Gould operated the Omaha site from 1963 to 1982 (Douglas County Compl. ¶ 109.); it operated the Savanna site from August of 1980 to about May of 1982. (Savanna Compl. ¶ 110.)

The political entity of Douglas County, Nebraska, purchased the former Gould facility in Omaha in 1984. Tests conducted in 1987 and 1988 revealed that the soil and subsoil were contaminated with lead, arsenic, antimony and cadmium. (Douglas County Compl. ¶ 112.) Douglas County incurred cleanup costs of approximately $6,000,000. (Douglas County Compl. at ¶ 247.) Regarding the Savanna facility, the Illinois Environmental Protection Agency ("IEPA") requested that investigations be conducted after Gould ceased operations in May of 1982. (Savanna Compl. ¶ 214.) These investigations revealed that the site was contaminated with lead and other hazardous substances. Gould entered into a consent decree with the IEPA under which Gould has incurred and will continue to incur cleanup costs. (Savanna Compl. ¶ 215.)

On November 4, 1991, Mankato, along with one hundred other defendants, was served with a summons and complaint in connection with the Omaha site.² The complaint alleges that Mankato "by contract, agreement or otherwise arranged for the disposal or arranged for the transportation for disposal of used or spent batteries, battery tops or bottoms, lead dross or other lead waste at the facility ... from which there was a release or threatened release for which Douglas County incurred response costs." (Douglas County Compl. ¶ 168.) The only allegation in the complaint addressing when the releases or threatened releases occurred states that the release of contaminants took place over the forty-two year period, from 1940 to 1982, in which Gould or Gould's predecessor operated the facility. (Douglas County Compl. ¶¶ 108-11, 113-14.)

On December 20, 1991, Mankato was served with a similar summons and complaint by Gould in connection with the Savanna site.³ The Savanna complaint contains no allegations as to when hazardous substances were released other than that the release or threatened release occurred during the period in which Gould or its predecessor operated the facility — that is, prior to May of 1982. (Savanna Compl. at ¶ 111.)

Mankato purchased insurance coverage from Western Casualty and Surety Company ("Western") through a local agent, First Insurance Mankato. It is undisputed that, between August 31, 1983 and August 31, 1987, Western issued comprehensive general liability ("CGL") policies to Mankato. Mankato asserts that it also purchased CGL policies from Western (also through First Insurance Mankato) for the periods from July 1, 1975 to August 31, 1983 and from August 31, 1987 to August 31, 1989. Unfortunately, neither party has produced policies from the period prior to August 31, 1983.⁴

Upon being served in the two environmental lawsuits, Mankato tendered defense of these suits to American States pursuant to the CGL policies. American States denied coverage for both the Douglas County and Savanna litigation on July 31, 1992. American States thereupon instituted this declaratory judgment action to resolve the question of its liability under the CGL policies.

Discussion

I. The Summary Judgment Standard

Rule 56 of the Federal Rules of Civil Procedure governs motions for summary judgment. Under that Rule:

summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Fed.R.Civ.P. 56(c). Summary judgment is to be granted only where the evidence is such that no reasonable jury could return a verdict for the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

Initially, the movant bears the burden of bringing forward sufficient evidence to establish that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). In evaluating the movant's showing, the evidence of the non-moving party is to be believed and all justifiable inferences are to be drawn in a light most favorable to that party. Matsushita Elec. Indus. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 1357, 89 L.Ed.2d 538 (1986); Liberty Lobby, 477 U.S. at 255, 106 S.Ct. at 2513; Trnka v. Elanco Prod., 709 F.2d 1223, 1225 (8th Cir.1983). Where a moving party, with whatever it provides the court, makes and supports a motion for summary judgment in accordance with Rule 56, a party opposing the motion may not rest upon the allegations or denials of its pleadings; rather, the nonmovant must "set forth specific facts showing that there is a genuine issue for trial." Liberty Lobby, 477 U.S. at 256, 106 S.Ct. at 2514; Fischer v. NWA Inc. 883 F.2d 594, 599 (8th Cir.1989), cert. denied, 495 U.S. 947, 110 S.Ct. 2205, 109 L.Ed.2d 531 (1990).

On a motion for summary judgment, the court's task is not to weigh facts or evaluate the credibility of affidavits and other evidence. Rather, the Court need only determine whether the record, as identified by the parties, shows the existence of a real controversy over a material issue, such that the controversy must be resolved by the finder of fact at trial. In addition, the nonmovant cannot avoid summary judgment in favor of the movant merely by pointing to some alleged factual dispute between the parties. Instead, any fact alleged to be in dispute must be "outcome determinative under prevailing law," that is, it must be material to an essential element of the specific theory of recovery at issue. See Get Away Club, Inc. v. Coleman, 969 F.2d 664, 666 (8th Cir.1992) (citation omitted).

II. Coverage Under the Policies.

A. Establishing a Prima Facie Case of Coverage

American States asserts that the insured bears the initial burden of establishing a prima facie case that it is entitled to coverage. Boedigheimer v. Taylor, 287 Minn. 323, 178 N.W.2d 610, 614 (1970) (insured seeking coverage for collision in which he was driving an automobile owned by someone else must establish proof of the existence of an insurance contract and compliance with the "non-owned automobile" definition in the policy). An insured may satisfy this burden by producing the original policy. Topinka v. Minnesota Mut. Life Ins. Co., 189 Minn. 75, 248 N.W. 660, 661 (1933). An insured may also establish a prima facie case of coverage through circumstantial evidence. Bituminous Cas. Corp. v. Vacuum Tanks, Inc., 975 F.2d 1130, 1132 (5th Cir.1992); New York v. Blank, 820 F.Supp. 697, 701-02 (S.D.N.Y. 1993). American States argues that Mankato has failed to establish a prima facie case of coverage.

Mankato began selling lead and used automobile batteries to Gould in April of 1979. Therefore Mankato can have no claims in connection with the former Gould facilities prior to April of 1979. The policy in effect on April 30, 1979 was issued on July 1, 1978. (Aff. of Greg Pooley, Exh. 1.) Although Mankato asserts that it had purchased CGL coverage from Western until October 1, 1989, the Court notes that the policies that Mankato purchased through First Insurance Mankato, effective for the period from August 31, 1987, to October 1, 1989 were issued by CNA Insurance Company. (Aff. of Greg Pooley, Exh. 1.) Mankato has failed to identify...