Amoco Oil Co. v. Dingwell, Civ. No. 87-0329-P.
| Decision Date | 27 July 1988 |
| Docket Number | Civ. No. 87-0329-P. |
| Citation | 690 F. Supp. 78 |
| Court | U.S. District Court — District of Maine |
| Parties | AMOCO OIL COMPANY; Atlantic Terminal Corporation; Bath Iron Works Corporation; B.P. Oil Company; C.H. Sprague & Son Company; Central Maine Power; Champion International Corporation; Chevron, U.S.A., Inc.; Fairchild Semiconductor Corporation; General Electric Company; Georgia-Pacific Corporation; Maine Yankee Atomic Power Company; Seacoast Ocean Services, Inc.; Titan Corporation; and Weyerhaeuser Company, Plaintiffs, v. Richard A. DINGWELL d/b/a The McKin Company, Defendant. |
William P. Skinner, William F. Greaney, Covington & Burling, Washington, D.C., Lawrence C. Winger, Herbert H. Bennett & Associates, Portland, Me., for plaintiffs.
Richard P. Romeo, Smith & Elliott, Saco, Me., for defendant.
Currently before the Court are Plaintiffs' Motion for Entry of Consent Judgment and three separately filed motions to intervene by Defendant's insurers.
Defendant Richard A. Dingwell, d/b/a The McKin Company ("Dingwell"), owned and operated a landsite in Gray, Maine, which is now listed by the United States Environmental Protection Agency as a "Superfund" site pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601, et seq. Plaintiffs are a group of fifteen companies ("the McKin Generator Group" or "the Group") which disposed of their hazardous waste at Dingwell's landsite.
The Travelers Indemnity Company and Charter Oak Fire Insurance Company ("Travelers"), American Policyholders Insurance Company ("API"), and Chicago Insurance Company issued liability insurance policies to Dingwell. The insurers have filed separate motions to intervene as defendant counterclaimants and cross-claimants pursuant to Federal Rule of Civil Procedure 24(a) and (b),1 and for a stay of this action pending the adjudication of a previously filed declaratory judgment action captioned Travelers Indemnity Company v. Dingwell, No. 87-0288-P ("the Travelers action").
In 1977, the Town of Gray directed Dingwell to cease operations after learning that several drinking wells near the site were contaminated with hazardous wastes. The Maine Department of Environmental Protection ("DEP") filed suit against Dingwell in 1978 to compel him to finance the cleanup of the site. The DEP and the United States Environmental Protection Agency ("EPA") installed monitoring wells around the perimeter of the site, removed liquid wastes from above-ground holding tanks and drums, and removed crushed drums. In 1985, the EPA issued a Record of Decision ("ROD") specifying the remedial action that the EPA required to address the environmental contamination. The EPA also notified Dingwell, Plaintiffs, and others that they are strictly, jointly, and severally liable under section 107(a) of CERCLA, 42 U.S.C. § 9607(a), for all costs incurred in the investigation and cleanup at the site.
In order to avoid prolonged litigation with the EPA and DEP, some of the Plaintiffs spent approximately $6,000,000 in financing the initial phase of the remedial action. The Plaintiffs and other settling parties have also signed a proposed Consent Decree with the EPA and DEP, under which Plaintiffs will finance the remainder of the remedial action required by the ROD. The cost of the remaining remedial action is estimated at $2,790,000. The Consent Decree further provides that Plaintiffs and other settling parties will pay the United States and the State of Maine an additional $3,000,000 for natural resource damages, cleanup costs incurred by the governmental agencies, and administrative expenses. Thus, the total cost of complying with the terms of the Consent Decree is approximately $12,430,000.
Dingwell's insurers agreed to provide a defense to Dingwell, but expressly reserved all rights to deny indemnification for any and all damages for which Dingwell may be held liable. With the insurers' knowledge, Plaintiffs and Dingwell undertook settlement negotiations and eventually signed a Settlement Agreement. The Agreement provides that Dingwell will join the Consent Decree, pay sixty-five percent of the cost of the cleanup, consent to entry of a judgment requiring him to comply with the Settlement Agreement, and cooperate with Plaintiffs in any action by the Plaintiffs to enforce the Settlement Agreement against Dingwell's insurers. In return, Plaintiffs agreed to seek recovery against Dingwell solely out of the proceeds of Dingwell's insurance policies, and not from his personal assets.
Plaintiffs filed their Complaint against Dingwell on November 2, 1987, seeking contribution under section 107(a) and 113(f)(1) of CERCLA, 42 U.S.C. §§ 9607(a) and 9613(f)(1) (Count I); indemnification under common law principles (Count II); and breach of contract for failure to indemnify the Group for the costs incurred in the cleanup (Count III). Pursuant to the Settlement Agreement, Plaintiffs also filed the pending Motion for Entry of a Consent Judgment.2
Dingwell's insurers moved to intervene to oppose the entry of a consent judgment and to stay the action until numerous insurance coverage issues could be resolved in the pending Travelers action. Having heard oral arguments on the issues presented, the Court finds that the insurers are not entitled to intervene, and that Plaintiffs' motion for entry of the consent judgment should be granted.
The insurers claim that they are entitled to intervene under either Rule 24(a) or 24(b). The Court will address each contention in turn.
Before a party may intervene as a matter of right under Rule 24(a), it must meet four basic requirements: (1) the application must be timely; (2) the applicant must have an interest in the property or transaction which is the subject of the action; (3) the applicant must show that disposition of the action may as a practical matter impair or impede his ability to protect that interest; and (4) the applicant's interest must not be adequately represented by the existing parties. Moosehead Sanitary District v. S.G. Phillips Corp., 610 F.2d 49, 52 (1st Cir.1979). The McKin Group apparently concedes that the applications for intervention were made in a timely fashion.3 The insurers filed the applications within two months of the initial filing, and thus did not cause a "last minute disruption of painstaking work by the parties and the court." Culbreath v. Dukakis, 630 F.2d 15, 22 (1st Cir.1980). Nor has the McKin Group claimed that the existing parties to the dispute are adequate representatives for the insurers' interests.4 Therefore, the Court need only address the interest and impairment requirements. These two requirements are closely related, since Federal Deposit Ins. Corp. v. Jennings, 816 F.2d 1488, 1492 (11th Cir.1987).
A party's interest must be "significantly protectable," Donaldson v. United States, 400 U.S. 517, 531, 91 S.Ct. 534, 542, 27 L.Ed.2d 580 (1971), and "direct, as opposed to remote or contingent." Restor-A-Dent Dental Laboratories, Inc. v. Certified Alloy Products, Inc., 725 F.2d 871, 874 (2d Cir.1984). Cf. Nuesse v. Camp, 385 F.2d 694, 700 (D.C.Cir.1967) (). The insurers do not have a significantly protectable interest in the subject matter. By reserving the right to deny coverage and providing independent counsel, the insurers gave up the right to control the litigation between the Group and Dingwell, and "thrust the responsibility for the litigation wholly upon the insured and his counsel." Cay Divers, Inc. v. Raven, 812 F.2d 866, 870 (3d Cir.1987). When the insurers reserved the right to deny coverage, Dingwell gained the ability to control those aspects of his case essential to the determination of his personal liability. See Three Sons, Inc. v. Phoenix Ins. Co., 357 Mass. 271, 257 N.E.2d 774, 776-77 (1970). The insurers left Dingwell to proceed as best he could with his own defense, and the Agreement itself does not prejudice them or preclude them from asserting any available policy defense. See Ideal Mutual Ins. Co. v. Myers, 789 F.2d 1196, 1202-03 (5th Cir. 1986). The insurers cannot now intervene in this lawsuit and force Dingwell to litigate his liability.
The insurers do not have a direct interest in the subject of this action, either. The subject of this action is the extent of Dingwell's obligation to indemnify or contribute to Plaintiffs for the costs of cleaning up the McKin site. As opposed to that discrete issue, the insurers' interest is to establish whether their policies cover Dingwell's obligations to the Group. However, the insurers' coverage defenses are not at issue in this litigation, and the insurers are not parties to the Settlement Agreement. Dingwell's alleged breach of the cooperation clause and other issues raised by the insurers are simply not germane to Plaintiffs' Complaint.5
The insurers' interest in the subject matter of the case also relies upon several contingencies: (1) the Court will grant the entry of consent judgment; (2) the Group will bring an action against the insurers under Maine's reach and apply statute; and (3) the state court will find that the insurers are responsible under the reach and apply statute for Dingwell's obligations to the Group.6 The existence of these contingencies shows that the insurers' interests are not direct. Restor-A-Dent, 725 F.2d at 874.
The insurers contend that their interests will be impaired or impeded by the entry of a consent judgment in their...
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