Anaconda Minerals Co. v. Stoller Chemical Co.

• Decision Date: 13 September 1991
• Docket Number: Civ. No. 87-C-118W.
• Citation: 773 F. Supp. 1498
• Parties: ANACONDA MINERALS COMPANY, Arco, Inc., Bethlehem Steel Corporation, Chaparral Steel Company, Federated Metals Corporation, Marathon Steel Company, Nucor Corporation, and Tamco, Inc., Plaintiffs, v. STOLLER CHEMICAL COMPANY, INC., Jerry H. Stoller, Micronutrients International, Inc., and Matt Recycling Company, Defendants. STOLLER CHEMICAL COMPANY, INC. and Jerry H. Stoller, Third-Party Plaintiffs, v. FIREMAN'S FUND INSURANCE COMPANY, the Travelers Indemnity Company of Rhode Island, American Universal Insurance Company, Great Northern Insurance Company, United States Fire Insurance Company, International Insurance Company, and Highlands Insurance Company, Third-Party Defendants.
• Court: U.S. District Court — District of Utah

773 F. Supp. 1498

ANACONDA MINERALS COMPANY, Arco, Inc., Bethlehem Steel Corporation, Chaparral Steel Company, Federated Metals Corporation, Marathon Steel Company, Nucor Corporation, and Tamco, Inc., Plaintiffs, v. STOLLER CHEMICAL COMPANY, INC., Jerry H. Stoller, Micronutrients International, Inc., and Matt Recycling Company, Defendants.

STOLLER CHEMICAL COMPANY, INC. and Jerry H. Stoller, Third-Party Plaintiffs, v. FIREMAN'S FUND INSURANCE COMPANY, the Travelers Indemnity Company of Rhode Island, American Universal Insurance Company, Great Northern Insurance Company, United States Fire Insurance Company, International Insurance Company, and Highlands Insurance Company, Third-Party Defendants.

Civ. No. 87-C-118W.

United States District Court, D. Utah, C.D.

September 13, 1991.

Scott F. Young, Michael Keller, Jeffrey E. Nelson, David K. Isom, Salt Lake City, Utah, for plaintiff Anaconda.

Rick L. Knuth, Charles S. Brown, Glen E. Davies, Salt Lake City, Utah, for plaintiffs Armco, Inc., Bethlehem Steel Corp., Chaparral Steel Co., Federated Metals, Marathon Steel Co., Nucor Corp., and Tamco, Inc.

Gregory P. Williams, Jay D. Gurmankin, Salt Lake City, Utah, Bruce H. Jackson, David K. Olsen, San Francisco, Cal., for defendants and third-party plaintiffs Stoller Chemical Co., Jerry H. Stoller.

Mark J. Williams, Salt Lake City, Utah, William A. Savino, Daniel A. Bartoldus, Lawrence A. Levy, Anthony Eckert, Uniondale, N.Y., for third-party defendant Fireman's Fund Ins. Co.

Michael M. Later, John M. Burke, Clark Waddoups, Salt Lake City, Utah, for third-party defendant The Travelers Indem. Co. of America.

Linda L. Roth, John M. Chipman, Salt Lake City, Utah, for third-party defendant American Universal Ins. Co.

Stanley J. Preston, Max D. Wheeler, Salt Lake City, Utah, for third-party defendant Great Northern Ins. Co.

Robert L. Stevens, Salt Lake City, Utah, for third-party defendant U.S. Fire Ins. Co.

Rex E. Madsen, Jerry D. Fenn, Salt Lake City, Utah, Karen L. Bizzini, Los Angeles, Cal., for third-party defendant Highlands Ins.

MEMORANDUM DECISION AND ORDER

WINDER, District Judge.

This matter is before the court on third-party defendants' Motion for Summary Judgment. The court heard this motion on March 1, 1991. Plaintiffs, Anaconda Minerals Company and Federated Metals Corporation, were represented by Jeffrey E. Nelson, Michael Keller and James A. Holtkamp. Plaintiff, Armco, Inc. was represented by Glen E. Davies, Rick L. Knuth, C. Scott Brown and Mary T. Noonan. Defendant and third-party plaintiff, Stoller Chemical Company, was represented by Gregory P. Williams and Jay D. Gurmankin. Defendant and third-party plaintiff, Jerry H. Stoller (referred to collectively with Stoller Chemical Company as "Stoller"), was represented by David A. Giannotti and K. David Olsen. Third-party defendant, Fireman's Fund Insurance Company, was represented by Mark J. Williams, William M. Savino, Daniel A. Bartoldus, Stephen J. Smirti, Jr., and Lawrence A. Levy. Third-party defendant, United States Fire Insurance Company, was represented by Robert L. Stevens. Third-party defendant, Highlands Insurance, was represented by Rex E. Madsen, Jerry D. Fenn, Robert Zeavin and Karen L. Bizzini. Third-party defendant, The Travelers Indemnity Company of America, was represented by Michael M. Later, Clark Waddoups and John M. Burke. Third-party defendant, American Universal Insurance Company, was represented by John M. Chipman and Linda L. Roth. Also present were in-house counsel for certain of the parties. Third-party defendants are referred to collectively in this Memorandum Decision as "insurers."

Before the hearing, the court carefully reviewed the memoranda submitted by the parties and all other pertinent papers in the file. After taking the matter under advisement, the court has further considered the law and the facts and now renders the following Memorandum Decision and Order.

BACKGROUND

This case concerns which parties will bear the costs of compliance with a cleanup order ("Consent Order") issued by the Environmental Protection Agency ("EPA") and consensually entered into by the plaintiffs and defendant/third-party plaintiff Stoller under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq. ("CERCLA"). Plaintiffs seek to recover from Stoller and others the cost of complying with the Consent Order. Stoller maintains, however, that under certain comprehensive general liability insurance policies purchased from the Insurers, the Insurers must defend and indemnify Stoller in the principal action, as well as pay attorney's fees and costs for the third-party action against the Insurers.¹ The Insurers seek this court's summary judgment that they have no such duty to defend and indemnify Stoller.

The Consent Order relates to a site located approximately thirty miles west of Salt Lake City, Utah, consisting of 14.5 acres along the western foothills of the Oquirrh Mountains. Micronutrients International, Inc. ("MII") leased and operated the site ("MII plant" or "MII site") during the periods relevant to this action. MII used the site for its operation of a granular fertilizer processing plant from 1971 to early 1982.

On June 24, 1974, Stoller acquired the stock of MII and operated the MII plant until June of 1981. Stoller then sold the MII stock to Matt Recycling, Inc. ("Matt"). Matt ceased manufacturing operations at the MII plant in early 1982 and the plant has remained closed since that time.

Among other components, MII used flue dust in its manufacturing operations. MII purchased the flue dust from the plaintiff steel manufacturers. Flue dust is a byproduct of steel manufacturing. MII mixed flue dust with sulfuric acid and water to produce zinc sulfate, a granular fertilizer additive. As early as 1974, Stoller was aware the flue dust it was using contained lead, zinc, chromium, cadmium and arsenic.

During the initial period of its operation, the MII plant had no facilities for storing flue dust. Plant workers stored the dust on the ground. Later, the plant began using storage hoppers. Plant workers unloaded the dust from rail cars using conveyors and then transported the dust to the storage hoppers, which were adjacent to the railroad track. Front-end loaders also were used to transport dust to the hoppers.

From the storage hoppers, workers transported the dust by conveyor to a pugmill. There they mixed the dust with concentrated sulfuric acid and water. The dust/acid mixture next passed through a rotary kiln dryer to evaporate the moisture. The evaporation process resulted in zinc sulphate crystallization, which provided the matrix for the granular fertilizer product manufactured at the MII plant. In the final stage of production, the plant screened the dried product to remove the very small particles known as fines.

In the regular course of unloading, transporting and processing the flue dust, both workers and equipment at the MII plant spilled, released and dispersed flue dust and fines as well as off-specification materials from aborted runs. Additionally, the MII plant property harbored numerous waste piles where workers gathered and dumped large quantities of off-specification flue dust, metal processing sludge and rejected or waste materials. Waste materials also were dumped in a pit south of the manufacturing facilities.

At one point, approximately 120 tons of boron and manganese also were transported to the plant site as part of an experiment to see if they were usable in fertilizer products. When the experiments proved unsuccessful, all of the boron and most of the manganese was dumped in the waste piles at the site. Exposure to the elements regularly affected the various uncontained piles of flue dust and waste around the MII plant property.

When the MII plant ceased operating, thousands of tons of virgin flue dust, processed flue dust that failed to meet specifications, waste and other materials were left in open piles on the site. Numerous 50-gallon drums containing caustic soda solution and 6,000 gallons of sulfuric acid stored in an aboveground tank also were left at the site. At least two large truck loads of virgin flue dust were dumped on the ground after the MII plant closed because MII could not take care of the deliveries.

From the time Stoller gained ownership of the MII plant in 1974, Stoller's management had reason to believe flue dust contained hazardous materials, such as lead, arsenic and zinc. Moreover, certain members of Stoller's management knew about the personal and environmental hazards created by flue dust.

In 1977 the State of Utah issued a formal notice that the dust generated by operations inside the MII plant violated air quality standards. Utah cited Stoller for violations of those standards and ordered it to reduce airborne flue dust inside the MII plant by installing an air filtration system known as a bag house. In 1980, just before selling its interest in the MII plant, Stoller actively investigated ways to dispose of flue dust and other waste materials piled around the site.

In the spring of 1983, the EPA and the Solid and Hazardous Waste Committee of the Utah State Department of Health identified the plaintiffs in this action and Stoller as potentially responsible parties ("PRPs") under CERCLA for the pollution at the MII plant. In January, 1986, Stoller, the plaintiffs and the EPA entered into the Consent Order. The Consent Order's stated objective was to "accomplish removal activities at the site, including decontamination and/or removal of contaminated equipment, structures and debris from the site; removal of waste piles; and disposal of waste piles in a secured hazardous waste management facility." Plaintiffs and Stoller later began cleanup activities to carry out the terms of the Consent Order. They completed Phase I of the cleanup in March, 1986.

On February 13, 1987, plaintiffs filed their complaint in...