ANR v. USFI, 00-287.

• Decision Date: 21 November 2001
• Docket Number: No. 00-287.,00-287.
• Citation: 796 A.2d 476
• Parties: AGENCY OF NATURAL RESOURCES, Harbor Management Corporation and the Summit Management Corporation v. UNITED STATES FIRE INSURANCE CO. and North River Insurance Company.
• Court: Vermont Supreme Court

796 A.2d 476

AGENCY OF NATURAL RESOURCES, Harbor Management Corporation and the Summit Management Corporation v. UNITED STATES FIRE INSURANCE CO. and North River Insurance Company.

No. 00-287.

Supreme Court of Vermont.

November 21, 2001.

Motion for Reargument Withdrawn February 8, 2002.

William H. Sorrell, Attorney General, William E. Griffin, Chief Assistant Attorney General, and Bridget C. Asay, Assistant Attorney General, Montpelier, for Plaintiff-Appellee.

John L. Putnam and David R. Putnam of Stebbins, Bradley, Wood & Harvey, P.A., Hanover, New Hampshire, for Defendants-Appellants.

Present: AMESTOY, C.J., DOOLEY, MORSE and SKOGLUND, JJ., and COOK, District Judge, Specially Assigned.

AMESTOY, C.J.

Defendant North River Insurance Company appeals a Washington Superior Court order granting plaintiff's, Agency of Natural Resources', motion for summary judgment.¹ Defendant contends that the court erred in ordering North River to pay restitution to the State for costs incurred in the investigation and clean-up of an underground petroleum leak. Defendant raises four arguments on appeal: (1) the State does not have a legal cause of action under 10 V.S.A. § 1941(f) and therefore does not have standing; (2) the relevant provision of the North River insurance policy specifically excludes insurance coverage of costs arising out of a State-directed clean-up of pollutants; (3) the trial court erred in finding liability without sufficient facts to determine first, if the leak was an occurrence that triggered the policy and second, the amount of the damages that should be allocated to North River; and (4) the trial court erred by not enforcing discovery orders. We affirm but remand in part for further findings on the allocation of damages. In December 1993, the Department of Environmental Conservation (DEC) began investigating reports of contaminated drinking water in Sherburne,² Vermont. After testing several wells, DEC identified the potential source of the contamination to be an underground fuel tank on property owned by Harbor Management Corporation, hereinafter Summit Lodge. DEC contacted Summit Lodge in January of 1994 and directed that it clean the contamination.

Summit Lodge hired Marin Environmental, an environmental consulting firm, to handle the contamination. Marin Environmental removed the underground fuel tank and confirmed, after testing the soil, that the tank was the source of a release of gasoline into the subsurface contaminating the local bedrock aquifer and a total of thirty-two private wells. With DEC's approval, Marin Environmental installed a groundwater extraction and treatment system and a soil vapor extraction system. The extraction system was somewhat effective, reducing contamination, but certain wells still test positive for pollutants above the level of drinking water standards. In contrast, the soil vapor extraction system put into place by Summit Lodge removed nearly all recoverable contamination from the soils overlying the bedrock aquifer.

In 1994, Summit Lodge filed a claim with their insurance companies, United States Fire Insurance (USFI) and North River. USFI denied coverage based on an exclusion within the pollution endorsement to the policy. North River did not respond. In the same year Summit Lodge applied to the Petroleum Cleanup Fund for reimbursement. The State reimbursed nearly all costs, limiting Summit Lodge's liability to $10,000. The State spent approximately $715,000 in the investigation and clean-up of the site, including the costs of providing bottled drinking water to the affected neighbors, and expects to spent an additional $100,000 to $200,000 before the clean-up is complete.

The State filed suit against USFI and North River in federal district court in 1997. In 1998, the parties agreed to dismiss the original action for lack of jurisdiction, and the State refiled in Washington Superior Court. The parties engaged in discovery and filed cross-motions for summary judgment in April of 1999. In an order dated December 30, 1999, Judge Teachout granted the State's motion finding that the leak at Summit Lodge was an occurrence covered under the North River policy and that defendants were liable for the costs that the State incurred.

Defendant filed a motion for reconsideration and on May 16, 2000, Judge Bryan denied the motion concluding (1) the State has standing pursuant to 10 V.S.A. § 1941(f); and (2) that the exclusion contained in the pollution endorsement of the North River policy does not exclude the costs associated with clean-up of contamination on a third-party property. On May 26, 2000, judgment was filed against defendant for $714,791.94 in costs, 12% pre-judgment interest, and "all future reasonable and necessary expenses for the remediation of the Summit lodge site." This appeal followed.

I.

We review a trial court's decision to grant summary judgment de novo. Hence, we will apply the same standard as the trial court, and its decision to grant a motion for summary judgment will be affirmed if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Chapman v. Sparta, 167 Vt. 157, 159, 702 A.2d 132, 134 (1997); see V.R.C.P. 56.

We first address defendant's argument that the State has no standing to bring a claim for restitution against North River pursuant to a policy under which they are not the insured. Because we hold that the State is granted a cause of action by 10 V.S.A. § 1941(f), we disagree.

Article III of the United States Constitution limits federal courts' jurisdiction to actual cases or controversies. U.S. Const. art. III. Vermont has adopted this requirement and with it the requirement that for plaintiffs to have standing to bring a case, they must have suffered a particular injury that is attributable to the defendant and that can be redressed by a court of law. Parker v. Town of Milton, 169 Vt. 74, 77-78, 726 A.2d 477, 480 (1998) (holding this Court has adopted the test articulated by the United States Supreme Court in Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)).

"The question of standing `involves both constitutional limitations on ... jurisdiction and prudential limitations on its exercise.'" Bennett v. Spear, 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (quoting Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)). These prudential limitations on standing include "the general prohibition on a litigant's raising another person's legal rights, the rule against adjudication of generalized grievances, and `the requirement that a plaintiff's complaint fall within the zone of interests protected by the law invoked.'" Hinesburg Sand & Gravel Co. v. State, 166 Vt. 337, 341, 693 A.2d 1045, 1048 (1997) (quoting Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984)).

Defendant concedes that the State can show injury in fact, traceable to the defendant, that could be redressed by a decision favorable to the State. Defendant asserts, however, that the State has no legal right upon which to base a cause of action because neither the explicit language of 10 V.S.A. § 1941(f) nor the State's theory of equitable subrogation is sufficient to allow the State to bring suit in the first instance. It is unnecessary to address the State's contention that its cause of action for restitution is based on the law of equitable subrogation independent of any statute, because — contrary to the argument of defendant — statutory authorization of a right of action does not require express statutory language. Where a statute "expressly or by clear implication grants a right of action," plaintiffs will have standing even where they raise general grievances or seek to enforce the rights of another party. Warth, 422 U.S. at 510, 95 S.Ct. 2197 (emphasis added); see Brown v. Stone, 66 F.Supp.2d 412, 423-24 (E.D.N.Y.1999); United States v. Tribal Dev. Corp., 49 F.3d 1208, 1214 (7th Cir.1995). We have no difficulty in concluding, as did the trial court below, that the language of the Petroleum Cleanup Fund not only authorizes state expenditure for cleanup of contamination caused by petroleum leakage, but also authorizes the State to seek restitution to the Fund for clean-up expenditures where there is insurance coverage for pollution damages.

In construing 10 V.S.A. § 1941, "`our principal goal is to effectuate the intent of the Legislature.'" State v. Brennan, 172 Vt. 277, 280, 775 A.2d 919, 921 (2001) (quoting Tarrant v. Dep't of Taxes, 169 Vt. 189, 197, 733 A.2d 733, 739 (1999)). Section 1941 provides for the Petroleum Cleanup Fund, which reimburses parties that have incurred costs from "the cleanup and restoration of contaminated soil and groundwater caused by releases of petroleum from underground storage tanks, including air emissions for remedial actions, and for compensation of third parties for injury and damage caused by a release." 10 V.S.A. § 1941(b). Under the act, the owner of the contaminating property is responsible for the first $10,000 of costs incurred and can apply for reimbursement for any excess amounts up to $990,000. Id. § 1941(b)(1). Moreover, the act provides that the Secretary of the Agency of Natural Resources (ANR) "may seek reimbursement to the fund of cleanup expenditures... to the extent covered, when there is insurance coverage." Id. § 1941(f).

"The statute authorizing state expenditures for petroleum cleanup is clear and unambiguous." ANR v. Glens Falls Ins. Co., 169 Vt. 426, 431, 736 A.2d 768, 771 (1999). Consistent with that, the statute in subsection (f) clearly establishes that the State may itself seek reimbursement in instances where the land is covered by insurance, to the extent of the coverage. 10 V.S.A. § 1941(f). In interpreting § 1941(f), we are mindful not to render a significant provision of a statute irrelevant. Brennan, 172 Vt. at 280, 775 A.2d at 922....