Avondale Industries, Inc. v. Travelers Indem. Co.

Decision Date09 November 1989
Docket NumberNo. 999,89-7035,999
Citation894 F.2d 498
PartiesAVONDALE INDUSTRIES, INCORPORATED and Ogden Corporation, Plaintiffs-Appellees, v. The TRAVELERS INDEMNITY COMPANY, Defendant-Third-Party Plaintiff-Appellant, v. COMMERCIAL UNION INSURANCE COMPANY, Highlands Insurance Company, American Motorists Insurance Company, and National Union Fire Insurance Company, Third-Party Defendants-Appellees. . On Petition for Rehearing
CourtU.S. Court of Appeals — Second Circuit

Barry R. Ostrager, New York City (Simpson Thacher & Bartlett, New York City, of counsel), for defendant-appellant The Travelers Indem. Co.

Thomas W. Brunner, Washington, D.C. (Marilyn E. Kerst, Frederick S. Ansell, Wiley, Rein & Fielding, Washington, D.C., of counsel), filed a letter brief for Ins. Environmental Litigation Ass'n as amicus curiae.

Patrick J. Foley, New York City, filed a memorandum for New York State Ins. Ass'n as amicus curiae.

Before NEWMAN, CARDAMONE and WINTER, Circuit Judges.



Appellant, Travelers Indemnity Company (Travelers), and amici, Insurance Environmental Litigation Association and New York State Insurance Association, urge us to grant their petition for rehearing in Avondale Industries, Inc. v. Travelers Indemnity Co., 887 F.2d 1200 (2d Cir.1989), on the basis of two cases handed down by the New York Court of Appeals, which were not available at the time we decided Avondale. One is Powers Chemco, Inc. v. Federal Insurance Co., 74 N.Y.2d 910, 549 N.Y.S.2d 650, 548 N.E.2d 1301 (N.Y.Ct.App.1989), and the other is A. Meyers & Sons v. Zurich American Insurance Group, 74 N.Y.2d 298, 546 N.Y.S.2d 818, 545 N.E.2d 1206 (1989). See Huddleston v. Dwyer, 322 U.S. 232, 236-37, 64 S.Ct. 1015, 1017-18, 88 L.Ed. 1246 (1944); Vandenbark v. Owens-Illinois Glass Co., 311 U.S. 538, 543, 61 S.Ct. 347, 350, 85 L.Ed. 327 (1941); see also Braniff Airways, Inc. v. Curtiss-Wright Corp., 424 F.2d 427, 428-30 (2d Cir.), cert. denied, 400 U.S. 829, 91 S.Ct. 59, 27 L.Ed.2d 59 (1970). Because we do not think these opinions are contrary to Avondale, the petition for rehearing is denied.

Powers Chemco

In Powers Chemco the New York Court of Appeals held that the defendant insurer was not obligated to indemnify the plaintiff for cleanup expenses associated with its decontamination of property purchased from a party who had allegedly buried, dumped and discharged hazardous wastes onto the property because such damage fell within the coverage exclusion for pollution damage that was not "sudden" and "accidental." Avondale is factually distinguishable from Powers Chemco. In Powers Chemco, the plaintiff seeking indemnification by the defendant insurer, by entering into an interim consent decree with the New York State Department of Environmental Conservation to decontaminate the property, effectively admitted that the prior landowner had engaged in intentional conduct that caused the pollution damage at issue. In Avondale, to the contrary, neither the plaintiff--nor any other party for that matter--has ever conceded that it engaged in intentional conduct that resulted in pollution damage. Without an admission--nor even an allegation of intentional conduct--we concluded in Avondale that the possibility that the pollution damage was both sudden and accidental had not been "clearly negate[d]."

Petitioners further note an apparent contradiction between our reliance upon the fact that there was "no allegation that Avondale itself continuously and intentionally polluted," Avondale, 887 F.2d at 1205 (emphasis added), and the statement in Powers Chemco that "there is nothing in the language of the pollution exclusion clause to suggest that it is not applicable when liability is premised on the conduct of someone other than the insured," Powers Chemco, 74 N.Y.2d at 911, 549 N.Y.S.2d at 651, 548 N.E.2d at 1302. This inconsistency does not furnish grounds for rehearing because, in fact, in Avondale no party was alleged to have or admitted to having engaged in intentional conduct that caused the pollution damage. We acknowledge that the above-quoted statement suggests otherwise and therefore modify the language in the opinion to read that there is "no allegation that Avondale or any other party continuously and intentionally polluted."

As a second matter, petitioners direct attention to the Court of Appeals' finding of intentional conduct based upon the complaint in Powers Chemco which alleged that the...

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