AY McDonald Industries v. INA

• Decision Date: 30 December 1993
• Docket Number: No. C88-1028.,C88-1028.
• Citation: 842 F. Supp. 1166
• Parties: A.Y. McDONALD INDUSTRIES, INC., Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, et al., Defendants.
• Court: U.S. District Court — Northern District of Iowa

842 F. Supp. 1166

A.Y. McDONALD INDUSTRIES, INC., Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, et al., Defendants.

No. C88-1028.

United States District Court, N.D. Iowa, E.D.

December 30, 1993.

William C. Fuerste, Stephen J. Juergens, Gregg L. Owens, Norman J. Wangberg, Fuerste Carew Coyle, Dubuque, IA, for A.Y. McDonald Industries, Inc.

Daniel A. Bartoldus, Lawrence A. Levy, Abbe L. Koplitz, Rivkin, Radler & Kremer, Uniondale, NY, Greg A. Egbers, Betty, Neuman & McMahon, Davenport, IA, Local Counsel, for Nat. Sur. Corp. and American Ins. Co.

Michael Patrick Murphy, Paul R. Koepff, Kathleen A. Gallagher, Mudge, Rose, & Gutherie, New York City, Robert M. Jilek, Robert C. Tilden, Simmons, Perrine, Albright & Ellwood, Cedar Rapids, IA, Local Counsel, for Ins. Co. of North America.

Terrence E. Kiwala, Laura A. Lewis, Geoffrey A. Bryce, Karen E. Wilson-Howard, Rooks, Pitts & Poust, Chicago, IL, Richard A. Stefani, Gray, Stefani & Mitvalsky, Cedar Rapids, IA, Local Counsel, for Hartford Acc. and Indem. Co., Twin City Fire Ins. Co., and Old Republic Ins. Co.

Daniel Litchfield, Bruce DeGrazia, Steve Taber, Gail Zwenke, David M. Rownd, Burditt & Radzius, Chicago, IL, Terry J. Abernathy, Pickens, Barnes & Abernathy, Cedar Rapids, IA, Local Counsel, for The Aetna Cas. and Sur. Co. and Cincinnati Ins. Co.

John Wharton, Peddicord, Wharton, Thune & Spencer, Des Moines, IA, Employers Reinsurance Corp. Mitchell L. Lathrop, Roger D. Brown, Kathy Waring, Sharon Engel, Adams, Duque & Hazeltine, San Diego, CA, for Puritan Ins. Co.

Nancy Gleason, Thomas B. Keegan, Gleason, McGuire & Shreffler, Chicago, IL, Gerald T. Sullivan, Robert S. Hatala, Crawford, Sullivan, Read, Roemermann, & Brady, P.C., Cedar Rapids, IA, Local Counsel, for Allstate Ins. Co.

William C. Davidson, Carole J. Anderson, Hallie E. Still-Caris, Lane & Waterman, Davenport, IA, American Employers Ins. Co.

Richard M. Hagstrom, Michelle K. Enright, Mark O. Krueger, Paul L. Gingras, Zelle & Larson, Minneapolis, MN, Richard P. Moore, Moyer & Bergman, P.C., Cedar Rapids, IA, Local Counsel, for Employers Ins. of Wausau.

ORDER

MELLOY, Chief Judge.

This matter appears before the court on the Defendants' resisted motion for summary judgment on the pollution exclusion issue, filed April 1, 1992, and the Plaintiff's resisted motion to certify a question of law to the Iowa Supreme Court, filed June 1, 1992.

The Defendants' motion, authored by American Insurance Company and National Surety Corporation, joined by Insurance Company of North America¹, Hartford Accident & Indemnity Company, Aetna Casualty & Surety Company, Employers Reinsurance Corporation, Allstate Insurance Company, Old Republic Insurance Company, Twin City Fire Insurance Company, Puritan Insurance Company, Cincinnati Insurance Company, and American Employers Insurance Company, asserts that the moving Defendants are entitled to summary judgment in their favor since the "pollution exclusion" clause contained in each of their insurance contracts with the Plaintiff precludes coverage in this case. The Plaintiff's motion moves the court to certify the question of whether the pollution exclusion clause applies in this case to the Iowa Supreme Court.

Background Facts

1. From 1949 until October 31, 1983, the Plaintiff manufactured brass valves in its brass foundry on 12th Street in Dubuque, Iowa. In making the brass valves, brass particulate and waste sand (which also contained brass particulate) would be generated. After being run through a series of filtration devices which supposedly removed all of the brass particulate, the waste sand was loaded onto a truck and periodically dumped onto a vacant area behind the foundry. Lead was a component of the brass particulate.

2. On July 29, 1982, the Plaintiff sold its entire 12th Street site to the Iowa Department of Transportation (the "IDOT"). The Plaintiff leased the 12th Street site from IDOT until IDOT took possession on October 28, 1983.

3. On December 6, 1984, the United States Environmental Protection Agency (the "EPA") served the Plaintiff with a complaint, a compliance order, and a notice of opportunity for hearing. These documents were served pursuant to the Resource Conservation and Recovery Act of 1976 ("RCRA"), Pub.L. No. 94-580, 90 Stat. 2796 (now codified as amended at 42 U.S.C. § 6901 et seq.). The EPA claimed that the 12th Street foundry site contained traceable amounts of lead in excess of acceptable regulatory levels. See 40 C.F.R. § 261.24.

4. On September 6, 1985, the EPA nominated the 12th Street site for inclusion on the Superfund List under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), Pub.L. No. 96-510, 94 Stat. 2767 (now codified as amended at 42 U.S.C. § 9601 et seq.).

5. A hearing on the RCRA complaint was held on November 5, 6, and 7, 1985, followed by a supplemental hearing on January 6, 1986. The administrative law judge ("ALJ") who heard the matter issued his "Initial Decision" on April 24, 1986. The ALJ found that the Plaintiff violated RCRA and imposed a civil penalty against the Plaintiff. In addition, the ALJ required the Plaintiff to submit a closure and a post-closure plan.

6. Both the Plaintiff and the EPA appealed the ALJ's decision on the RCRA matter to the administrator of the EPA. On July 23, 1987, the EPA issued its "Final Decision." Essentially adopting the ALJ's "Initial Decision," the EPA found that the Plaintiff violated RCRA. The EPA assessed a civil penalty against the Plaintiff and required the Plaintiff to submit a closure plan, a post-closure plan, and a groundwater assessment plan. The EPA also mandated that the Plaintiff fully implement these plans.

7. In 1986 and 1987 the Plaintiff, IDOT, and the EPA engaged in extensive negotiations concerning cleanup of the 12th Street site under CERCLA, post-closure monitoring and maintenance, and recovery of the EPA's response costs.

8. On August 19, 1987, the Plaintiff, the IDOT, and the EPA entered into a consent order which covered both the RCRA and the CERCLA matters. The consent order required the Plaintiff to (1) design and construct a clay cap over a specified portion of the property; (2) expand its groundwater monitoring system; and (3) develop and implement a post-closure plan for a period of thirty years.

9. The Plaintiff continues to comply with the RCRA final decision of July 23, 1987, and the consent order of August 19, 1987. In complying with the consent order, the Plaintiff has spent in excess of two million dollars.

10. On June 23, 1988, the Plaintiff commenced an action against the Defendants in the Iowa District Court for Dubuque County seeking indemnification and declaratory relief for the past and future costs of complying with the consent order. The Defendants removed the action to this court on July 20, 1988.

11. Between 1949 and 1983, the moving Defendants issued general liability policies and umbrella policies to the Plaintiff.

12. On April 1, 1992, American Insurance Company and National Surety Corporation filed the summary judgment motion currently before the court. The Defendants assert that they are entitled to summary judgment in their favor since the "pollution exclusion" clause contained in each of their insurance contracts with the Plaintiff precludes coverage in this case.

13. On June 1, 1992, the Plaintiff filed the motion to certify currently before the court. The Plaintiff's motion moves the court to certify the question of whether the pollution exclusion clause applies in this case.

Motion To Certify

The Plaintiff's motion to certify moves the court to certify the following question of law to the Iowa Supreme Court:

Whether, as a matter of Iowa law, repeated dumpings over an extended period of time of foundry sand containing the metal alloy brass which was not known to and reasonably not believed to release one of its chemical constituents, lead, into the environment at the time it was dumped (and later alleged by the EPA to constitute a hazardous waste or hazardous substance because of the alleged release of lead), cannot be a "sudden and accidental" "discharge, dispersal, release or escape" of pollutants, within the meaning of the exception to the 1970 form of pollution exclusion of a comprehensive general liability policy, excess policy or umbrella policy.

Local Rule 23 provides that a question of law may be certified to the Iowa Supreme Court if "it appears there is no controlling precedent in the decisions of the appellate courts of the state" of Iowa. See also Iowa Code § 684A.1. For reasons which will be more fully explained in the text to follow, the court concludes that Weber v. IMT Ins. Co., 462 N.W.2d 283 (Iowa 1990), is controlling in this case. Accordingly, the court hereby denies the Plaintiff's motion to certify.

Summary Judgment

The Defendants' motion moves the court to enter summary judgment in their favor, denying the Plaintiff's claim for indemnification and declaratory relief. Under Rule 56(c) summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Once the motion for summary judgment is made and supported, it places an affirmative burden on the non-moving party to go beyond the pleadings and "by affidavit or otherwise" designate "specific facts showing that there is a genuine issue for trial." Robinson v. Monaghan, 864 F.2d 622, 624 (8th Cir.1989) (quoting Fed.R.Civ.P. 56(e)); Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). In designating specific facts, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment" because Rule 56(c) requires "that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). In order...