Boise Cascade Corp. v. Reliance Nat. Indemn. Co.
| Decision Date | 28 April 2000 |
| Docket Number | No. CIV. 98-258-P-C.,CIV. 98-258-P-C. |
| Citation | 99 F.Supp.2d 87 |
| Parties | BOISE CASCADE CORPORATION, INC., Plaintiff v. RELIANCE NATIONAL INDEMNITY CO., INC., Koch Engineering Co., Inc., and Ballard International Corp., Inc., Defendants |
| Court | U.S. District Court — District of Maine |
Theodore H. Kirchner, James D. Poliquin, Norman, Hanson & Detroy, Portland, ME, for Plaintiff.
Jeffrey T. Edwards, Preti, Flaherty, Beliveau, Pachios & Haley, LLC, Portland, ME, Daniel Nuzzi, David Bertoni, Brann & Isaacson, Lewiston, DE, for Defendants.
The Amended Complaint (Docket No. 28) sets forth three counts against three Defendants. By Count I, Boise Cascade Corporation, Inc. ("Boise" or "Plaintiff") alleges breach of contract by Reliance National Indemnity Company, Inc. ("Reliance"). In Count II, Boise seeks reformation of an insurance policy issued by Reliance. In Count III, Boise alleges breach of contract by Koch Engineering Co., Inc. ("Koch") or Ballard International Corp., Inc. ("Ballard"). Currently before the Court are three summary judgment motions. Koch has moved for summary judgment with respect to Count III ("the Koch Motion") (Docket No. 22). Boise has moved for summary judgment with respect to Count I ("the Boise Motion") (Docket No. 19). Reliance has moved for summary judgment with respect to Counts I and II ("the Reliance Motion") (Docket No. 25). For the reasons that follow, the Court will grant the Koch Motion, deny the Boise Motion, and grant in part and deny in part the Reliance Motion.
In early September 1995, Marvin Woodbury, Michael Ross, James Quinn, and Lewin Dodge ("the Koch employees") were working at the Boise Cascade mill in Rumford, Maine. Plaintiff's Statement of Material Facts ("PSMF") (Docket No. 20) ¶ 3. The Koch employees were tasked with inspecting and repairing tile-lined tanks used in the papermaking process. While at the mill, the Koch employees were allegedly injured when they were exposed to "poisonous and toxic gasses." Plaintiff's Complaint (Docket No. 1) at Exhibits A, B. In 1997, the Koch employees filed suit against Boise ("the underlying litigation").1 Id. The complaint in the underlying litigation alleged, in pertinent part, the following:
13. As a direct and proximate result of Defendant Boise Cascade's negligence as set forth above and in other respects as will be shown at the trial of this matter, Plaintiff Marvin Woodbury was seriously and permanently injured, was and will be prevented from carrying out his usual duties, suffered and will suffer great and permanent pain of body and mind, has suffered and will suffer permanent disability, loss of function and loss of enjoyment of life, was and will be obligated to expend monies for medical and hospital care, has suffered and will continue to suffer a great and permanent loss of earnings and earning capacity, and has suffered and will continue to suffer emotional distress and damages in other respects which will be shown at the trail of this matter.2
Id.3
Statements by Boise employees indicate that the Koch employees were exposed to chlorine gas that escaped into their work area as a result of errors by Boise employees. Reliance Statement of Material Facts ¶¶ 37-38; Exhibit No. 54; Miscellaneous Document No. 6.4 An investigation by the Occupational Safety and Health Administration lends further support to this conclusion. Miscellaneous Document No. 11.
The Koch employees were working at Boise under contract. The actual terms of the contract, however, are in dispute. On June 28, 1995, Stephen Clarke, a Koch official, provided Boise with a quote for the repairs to the tile-lined tanks. Exhibit No. 9. The written quote included the following language: "The attached Field Service Group Standard Terms and Conditions are made part of this proposal" ("the Koch standard terms"). Id. In response to Koch's quote, on August 1, 1995, Boise sent a purchase order to Koch, which included Boise's standard terms and conditions on the reverse ("the Boise standard terms"). Exhibit No. 11. The Boise standard terms indicated that its terms would be the controlling terms.5 Id. Furthermore, the Boise standard terms require a seller who is to perform work at Boise to carry certain insurance coverage and to name Boise as an additional insured on the seller's liability insurance policy.6 Id. On August 7, 1995, Clarke signed the acknowledgment copy of the Boise purchase order and mailed it to Boise with a cover letter. Exhibit No. 11; Stephen Clarke Dep. at 56-57. Next to Clarke's signature on the acknowledgment copy was the language "I (WE) Knight/Ballard KECI hereby accept this PURCHASE ORDER solely on the terms & Conditions set forth herein."7 Affidavit of Marine Eastman and attachment. The cover letter from Clarke indicated that "THE ACCEPTANCE OF THIS PURCHASE ORDER IS BASED ON THE ATTACHED TERMS AND CONDITIONS." Exhibit No. 11. In addition to the acknowledgment copy of the Boise purchase order, another copy of the Koch standard terms was enclosed with the letter. Exhibit 11; Clarke Dep. at 56.
From December 1, 1994, through December 1, 1995, Koch was covered by a commercial general liability insurance policy issued by Reliance ("the Reliance policy"). Exhibit No. 23. Endorsement No. 14 to the Reliance policy states the following:
ADDITIONAL INSURED/NAMED INSURED ENDORSEMENT
B. SUCH INSURANCE AS IS PROVIDED UNDER THIS PROVISION SHALL BE PRIMARY INSURANCE, PROVISIONS OF THIS POLICY TO THE CONTRARY NOTWITHSTANDING, IF THE NAMED INSURED HAS
AGREED TO PROVIDE PRIMARY INSURANCE.
C. IN THE ABSENCE OF SPECIFIC OBLIGATIONS TO THE CONTRARY WHICH MAY BE CONTAINED IN ANY CONTRACT OR AGREEMENT INTO WHICH THE NAMED INSURED MAY HAVE ENTERED, THE INCLUSION OF OTHER PERSONS OR ORGANIZATIONS INCLUDING JOINT VENTURES, PARTNERSHIPS, TRUSTEES OR ESTATES AS ADDITIONAL INSURED HEREUNDER SHALL BE LIMITED TO THEIR LIABILITY FOR THE CONDUCT OF THE NAMED INSURED.
Exhibit No. 23, Endorsement No. 14. The Reliance policy also includes a "TOTAL POLLUTION EXCLUSION ENDORSEMENT," which reads, in relevant part, as follows:
This Insurance does not apply to:
f. (1) "Bodily injury" or "property damage" which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time.
. . . . .
Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Reliance Statement of Material Facts ¶ 4 and second unnumbered attachment. Finally, the Reliance policy includes Exclusion 2(e), which states:
2. Exclusions.
This insurance does not apply to:
e. Employer's Liability
"Bodily Injury" to
(1) An "employee" of the insured arising out of and in the course of:
(a) Employment by the insured; or
(b) Performing duties related to the conduct of the insured's business;
Reliance Statement of Material Facts, first unnumbered attachment.
The Boise standard terms require the seller to provide Boise with a certificate of insurance. Exhibit No. 11. Apparently Koch did not provide Boise with a certificate naming Boise as an additional insured on or about August 7, 1995, when Clarke signed and returned the Boise purchase order. However, on January 17, 1995, several months prior to the acknowledgment of the Boise purchase order, a "CERTIFICATE OF INSURANCE," ("the January 17, 1995 certificate") along with an attached endorsement entitled "ADDITIONAL INSURED," ("the attached endorsement") was issued to Boise. Exhibit No. 2; Becci Biagini Dep. at 60-62. The January 17, 1995, certificate listed Reliance as the insurance company, Ballard as the insured, and Boise as the additional insured. Exhibit No. 2. At the top of the January 17, 1995, certificate is the following language:
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
Exhibit No. 2. Near the bottom of the Certificate is typed "BOISE CASCADE CORP., ITS DIRECTORS, OFFICERS AND AGENTS ARE NAMED AS ADDITIONAL INSUREDS PER ATTACHMENT." Id.
The attached endorsement, which again listed Boise as an additional insured, was not a Reliance form. Exhibit No. 2; Marla Donovan Lang Dep. at 68-69. The attached endorsement, captioned "ADDITIONAL INSURED (Owners or Contractors)," indicates that the named additional insured (Boise) is covered only "with respect to liability arising out of the negligent acts or omissions of Named Insured in connection with operations performed for the additional insured by the Named Insured ...." Exhibit No. 2. The attached endorsement goes on in section 1.(b) to state "[t]his insurance does not apply to[] bodily injury or property damage arising out of any act or omission of the additional insured or any of his employees." Id.
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