O'Brien Energy Systems, Inc. v. American Employers' Ins. Co.
| Decision Date | 03 August 1993 |
| Citation | 629 A.2d 957,427 Pa.Super. 456 |
| Parties | O'BRIEN ENERGY SYSTEMS, INC., Appellant, v. AMERICAN EMPLOYERS' INSURANCE COMPANY, Federal Insurance Company, International Insurance Company, Liberty Mutual Insurance Company, National Union Fire Ins. Co. of Pittsburgh, Pa, Planet Insurance Company and Montgomery County, Pennsylvania, and Smithkline Beecham Corporation. |
| Court | Pennsylvania Superior Court |
Lee M. Epstein, Philadelphia, for appellant.
Walter A. Stewart, Philadelphia, for Liberty Mut., appellee.
James A.A. Pabarue, Jr., Philadelphia, for American Employers', appellee.
Richard W. Bryan, Arthur Burger, pro hac vice National Union Fire Ins. Co. of Pittsburgh, appellee.
Before WIEAND, CIRILLO and POPOVICH, JJ.
In this action for declaratory judgment to determine whether there was insurance coverage requiring one or more insurers to defend O'Brien Energy Systems, Inc. (O'Brien Energy) against a claim for property damage caused by the gradual migration of methane gas, the trial court entered summary judgment in favor of the insurers. O'Brien Energy appealed. For the reasons herein set forth, we affirm.
In 1979, SmithKline Beecham Corporation (SmithKline) purchased from National Gypsum Company certain quarry real estate in Montgomery County for the purpose of constructing and maintaining a research facility. Included in the sale was an assignment of a lease agreement which National Gypsum had with Montgomery County, pursuant to which the County conducted a landfill operation. According to the terms of the lease agreement, the County was required to (a) construct all necessary sanitary monitoring facilities and meet all requirements for the approved management of a sanitary landfill, and (b) indemnify the owner and hold it harmless from all claims for injury to persons or damage to property arising from the County's use of the leased premises, including damages caused by methane gas.
O'Brien Energy develops, owns and operates alternative fuel and waste heat recovery projects. A significant part of its business involves the operation of gas to energy facilities. This entails the extraction of methane gas, which forms naturally in landfills, and the conversion thereof to power, which is then sold to nearby industries or public utilities. On October 13, 1983, O'Brien Energy entered into a Methane Gas Agreement with SmithKline and the County. Pursuant to this agreement, O'Brien Energy was granted a license to extract methane gas from the County's landfills. The electricity and steam generated thereby were sold to SmithKline for use in its research facility. The agreement among the parties provided in pertinent part as follows:
Neither the purchase by [SmithKline] of electricity and steam from O'Brien nor the grant of a license to O'Brien to develop gas from the landfill property shall constitute a release of the County from its obligations to operate the landfill property so as to abate any nuisance from methane gas generated by decomposition of waste deposited on the landfill property....
SmithKline detected methane gas migration from the landfill in June, 1986 and commissioned consultants to make a landfill impact survey. In August, 1987, the consultants confirmed the migration of methane gas. In December, 1987, gas which had migrated onto SmithKline's land caused an explosion within a utility conduit. On June 26, 1989, SmithKline commenced an action against the County to recover damages for and to prevent future damage from migrating methane gas. It alleged that the County had breached the terms of its lease and the Methane Gas Agreement by failing to control the migration of landfill gases. The County joined O'Brien Energy as an additional defendant. The defendant's complaint contained five counts. It alleged causes of action for negligence and breach of contract and requested a mandatory injunction requiring O'Brien Energy to operate its gas recovery system at full capacity so as to prevent additional gas migration. The County also requested a declaratory judgment that the Methane Gas Agreement required O'Brien Energy to remedy the migration of methane gas; and, finally, the County requested indemnification for any liability which it might incur to SmithKline.
The present action for declaratory judgment was filed by O'Brien Energy against American Employers' Insurance Company, Liberty Mutual Insurance Company, and National Union Fire Insurance Company of Pittsburgh to determine whether policies of comprehensive general liability insurance which they had issued required that they provide a defense for O'Brien Energy in the underlying action to which it had been named as an additional defendant. Thereafter, the parties filed motions for summary judgment. The trial court held that coverage for migrating gases was excluded by the terms of the several policies and entered judgment in favor of the insurers.
A motion for summary judgment may be granted only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. In passing upon a motion for summary judgment, a court must examine the record in a light most favorable to the nonmoving party and must resolve all doubt against the moving party. Mariscotti v. Tinari, 335 Pa.Super. 599, 601, 485 A.2d 56, 57 (1984); Thorsen v. Iron and Glass Bank, 328 Pa.Super. 135, 140-141, 476 A.2d 928, 930-931 (1984).
The interpretation of an insurance contract is a matter of law for the court. The primary objective of contract interpretation is to ascertain and effectuate the intent of the parties as it is reasonably manifested by the language of their written contract. Toombs NJ Inc. v. Aetna Casualty & Surety Co., 404 Pa.Super. 471, 476-477, 591 A.2d 304, 307 (1991); J.H. France Refractories Co. v. Allstate Insurance Co., 396 Pa.Super. 185, 193, 578 A.2d 468, 472 (1990) (en banc), affirmed in part, reversed in part, 534 Pa. 29, 626 A.2d 502 (1993). The words of an insurance policy which are unambiguous should be construed according to their plain and ordinary meaning. Harford Mutual Insurance Co. v. Moorhead, 396 Pa.Super. 234, 240, 578 A.2d 492, 495 (1990), allocatur denied, 527 Pa. 617, 590 A.2d 757 (1991). The court must assess the writing as a whole, and not in discrete units, when determining whether a writing is ambiguously drafted. Ready Food Products, Inc. v. Great Northern Insurance Co., 417 Pa.Super. 643, 646, 612 A.2d 1385, 1387 (1992). A contract term or provision may properly be deemed ambiguous if reasonable minds can differ as to its meaning. Id. While the court will not allow an overly-subtle or technical interpretation to defeat the reasonable expectations of the insured, it will not convolute the plain meaning of a writing merely to find an ambiguity. Id.
The insurer's duty to defend the insured is dependent upon the coverage afforded by the insured's policy. Harford Mutual Insurance Co. v. Moorhead, supra at 238, 578 A.2d at 494.
If the factual allegations of the complaint against the insured state a claim which would potentially fall within the coverage of the policy, then the insurer has the duty to defend. As the Supreme Court has stated, "[i]t is not the actual details of the injury, but the nature of the claim which determines whether the insurer is required to defend." In making this determination, the factual allegations of the complaint are taken to be true and the complaint is to be liberally construed with all doubts as to whether the claims may fall within the coverage of the policy to be resolved in favor of the insured.
Biborosch v. Transamerica Insurance Co., 412 Pa.Super. 505, 509, 603 A.2d 1050, 1052, allocatur denied, 532 Pa. 653, 615 A.2d 1310 (1992) (citations omitted).
The several policies issued to appellant by the appellees are comprehensive general liability policies which provide coverage for bodily injury and property damage liability, as well as personal injury and advertising liability. Each policy contains a pollution exclusion clause. The policy issued by American Employers' states, in pertinent part:
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
bodily injury or property damage
to which this insurance applies, caused by an occurrence,....
An "occurrence" is defined as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured." An exclusion thereto provided that the insurance coverage had no application
to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.
An endorsement to the American Employers' policy extended indemnity to the insured for "personal injury" claims arising out of
A. false arrest, detention or imprisonment, or malicious prosecution;
B. the publication or utterance of a libel or slander or of other defamatory [or] disparaging material, or a publication [or] utterance in violation of an individual's right of privacy, except publications or utterances in the course of or related to advertising, broadcasting or telecasting activities conducted by or on behalf of the named insured;
C. wrongful entry or eviction, or other invasion of the right of private occupancy.
The policies issued by Liberty Mutual and National Union are similar, if not identical in all instances. Both contain pollution exclusion clauses as well as personal injury coverage. The policies issued to appellant by Liberty Mutual in 1984 and 198...
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