Buckeye Union Ins. Co. v. Liberty Solvents and Chemicals Co., Inc., 11598

• Decision Date: 11 July 1984
• Docket Number: No. 11598,11598
• Citation: 17 O.B.R. 225,477 N.E.2d 1227,17 Ohio App.3d 127
• Parties: , 17 O.B.R. 225 BUCKEYE UNION INSURANCE CO., Appellee, v. LIBERTY SOLVENTS AND CHEMICALS CO., INC., Appellant.
• Court: Ohio Court of Appeals

Page 127

17 Ohio App.3d 127

477 N.E.2d 1227, 17 O.B.R. 225

BUCKEYE UNION INSURANCE CO., Appellee, v. LIBERTY SOLVENTS AND CHEMICALS CO., INC., Appellant.

No. 11598.

Court of Appeals of Ohio, Ninth District, Summit County.

July 11, 1984.

Syllabus by the Court

1. Section 9607, Title 42, U.S.Code, establishes strict liability for three categories of "responsible persons": (1) present and former owners of hazardous waste disposal sites; (2) transporters of hazardous wastes; and (3) those who arrange for the transport or disposal of hazardous wastes.

2. Generally, "accident" means something that must have come about or happened in a certain way, while "occurrence" means something that happened or came about in any way. Thus accident is a special type of occurrence, but occurrence goes beyond such special confines and, while including accident, it encompasses many other situations as well.

3. The releases and threatened releases of hazardous waste materials are "occurrences" within the common understanding of that term.

4. Claims for damages caused by pollution which are excluded from liability insurance coverage unless the pollution is "sudden and accidental" will be covered where the damages were neither unexpected nor unintended from the standpoint of the insured.

5. The "completed operations hazard" exclusion in a liability insurance policy is meant as a limitation on coverage for accidents due to defective workmanship occurring after the completion of work by the insured on a construction or service contract.

6. A "products hazard" exclusion in a liability insurance policy will preclude coverage only where there is a defective condition in the product itself which proximately causes the damage. This defective condition may be a design defect in the product; a manufacturing defect in the product; or in the case of an inherently dangerous or unavoidably unsafe product, a failure to provide adequate warnings.

William J. Cady, Akron, for appellee.

Richard L. Creighton and Robert E. Coletti, Cincinnati, for appellant.

QUILLIN, Judge.

In this case, Liberty Solvents & Chemicals Co., Inc. (Liberty Solvents), appeals from the trial court's determination on summary judgment that Buckeye Union Insurance Co. (Buckeye) has no duty to defend of indemnify its insured, Liberty Solvents, against the claims made by the state of Ohio and the United States relating to the clean-up of a hazardous waste facility owned and operated by Chem-Dyne Corp. We reverse.

On September 14, 1982, the state of Ohio filed an action in federal district court against Liberty Solvents and thirty-seven other entities for damages, injunctive, and declaratory relief in connection with the hazardous waste facility in Hamilton County, Ohio operated by Chem-Dyne. The complaint alleges that generators of hazardous waste, including Liberty Solvents, contracted with Chem-Dyne for the disposal of the hazardous waste, and that the waste was spilled, leaked, released or otherwise discharged when drums were dropped and ruptured or punctured by Chem-Dyne, thereby polluting the surface waters, soil and groundwater in and around the disposal site.

On April 13, 1983, the United States filed an amended complaint against Liberty Solvents in the same federal court for damages caused at the Chem-Dyne site. The state and federal lawsuits were thereafter consolidated for trial. As the complaint filed by the United States interjects no new or additional facts or causes of action against Liberty Solvents, the discussion of the issues that follows will focus solely on the complaint filed by the state of Ohio.

Liberty Solvents notified its insurer, Buckeye, of the pending lawsuits and requested that Buckeye defend the actions under the terms of the policy. On March 3, 1983, Buckeye filed this declaratory judgment action seeking a determination that it has no duty to defend and/or indemnify Liberty Solvents for the damage claims set forth in the two complaints. Liberty Solvents counterclaimed for a declaration that Buckeye is required to defend and indemnify.

Both parties filed motions for summary judgment. Liberty Solvents requested partial summary judgment on the issue of Buckeye's duty to defend. Buckeye sought summary judgment on both its duty to defend and indemnify. The trial court denied Liberty Solvents' motion and granted the motion of Buckeye, holding that Buckeye has no duty to defend the claims against Liberty Solvents nor a duty to indemnify Liberty Solvents. Liberty Solvents appeals, setting forth the following assignments of error:

"1. The trial court erred to the prejudice of defendant-appellant in granting plaintiff-appellee's motion for summary judgment.

"2. The trial court erred to the prejudice of defendant-appellant in not granting defendant-appellant's motion for partial summary judgment."

Upon consideration of the arguments set forth by the parties and the relevant case law, and for the reasons stated below, we sustain both assignments of error.

The question presented by this appeal is whether the allegations of the complaint state a claim for which coverage is or may be afforded by the policy of insurance.

In Willoughby Hills v. Cincinnati Ins. Co. (1984), 9 Ohio St.3d 177, 459 N.E.2d 555, the court held that:

"Where the insurer's duty to defend is not apparent from the pleadings in the action against the insured, but the allegations do state a claim which is potentially or arguably within the policy coverage, or there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded, the insurer must accept the defense of the claim."

We apply this test in conjunction with Civ.R. 56, which states in part:

"(C) * * * Summary judgment shall be rendered forthwith if the pleading, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence in the pending case, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. * * * A summary judgment shall not be rendered unless it appears from such evidence or stipulation and only therefrom, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, such party being entitled to have the evidence or stipulation construed most strongly in his favor. * * *."

We conclude that the trial court erred in granting summary judgment to Buckeye and in failing to grant Liberty Solvents' motion for partial summary judgment. From the state of the record before us, it appears that the complaint against Liberty Solvents does state a claim which may be within the coverage afforded by the policy of insurance. Buckeye must therefore accept the defense of Liberty Solvents even though it may ultimately be determined that there is no duty of indemnification. This latter question is not now before this court.

In part, the state's complaint alleges that:

" * * * Chemical wastes, including wastes containing hazardous substances, arrived at the Chem-Dyne site in drums, barrels, tank trucks, railroad cars and other containers. At times relevant to the allegations in this complaint, Chem-Dyne or its affiliates transferred such wastes from some of the aforementioned containers, mixing or blending some of the material as 'chem-fuel' for sale to other parties. Waste materials, including 'hazardous substances' * * * were mixed, blended or commingled in open pits, loading docks and bulk storage tanks. Thousands of drums and other containers have been stored on the Chem-Dyne site for prolonged, indefinite periods, exposed to the weather. Many drums are now in a rusted or corroded condition. Drums were placed in stacks as tall as four drums high and were sometimes creased, dropped and ruptured or otherwise punctured by Chem-Dyne or its affiliates. Many drums at the Chem-Dyne site are missing tops or bungs or otherwise lack secure and proper closures. * * * "

From these allegations, the complaint arguably states the following claims for relief against Liberty Solvents: (1) strict liability under the Comprehensive Environmental Response, Compensation and Liability Act, Section 9601 et seq., Title 42, U.S.Code (Superfund Act); (2) nuisance in violation of R.C. 3767.02; (3) common-law strict liability for engaging in an ultrahazardous activity; (4) common-law negligence in contracting with Chem-Dyne; (5) common-law recklessness in contracting with Chem-Dyne; and (6) breach of the non-delegable duty to assure the safe and proper storage, treatment and disposal of its waste products.

The Superfund Act creates a $1.8 billion fund to finance cleanup operations of environmentally polluted areas. Section 9607, Title 42, U.S.Code, provides in part, as follows:

"(a) Covered persons; scope

"Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section--

"(1) the owner and operator of a vessel (otherwise subject to the jurisdiction of the United States) or a facility,

"(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,

"(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility owned or operated by another party or entity and containing such hazardous substances, and

"(4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities or sites selected by such person from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable...