Buell Industries v. Greater Ny Mutual Insurance

• Decision Date: 26 February 2002
• Docket Number: 16464
• Citation: 791 A.2d 489
• Parties: v. GREATER NEW YORK MUTUAL INSURANCE COMPANY ET AL.16464 THE SUPREME COURT OF THE STATE OF CONNECTICUT
• Court: Connecticut Court of Appeals

v.

GREATER NEW YORK MUTUAL INSURANCE COMPANY ET AL.

No. SC 16464

THE SUPREME COURT OF THE STATE OF CONNECTICUT

Argued September 20, 2001

February 26, 2002

Francis J. Brady, with whom were Austin Carey, Jr., John S. Vishneski III and, on the brief, Angela Elbert Dietz, for the appellant (plaintiff). Joel M. Fain, with whom were Jay D. Kenigsberg, pro hac vice, Thomas C. Clark, and, on the brief, Erich H. Gaston and Glory M. Lena, for the appellees (defendant Federal Insurance Company et al.). Laura A. Foggan, pro hac vice, Daniel E. Troy, pro hac vice, Danielle E. Berry, pro hac vice, Daniel P. Scapellati and John B. Farley, filed a brief for the Insurance Environmental Litigation Association as amicus curiae. W. James Cousins, Jr., Eugene R. Anderson, pro hac vice, Robert M. Horkovich, pro hac vice, Mark Garbowski, pro hac vice, Amy Bach, pro hac vice, and Brian T. Valery, law clerk, filed a brief for the United Policyholders as amicus curiae.

Sullivan, C. J., and Norcott, Palmer, Vertefeuille and Zarella, Js.

Norcott, J.

Opinion

This appeal arises from a dispute regarding whether the comprehensive general liability policies issued by the defendant insurers provide coverage for the environmental claims asserted by the plaintiff. More specifically, we are asked, in part, to interpret the meaning and applicability of the ''sudden and accidental'' exception to the pollution exclusion contained in the defendants' insurance policies. The plaintiff, Buell Industries, Inc., filed a declaratory judgment action against the defendants, Federal Insurance Company (Federal) and Chicago Insurance Company (Chicago), after they had denied coverage. The defendants moved for summary judgment and the trial court, Koletsky, J., ruled in favor of the defendants. The plaintiff appealed from the judgment of the trial court. We now affirm the judgment of the trial court.

The following are the relevant facts and procedural history. The plaintiff is a Delaware corporation with its principal place of business in Waterbury, Connecticut. The issues in this appeal concern two manufacturing facilities owned by the plaintiff: Highland Manufacturing (Highland) and Anchor Fasteners (Anchor), both of which are located in Waterbury. The plaintiff manufactures metal parts at each of the facilities. In 1990, the plaintiff began an environmental investigation of the facilities. The investigation revealed that both sites were contaminated. ¹ According to the plaintiff, each of the sites was contaminated as a result of releases that had occurred during and after 1966.

The contamination at issue in this case concerns primarily groundwater pollution. At Highland, the significant source of contamination was trichloroethylene (TCE), which was located beneath the plant's former wastewater lagoon. TCE existed in this area in a dense nonaqueous phase liquid form, that was not fully dissolved in the groundwater and spread from the lagoon area to neighboring properties through the groundwater.

The Highland facility utilized a two stage degreasing machine, that used TCE in both liquid and vapor forms. Metal parts were placed into the degreasing tank in order to remove grease and dirt. The parts were then raised out of the liquid TCE and placed into the vapor TCE for continued cleaning and drying. Virgin TCE was typically stored in barrels in the room containing the degreasing unit. While there is no disagreement that TCE existed in the groundwater at Highland, how it got there is very much disputed.

Anchor produces a variety of metal products, including screws, nuts, rivets and clips. At Anchor, the main source of contamination at issue in this case was oil or, more specifically termed, total petroleum hydrocarbon (TPH). ² In 1986, an underground waste oil tank (tank) was removed from the loading dock area at Anchor. During this excavation, a former dry well, approximately six and one-half feet in depth, was discovered. The dry well was deconstructed and removed along with the tank. Despite the removal of the tank and the dry well, TPH contamination in the soil was discovered and, in 1994, approximately 800 cubic yards of soil were removed from the area. Nevertheless, monitoring wells installed at the site have indicated the periodic flow of free phase oil in this location. A passive oil collection system was installed in order to abate the contamination. Again, as with the Highland site, the parties do not disagree that the Anchor site is contaminated, although the cause of TPH contamination and the insurers' responsibility for the costs of its remediation are disputed.

The plaintiff filed claims with its insurers, including Federal and Chicago, ³ for the costs of remediating the environmental contamination at Highland and Anchor. The plaintiff sought coverage, under the insurance contracts' property damage and personal injury provisions, for its costs associated with the investigation and cleanup of the contamination at the Highland and Anchor facilities. Both Federal and Chicago denied coverage.

The insurance policies can be described more specifically as follows. ⁴ Federal provided primary comprehensive general liability insurance to the plaintiff for the period from February 1, 1975, through February 1, 1986. Chicago's policies provided umbrella liability insurance to the plaintiff for the period from February 1, 1980, through February 1, 1985. ⁵ The Federal and Chicago policies both provide coverage for property damage and personal injury. The policies are occurrence based insurance. Insurance is provided on a per occurrence basis with ''occurrence'' defined, in the Federal policy effective February 1, 1975, ⁶ 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.''

Each of the policies at issue in this case includes a pollution exclusion clause. While the wording of each differs slightly, ⁷ both exclude from coverage any claims that are the result of the discharge of pollutants. The policies, however, also contain an exception to the pollution exclusion. This is the so-called ''sudden and accidental'' exception, which reinstates coverage when the release of pollutants is ''sudden and accidental.'' ⁸ In other words, the pollution exclusion makes clear that pollution related claims are excluded from coverage unless the claim is based on a release of pollutants that is ''sudden and accidental.'' Weemphasize that the focus of the pollution exclusion is on the release or discharge of the pollutants, which must be ''sudden and accidental,'' rather than on the damage caused by such an event.

In response to the denials of coverage, the plaintiff filed an action for declaratory judgment on January 26, 1999. The plaintiff sought a judgment by the court declaring Federal and Chicago jointly and severally liable for the sums the plaintiff had paid, and that it will pay, with respect to the contamination at the Highland and Anchor sites. After the trial court granted the defendants' motion to strike the plaintiff's claim for attorney's fees, the plaintiff filed a notice of intent to appeal.

On June 9, 2000, Federal and Chicago moved for summary judgment, asserting that: (1) the insurance policies' pollution exclusion clause precludes coverage; (2) none of the plaintiff's claims constitutes ''personal injury'' as that term is defined in the insurance policies; and (3) the sums expended by the plaintiff are ordinary business expenses and not ''damages'' as required by the insurance policies. Additionally, Chicago asserted that: its excess insurance policy would not be reached since a pro rata allocation of the plaintiff's damages would prevent the policy from being triggered. The trial court rendered summary judgment for the defendants, ruling that, as a matter of law, the plaintiff's claims do not fall within the ''personal injury'' provisions of the defendants' insurance policies. The court also held that there exists no genuine issue of material fact that any of the discharges were, as required by the insurance policies, ''sudden.'' ⁹ The plaintiff appealed to the Appellate Court, and we transferred the case to this court pursuant to Practice Book § 65-1 and General Statutes § 51-199 (c). ¹⁰

The plaintiff makes three arguments on appeal. The plaintiff argues, first, that the trial court improperly concluded that the ''sudden and accidental'' exception to the pollution exclusion did not apply to the environmental contamination in this case. Second, the plaintiff argues that the trial court improperly rendered summary judgment for the defendants because a genuine issue of material fact exists regarding whether the contamination occurred slowly or abruptly. Finally, the plaintiff argues that the trial court improperly concluded that the personal injury provisions of the policy do not provide coverage for the environmental contamination at issue in the case. We examine each of these contentions in turn. ¹¹

I.

We first address the plaintiff's contention that the trial court improperly granted the motion for summary judgment in favor of the defendants on account of the pollution exclusion clause. The plaintiff argues that the ''sudden and accidental'' exception to the pollution exclusion clause covers these releases because the term ''sudden'' should be understood to mean unexpected and not necessarily quick or abrupt. The plaintiff maintains, in other words, that even though the discharges may have occurred over a period of years, the defendants' insurance policies should provide coverage so long as the releases were unexpected and accidental. We disagree with the plaintiff and conclude that the term ''sudden,'' as used in the policies, includes a temporal quality, which requires that the onset of the release in question occurs quickly or happens abruptly.

The meaning of the pollution exclusion is an issue...