Burt Rigid Box v. Travelers Property Cas. Corp.

• Decision Date: 16 August 2002
• Docket Number: No. 01-7230(L).,No. 01-7649(XAP).,01-7230(L).,01-7649(XAP).
• Citation: 302 F.3d 83
• Parties: BURT RIGID BOX, INC., f/k/a F.N. Burt Company, Inc., Plaintiff-Appellant-Cross-Appellee, v. TRAVELERS PROPERTY CASUALTY CORP., f/k/a/ Aetna Casualty and Surety Company, Defendant-Appellee-Cross-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

302 F.3d 83

BURT RIGID BOX, INC., f/k/a F.N. Burt Company, Inc., Plaintiff-Appellant-Cross-Appellee, v. TRAVELERS PROPERTY CASUALTY CORP., f/k/a/ Aetna Casualty and Surety Company, Defendant-Appellee-Cross-Appellant.

No. 01-7230(L).

No. 01-7649(XAP).

United States Court of Appeals, Second Circuit.

Argued May 14, 2002.

Decided August 16, 2002.

COPYRIGHT MATERIAL OMITTED

Jonathan A. Mugel, Lippes, Silverstein, Mathias & Wexler LLP, Buffalo, NY, for Plaintiff-Appellant-Cross-Appellee.

Robert Lewin (Michelle L. Jacobson, Marcia Ann Miller, of counsel), Stroock & Stroock & Lavan LLP, New York, NY, for Defendant-Appellee-Cross-Appellant.

Thomas W. Brunner, Laura A. Foggan, John C. Yang, Stephen C. Tosini, Wiley, Rein & Fielding, Washington, DC, for Amicus Curiae Insurance Environmental Litigation Association.

JOSÉ A. CABRANES, Circuit Judge:

Burt Rigid Box, Inc., a manufacturer of boxes and other containers, brought this action seeking a declaration that Travelers Casualty and Surety Company (formerly known as Aetna Casualty and Surety Company)¹ was obligated to provide insurance coverage under certain lost insurance policies issued to Burt's former parent company. Burt sought coverage related to claims brought against it for alleged improper disposal of toxic waste in the 1960s and early 1970s at four sites near Buffalo, New York: the Pfohl Brothers Landfill, the Booth Oil Landfill, the Sleepy Hollow campground, and the Alltift Realty Landfill.

In a comprehensive Decision and Order dated January 26, 2001, the United States District Court for the Western District of New York (Leslie G. Foschio, Magistrate Judge)² granted in part and denied in part cross-motions for summary judgment, thus disposing of all the parties' claims. See Burt Rigid Box Inc. v. Travelers Prop. Cas. Corp., 126 F.Supp.2d 596 (W.D.N.Y. 2001). Specifically, the District Court held, inter alia, that (1) Burt was entitled to summary judgment on the issue of the existence and terms of the policies because it had adduced sufficient unopposed evidence to establish these facts by a preponderance of the evidence; (2) Burt's notice of occurrence with respect to alleged contamination at the Pfohl and Sleepy Hollow sites was untimely, which untimeliness was not excused under the circumstances; (3) Aetna had not waived and was not estopped from asserting late notice defenses, except with respect to certain bodily injury claims for which it had failed to promptly disclaim coverage pursuant to section 3420(d) of the New York Insurance Law; and (4) Aetna was entitled to summary judgment as to certain claims which the undisputed evidence showed were outside the coverage of the policies at issue. Id. at 641. In a Supplemental Decision and Order dated April 24, 2001, the District Court granted Aetna's motion to amend the judgment to include all property damage claims related to the Pfohl site among those which Aetna was excused from defending because of Burt's late notice of occurrence. See Burt Rigid Box Inc. v. Travelers Prop. Cas. Corp. No. 91-CV-303F, slip op. (W.D.N.Y. Apr.24, 2001).

The parties now cross-appeal. Burt contends that the District Court erred in holding that its notice of the Pfohl site occurrence was untimely under the circumstances and that Aetna did not waive and was not estopped from asserting its late notice defenses. Burt also argues that the District Court erred in considering evidence outside the four corners of the complaints filed against Burt to grant Aetna summary judgment on claims that are outside the scope of the coverage of the policies at issue. Aetna contends that the District Court erred in granting Burt summary judgment on the issue of the existence and terms of the policies by holding that Burt was required to prove those facts by a preponderance of the evidence, rather than by clear-and-convincing evidence. Aetna also argues that the District Court erred in holding that Aetna is required to defend certain bodily injury claims because (a) section 3420(d) of New York's Insurance Law is inapplicable inasmuch as the alleged injuries did not result from an "accident" within the meaning of that statute; and (b) even if section 3420(d) is applicable, (i) it was not required to disclaim because it claims that no insurance policy exists, (ii) its prompt disclaimers on grounds other than late notice were sufficient to preserve its right to later disclaim on the ground of late notice, and (iii) its disclaimers on the basis of late notice were timely under the circumstances.

We do not reach the issues of the evidentiary standard by which an insured is required to establish the existence and terms of a lost insurance policy, the timeliness of Burt's notice of occurrence with respect to the Pfohl site, or the applicability of or Aetna's compliance with section 3420(d) of New York's Insurance Law. We hold that (1) even if an insured is required to prove the existence and terms of a lost insurance policy by clear-and-convincing evidence, Burt nevertheless is entitled to summary judgment on the issue of the existence and terms of the policies in this case because it has adduced sufficient unopposed evidence to meet that standard; (2) Aetna waived its late notice defenses by failing to include them among a series of affirmative defenses in its Answer, which contained its disclaimers of coverage based on other provisions of the polices; and (3) the District Court did not abuse its discretion or otherwise err in granting summary judgment to Aetna as to certain claims that the undisputed evidence showed were outside the coverage of the policies at issue.

Accordingly, we reverse the judgment of the District Court solely with respect to the claims related to the Pfohl and Sleepy Hollow sites, which claims the District Court held Aetna was not required to defend because Burt had not provided timely notice of occurrence. In all other respects, we affirm the judgment of the District Court.

I. BACKGROUND

The facts of this case are set forth extensively in the District Court's opinion, see Burt Rigid, 126 F.Supp.2d at 603-07, familiarity with which is presumed. Accordingly, we set forth below only a brief summary of the facts necessary to decide the issues on appeal.

Prior to 1983, Burt was a wholly-owned subsidiary of Moore Corporation of Toronto, Canada. Moore — a holding company — administered its insurance program from Toronto, covering itself and all of its subsidiaries. On April 13, 1983, Moore sold Burt to three individual investors from Buffalo, New York.

In March 1985, the New York State Department of Environmental Conservation ("DEC") informed Burt that it had been identified as a generator of hazardous wastes deposited at the Pfohl Landfill. Although the DEC did not explicitly assert any legal claims against Burt, it requested that Burt provide certain information regarding Burt's activities at the Pfohl Landfill to assist the DEC's investigation. After performing an internal investigation, Burt concluded that it did not dispose of any hazardous waste at the Pfohl site and that, accordingly, it did not anticipate any liability for any remediation activities undertaken at that site.

On March 14, 1986, the DEC notified Burt that it was considered the generator of hazardous waste materials discovered in 18 drums that had been transported to and deposited in the Sleepy Hollow site. Accordingly, the DEC considered Burt a responsible party regarding the Sleepy Hollow site.

In August 1986, Burt received a letter from counsel for the "Pfohl Bros. Site Steering Committee"³ stating that Burt had been "identified by [DEC] as a potentially responsible party ... with respect to the Pfohl [site]." The Steering Committee proposed that each "potentially responsible party" pay an initial assessment of $3,000 into an administrative trust fund to assist in responding to the DEC's demands. Burt then provided notice of the Steering Committee's letter and the DEC inquiry to the Hartford Insurance Company, its insurance carrier since 1983, and asked Moore to provide Burt with the identity of any and all insurers who may have provided liability coverage to Burt prior to 1983.

In September 1986, Moore provided Burt with the identities of Moore's insurance carriers for the years 1972 to 1983. Moore was unable, however, to identify the name of its liability insurance carriers for years prior to 1972.

On February 3, 1987, Burt entered into a consent order with the DEC in which Burt agreed to undertake a clean-up of the Sleepy Hollow site.

In September 1987, the DEC requested additional information from Burt regarding its involvement with hazardous waste dumped in the Pfohl Landfill.

On February 17, 1988, the DEC advised Burt that it had been identified as a potentially responsible party because it was a generator of hazardous waste deposited at the Alltift Realty Landfill, and, on February 19, 1988, the DEC advised Burt that it had been identified as a potentially responsible party as a generator of hazardous waste deposited at the Booth Oil site. The letters informed Burt that the DEC was asserting claims against Burt for the costs of investigation and remediation of those sites. In a similar letter dated March 31, 1988, the DEC informed Burt that it had "reason to believe" that Burt had generated hazardous waste that was deposited at the Pfohl site.

On April 14, 1988, Burt again asked Moore to identify the carriers, policy numbers, and effective dates of coverage for its insurance program prior to 1983. On May 4, 1988, Moore provided Burt for the first time with information indicating that Aetna had been Moore's — and Burt's — commercial general liability carrier in the late 1960s and early 1970s. In letters dated May 6 and 10, 1988, Burt notified Aetna of the DEC's claims against it with regard to the Pfohl, Alltift, and Booth Oil sites. In another letter, dated June 16, 1988, Burt told Aetna that it was incurring defense costs related...