C.D. Spangler Const. Co. v. Industrial Crankshaft and Engineering Co., Inc.
| Decision Date | 07 February 1990 |
| Docket Number | No. 128PA88,128PA88 |
| Citation | 388 S.E.2d 557,326 N.C. 133 |
| Court | North Carolina Supreme Court |
| Parties | , 58 USLW 2539 C.D. SPANGLER CONSTRUCTION COMPANY v. INDUSTRIAL CRANKSHAFT AND ENGINEERING CO., INC., d/b/a Dynatech Industries; Durham Life Insurance Company; International Insurance Company; Aetna Fire Underwriters Insurance Company; Westchester Fire Insurance Company; Great American Insurance Company; Federal Insurance Company; St. Paul Fire and Marine Insurance Company; United States Fire Insurance Company; American States Insurance Company; and Travelers Indemnity Company. |
Appeal by C.D. Spangler Construction Company (Spangler) and Durham Life Insurance Company (Durham Life) pursuant to N.C.G.S. § 7A-27(b) from an Order and Judgment entered by Snepp, J., at the 4 January 1988 Session of Superior Court, Mecklenburg County, granting St. Paul Fire and Marine Insurance Company's (St. Paul) Motion for Partial Summary Judgment and The Travelers Indemnity Company's (Travelers) Motion for Summary Judgment. St. Paul's and Travelers' motions to bypass the Court of Appeals were allowed pursuant to N.C.G.S. § 7A-31(b). Heard in the Supreme Court on 13 October 1988.
Perry, Patrick, Farmer & Michaux, P.A. by Roy H. Michaux, Charlotte, N.C. and Young, Moore, Henderson & Alvis, P.A. by Walter E. Brock, Jr., Raleigh, for plaintiff-appellant.
Golding, Crews & Meekins by Harvey L. Cosper, Jr., Charlotte, and Steptoe & Johnson, by Roger E. Warin, Washington, D.C., for defendant-appellee, St. Paul Fire and Marine Ins. Co.
Womble, Carlyle, Sandridge & Rice by Richard T. Rice and Reid C. Adams, Jr., Winston-Salem, for defendant-appellee Travelers Indem. Co.
Manning, Fulton & Skinner by Howard E. Manning, Sr., Raleigh, and Covington & Burling by Eric S. Koenig, Washington, D.C., for amici curiae, American Petroleum Inst., ICI Americas, Inc., Intern. Business Machines Corp. and Olin Corp.
Bode, Call & Green by S. Todd Hemphill, Raleigh, for amicus curiae Insurance Environmental Litigation Ass'n.
This is an action for declaratory judgment brought by the insured seeking judicial construction of comprehensive general liability insurance policies. The question presented is whether the policies' coverage clauses protect the insured against losses incurred in complying with lawful orders of a state agency to remove a certain hazardous waste from its premises. The trial court concluded the coverage clauses did not protect against such losses and entered summary judgment for St. Paul and Travelers. We conclude to the contrary and reverse.
The record before the trial court shows the material undisputed facts to be as follows:
Spangler is a North Carolina construction company organized with its principal place of business in Mecklenburg County. On 14 April 1967 Spangler leased for twenty years a site on Hawkins Street in Charlotte from a predecessor to Durham Life, which currently owns the property. In May 1973 Spangler sublet a portion of the premises to Industrial Crankshaft and Engineering Company, Inc., d/b/a/ Dynatech Industries (Dynatech), which conducted a chromium plating operation at the site.
On 29 July 1974 a fire on the subleased premises destroyed much of Dynatech's equipment including its chrome tanks. The tanks' contents, 625 gallons of liquid solution containing 1,150 pounds of chromic acid, were washed by city firefighters into the yard and into a large open pit located inside the building. 1
In December 1984 the Mecklenburg County Environmental Health Department informed a representative of the North Carolina Department of Human Resources, Solid and Hazardous Waste Management Branch (the State) of the presence at the Hawkins Street site of hazardous waste containing chromium in amounts exceeding legal limits. See 40 C.F.R. § 261 (). The State also concluded that discharge of such waste is a prohibited disposal under 40 C.F.R. § 270.1(b) (). The State informed Dynatech of its obligation under the North Carolina Solid Waste Management Act (the Act), N.C.G.S. § 130A-290 et seq., to develop and execute a remedial plan to clean up the waste material pursuant to 40 C.F.R. § 265.15(c) (). 2 Dynatech conducted tests to determine the extent of the contamination and began removing contaminated soil from the site in June 1985. It then vacated the site some time before 30 June 1985.
On 5 July 1985 pursuant to the Act, the State issued a Compliance Order addressed to Spangler, Durham Life, and Dynatech. The order required Dynatech and Spangler to perform a number of cleanup actions to bring the site into compliance with state regulations. By letter dated 11 September 1985, Spangler notified its insurer St. Paul of the order and demanded protection from losses or costs which might be incurred by Spangler in the cleanup. 3
By October 1985 Spangler had employed Chas. T. Main, Inc., an engineering firm, to study the problem and to recommend reasonable remedial action. One of the firm's environmental engineers conducted tests and determined that the groundwater at the site had been contaminated. There were complaints that the contaminated water was getting into storm drains and appearing off the site.
On 27 March 1986 the State issued a second Compliance Order which superseded its July 1985 order. The new order required action by Durham Life in addition to Spangler and Dynatech. In this order, the State concluded: chromium levels at the Hawkins Street site exceeded state limits; spills or other leaching had occurred at the site; "discharge" from the site had continued to the present; and there was a potential for groundwater contamination. The State found that Spangler, Durham Life, and Dynatech, having failed to control or treat spills of hazardous wastes, were operating an unpermitted hazardous waste disposal facility in violation of state and federal regulations. The State directed Spangler, Dynatech, and Durham Life to perform a sequence of enumerated actions to bring the site in compliance with these regulations. They were ordered to: control run-on and run-off from the active portion of the site; dispose of or decontaminate all equipment and structures on the site; submit a closure plan and complete closure of the site within 180 days of its approval; and collect and analyze soil and groundwater samples for waste content. The order informed the parties of their right to request a formal hearing under the Administrative Procedure Act, 1973 N.C.Sess.Laws ch. 1331 (recodified at N.C.G.S. § 150B (1987)). Though Spangler subsequently petitioned for a hearing, nothing in the record indicates that one was held.
After Spangler had evaluated the investigative report from its engineers, the State advised it to remove the contaminated portion of the building and the soil and haul it to a hazardous waste landfill in Pinewood, South Carolina, to avoid damage to the surrounding properties. By letter dated 30 July 1986 Spangler again notified its insurer, St. Paul, of the State's demands. The letter set out in detail the extent of hazardous waste contamination at the site, the remedial requirements imposed by the State's two compliance orders, and the costs of cleanup to date. 4 In October 1986 St. Paul responded, denying it had any obligation to Spangler. Spangler proceeded with the cleanup of the site.
In July of 1987, the State directed Spangler to dig permanent wells designed to collect underground water at different levels in the same spot next to the adjoining property owned by Durham Life. The affidavit of Gary Ribblett, an environmental engineer employed by Chas. T. Main, Inc., indicated that chromium contaminated groundwater had migrated off the site area:
From our analysis of the water samples removed from these wells, we have discovered chromium at highly concentrated levels which, in our opinion, will require some treatment system designed to recover the groundwater to prevent further migration off the site. The State has requested a meeting to discuss a specific course of action with regard to the water treatment.
By 10 October 1987 Spangler had expended $507,143.72 in testing and analysis, attorney's fees, and other cleanup related expenses. By 9 February 1987 Durham Life reported incurring costs and expenses for engineering and attorney's fees totaling in excess of $10,000.
St. Paul provided comprehensive general liability insurance coverage to Durham Life from 1 April 1970 through 1 April 1985 and to Spangler from 1 November 1982 through 1 November 1985. Travelers provided similar coverage to Durham Life from 1 April 1985 to 1 July 1986. The pertinent insuring provisions of these policies contained language identical, or comparable, to the following:
The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... property damage to which this insurance applies, caused by an occurrence ... and the Company shall have the right and duty to defend any suit against the insured seeking damages on account of such ... property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient....
(Emphasis added.) 5 The policies define the term "property damage" as (1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.
(Emphasis added.) 6 None of the policies define the term "damages" or "suit."
On the basis of these insurance policies, Spangler...
To continue reading
Request your trial
-
RT Vanderbilt Co. v. Continental Casualty Co., (SC 17178).
...& Casualty Co., 136 N.H. 402, 417-18, 618 A.2d 777 (1992); C.D. Spangler Construction Co. v. Industrial Crankshaft & Engineering Co., 326 N.C. 133, 153-55, 388 S.E.2d 557 (1990); Johnson Controls v. Employers Ins. of Wausau, 264 Wis. 2d 60, 106-14, 665 N.W.2d 257, reconsideration denied, 26......
-
Essentia Insurance Company v. Stephens
...Bank & Tr. Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 354, 172 S.E.2d 518 (1970) ; see C.D. Spangler Const. Co. v. Indus. Crankshaft & Eng'g Co., 326 N.C. 133, 142, 388 S.E.2d 557 (1990) ("So long as it is reasonable to do so, policy provisions which extend coverage are construed liber......
-
Montrose Chemical Corp. v. Admiral Ins. Co.
...government's position and initiate proceedings which would result in subsequent findings and orders. (See Spangler Const. v. Indus. Crankshaft (1990) 326 N.C. 133, 388 S.E.2d 557, 559.) Moreover, the PRP letter referred only to the CERCLA clean-up of the Stringfellow site and it did not ref......
-
Morton Intern., Inc. v. General Acc. Ins. Co. of America
...Minnesota Mining & Mfg. Co. v. Travelers Indem. Co., 457 N.W.2d 175, 179-84 (Minn.1990); C.D. Spangler Constr. Co. v. Industrial Crankshaft & Eng'g Co., 326 N.C. 133, 388 S.E.2d 557, 565-69 (1990); Boeing Co. v. Aetna Casualty & Sur. Co., 113 Wash.2d 869, 784 P.2d 507, 510-15 (1990); Compas......
-
Determining Coverage and Obtaining Policy Limits
...v. Bronson Plating Co. , 519 N.W.2d 864, 871 (Mich. 1994); C. D. Spangler Constr. Co. v. Industrial Crankshaft & Engineering Co. , §1384 388 S.E.2d 557, 570-571 (N.C. 1990). It is likely these issues will continue to be litigated for years to come. §1390 Duties Between Independent Counsel a......
-
Chapter 5
...Pa., 15 A.D.3d 982, 789 N.Y.S.2d 352 (2005). North Carolina: C.D. Spangler Construction Co. v. Industrial Crankshaft & Engineering Co., 388 S.E.2d 557 (N.C. 1990). Rhode Island: Insurance Company of North America v. Kayser-Roth Corp., 770 A.2d 403 (R.I. 2001). South Carolina: Helena Chemica......