Catlin Specialty Ins. Co. v. J.J. White, Inc.

• Decision Date: 26 February 2018
• Docket Number: CIVIL ACTION No. 14–1255
• Parties: CATLIN SPECIALTY INSURANCE CO., Plaintiff/Counterdefendant, v. J.J. WHITE, INC., Defendant/Counterplaintiff, Sunoco, Inc., et al., Counterplaintiffs.
• Court: U.S. District Court — Eastern District of Pennsylvania

309 F.Supp.3d 345

CATLIN SPECIALTY INSURANCE CO., Plaintiff/Counterdefendant,

v.J.J. WHITE, INC., Defendant/Counterplaintiff,Sunoco, Inc., et al., Counterplaintiffs.

CIVIL ACTION No. 14–1255

United States District Court, E.D. Pennsylvania.

Signed February 26, 2018

Filed February 27, 2018

David P. Helwig, Marks O'Neill O'Brien & Courtney, Pittsburgh, PA, Hugh M. Russ, III, James M. Bauer, Kevin D. Szczepanski, William A. Ciszewski, Hodgson Russ LLP, Lauren Mendolera, Patrick M. Tomovic, Harter Secrest & Emery LLP, Buffalo, NY, Patricia Fecile–Moreland, Marks O'Neill O'Brien Doherty & Kelly PC, James J. Black, III, Black & Gerngross, Philadelphia, PA, for Plaintiff/Counterdefendant.

James J. Black, III, Jeffrey B. Miceli, Ivan I. Mihailov, Black & Gerngross PC, Patricia Fecile–Moreland, Marks O'Neill O'Brien Doherty & Kelly PC, Philadelphia, PA, David P. Helwig, Marks O'Neill O'Brien & Courtney, Pittsburgh, PA, Hugh M. Russ, III, James M. Bauer, Kevin D. Szczepanski, William A. Ciszewski, Hodgson Russ LLP, Lauren Mendolera, Patrick M. Tomovic, Harter Secrest & Emery LLP, Buffalo, NY, for Defendant/Counterplaintiff.

MEMORANDUM OPINION

Goldberg, District Judge

This insurance coverage case stems from a settled state court wrongful death lawsuit wherein it was alleged that exposure to harmful chemicals at Sunoco refineries caused the death of a refinery worker. Plaintiff in the case before me, Catlin Specialty Insurance Company ("Catlin"), seeks a judicial declaration that the insurance policy it issued to Defendant, J.J. White, Inc. ("J.J. White"), does not cover losses from this lawsuit, which was brought by the estate of a J.J. White employee. J.J. White—and purported additional insureds that have intervened in this action, Sunoco, Inc. and Sunoco, Inc. (R & M) (collectively, "Sunoco")—have asserted counterclaims against Catlin, arguing that Catlin breached its duty to defend them in the underlying lawsuit, and seek reimbursement for the amount that J.J. White and Sunoco paid to settle that case.

Currently before me are two cross-motions for summary judgment: (1) Catlin's "Motion for Summary Judgment;" and (2) J.J. White and Sunoco's "Amended Motion for Summary Judgment or, Alternatively, Partial Summary Judgment." For the reasons that follow, Catlin's Motion will be denied and J.J. White and Sunoco's Motion will be granted in part and denied in part.

I. FACTUAL & PROCEDURAL BACKGROUND

The following facts are undisputed, unless otherwise noted: At all times relevant to this matter, J.J. White provided maintenance services for refineries, including maintaining and replacing pipes within such refineries. J.J. White's clients included Sunoco, which operated refineries in and around Philadelphia. J.J. White provided its services to Sunoco as a general contractor under a series of agreements referred to as the "Field Services Contracts." Under the Field Services Contracts, J.J. White was required to maintain certain insurance policies and name Sunoco as an additional insured on those policies.¹ (J.J. White/Sunoco's SOF ¶¶ 7–9, 39, 48–49; Decl. of Robert Celestino (hereinafter "Celestino Decl."), Ex. F., Doc. No. 108–11 at 24; Catlin's Resp. to J.J. White/Sunoco's SOF ¶¶ 7–9, 39, 48–49.)

A. The Pollution Policy Catlin Issued to J.J. White

J.J. White first obtained the insurance policy at issue in this case from Catlin in 2009, which was entitled "Contractor's Protective Professional and Pollution Legal Liability Insurance Policy" (hereinafter the "Pollution Policy"). By the time the claim at issue in this case was made, in 2012, the Pollution Policy had been renewed twice.² (J.J. White/Sunoco's SOF ¶ 10; Catlin's Resp. to J.J. White/Sunoco's SOF ¶ 10.)

While the Pollution Policy has three coverage parts—A, B, and C—only one, Coverage C (entitled "Pollution Legal Liability"), is at issue. Coverage C provides, in relevant part:

The Insurer shall pay on behalf of Insured for a Pollution Loss ... which the Insured has or will become legally obligated to pay as a result a [sic, read "as a result of a"] Pollution Claim first made against the Insured and reported to the Insurer, in writing, during the Policy Period ... from Pollution Conditions ..., provided that ... the Pollution Conditions first occurred on or after the Retroactive Date ....³

The Pollution Policy defines the term "Pollution Condition" (singular) as: "the discharge, dispersal, release, seepage, migration or escape of smoke, soot, fumes, acids, alkalis, toxic chemicals, asbestos, liquids or gases, waste materials or other irritants, contaminants or pollutants ... into or upon land, the atmosphere or any watercourse or body of water." (Decl. of Matthew J. Ford (hereinafter "Ford Decl."), Ex. A (hereinafter "Pollution Policy") §§ I, IV.Q.)

As the language above indicates, the Pollution Policy is a "claims-made" policy, as opposed to an "occurrence-based" policy. That is, the Pollution Policy provides coverage for a certain claim based on the date that the claim was made against the insured, rather than the date on which the event that gave rise to the claim occurred. However, like many claims-made insurance policies, the Pollution Policy has an occurrence-based proviso to its coverage—a "retroactive date." (This provision is referred to hereinafter as the "Retroactive Date Provision.") As set out above, the Retroactive Date Provision provides that even if a claim is "made ... during the Policy Period," there is only coverage if "the Pollution Conditions first occurred on or after the Retroactive Date." The Pollution Policy specifies a retroactive date of April 30, 2002. (J.J. White/Sunoco's SOF ¶¶ 10, 25, 34; Catlin's Resp. to J.J. White/Sunoco's SOF ¶¶ 10, 25, 34.)

While the Pollution Policy names J.J. White as the "Named Insured," it provides that Coverage C will also cover, as an additional insured, "any client of [J.J. White] that [J.J. White] has agreed by written contract to name as an additional insured on this Policy, but solely as respects otherwise covered Pollution Losses caused by [J.J. White's] Contractor Activity." (J.J. White/Sunoco's SOF ¶ 19; Catlin's Resp. to J.J. White/Sunoco's SOF ¶ 19.)

B. The Underlying Lawsuit

George Gans was a longtime employee of J.J. White who worked as a contractor in Sunoco's refineries—beginning as early as 1986 and continuing through 2010. In 2010, Gans was diagnosed with Acute Myelogenous Leukemia

, and died of this condition shortly thereafter. (J.J. White/Sunoco's SOF ¶ 40; Catlin's Resp. to J.J. White/Sunoco's SOF ¶ 40; Catlin SOF ¶ 12; J.J. White/Sunoco's Resp. to Catlin's SOF ¶ 12; Ford Decl., Ex. C ¶¶ 7–8, 27.)

In October 2011, Gans' estate brought suit against Sunoco, alleging that his leukemia

was caused by exposure to benzene and other hydrocarbons (collectively, "BTEX") while working in Sunoco's refineries, and that Sunoco had failed to take adequate steps to protect Gans from this hazard. (The suit is referred to hereinafter as the "Gans Suit.") Importantly, the complaint in the Gans Suit did not allege on what dates, exactly, Gans was exposed to BTEX, but only that Gans was exposed before May 1, 2010. (Catlin's SOF ¶ 7; J.J. White/Sunoco's Resp. to Catlin's SOF ¶ 7; J.J. White/Sunoco's SOF ¶ 37; Catlin's Resp. to J.J. White/Sunoco's SOF ¶ 37.)

In March 2012, Sunoco informed J.J. White of the Gans Suit, requesting that J.J. White defend and indemnity it, pursuant to the Field Services Contracts. In turn, J.J. White informed Catlin of the Gans Suit, advising that Sunoco was seeking coverage as an additional insured under the Pollution Policy. Thereafter, in September 2012, Sunoco made J.J. White a party to the Gans Suit, filing a third-party complaint against it for indemnification. (Catlin's SOF ¶ 9, J.J. White/Sunoco's Resp. to Catlin's SOF ¶ 9; J.J. White/Sunoco's SOF ¶¶ 41, 45; Catlin's Resp. to J.J. White/Sunoco's SOF ¶¶ 41, 45.)

Catlin agreed to defend J.J. White subject to a reservation of rights, informing J.J. White that it would not be covered for the Gans Suit if "there was chemical exposure to [Gans] that pre-dates the Retroactive Date," April 30, 2002. Catlin did not agree to defend Sunoco, which retained and paid for its own counsel. (Catlin's SOF ¶ 10; J.J. White/Sunoco's Resp. to Catlin's SOF ¶ 10; J.J. White/Sunoco's SOF ¶¶ 46–47, 67, 72; Catlin's Resp. to J.J. White/Sunoco's SOF ¶¶ 46–47, 67, 72.)

Meanwhile, discovery proceeded in the Gans Suit. By October 2013, both Gans' estate and Sunoco had produced expert reports. These reports disagreed as to the cause of Gans' leukemia

. While the estate's experts opined that Gans' years of exposure to BTEX had likely caused him to develop leukemia, defense experts disagreed, contending that Gans' leukemia was more likely "idiopathic" (i.e., of indeterminate cause) or the result of Gans' years of cigarette smoking and family history of cancer. (J.J. White/Sunoco's SOF ¶¶ 75, 77–79, 81–85; Catlin's Resp. to J.J. White/Sunoco's SOF ¶¶ 75, 77–79, 81–85.)

In early 2014, three of Gans' coworkers were deposed—John Keegan, Thomas Tyrrell, and Charles Burns. While J.J. White and Sunoco dispute the reliability of this deposition testimony, Keegan, Tyrell, and Burns testified generally that in the late 1980s, 1990s, and early 2000s Gans was exposed to liquids and gasses that—they believed—contained BTEX. (Catlin's SOF ¶¶ 11–12, 14–15; J.J. White/Sunoco's Resp. to Catlin's SOF ¶¶ 11–12, 14–15).

Thereafter, on February 27, 2014, Catlin filed this action seeking a declaration that the Pollution Policy does not provide coverage for the Gans Suit. The following day, Catlin sent a letter to J.J. White disclaiming coverage for, and withdrawing its defense of, the Gans Suit, explaining its position that Keegan's deposition testimony established that Gans had been exposed to BTEX before the Pollution Policy's April 30, 2002, retroactive date. (Catlin's SOF ¶ 16; J.J. White/Sunoco's Resp. to Catlin's SOF ¶ 16; J.J White/Sunoco's SOF ¶¶ 103–104; Catlin's Resp. to J.J White/Sunoco's SOF...