Cessna Aircraft Co. v. Hartford Acc. & Indem. Co.

Decision Date09 August 1995
Docket NumberNo. 93-2425-JWL.,93-2425-JWL.
Citation900 F. Supp. 1489
PartiesThe CESSNA AIRCRAFT COMPANY, Plaintiff, v. HARTFORD ACCIDENT & INDEMNITY COMPANY, John Does, certain, Unidentified Underwriting Members of Lloyd's of London, Allstate Insurance Company, Successor to Northbrook Insurance Company, Pine Top Insurance Company, Manhattan Fire & Marine Insurance Company, United States Fire Insurance Company, Westport Insurance Corp., f/k/a The Puritan Insurance Company, Old Republic Insurance Company, Twin City Fire Insurance Company and International Insurance Company, Defendants.
CourtU.S. District Court — District of Kansas

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Mary L. Barrier, F. Rebecca Sapp, William E. Hanna, Steven J. Boyd, Morrison & Hecker, Kansas City, MO, for Cessna Aircraft Company.

Joseph R. Colantuono, Polsinelli, White, Vardeman & Shalton, Overland Park, KS, W. Russell Welsh, Robert L. Wehrman, William E. Hans, Polsinelli, White, Vardeman & Shalton, Kansas City, MO, Ignatius John Melito, Robert F. Walsh, Donna M. Rowley, Siff Rosen P.C., New York City, Andrew C. Marquardt, Marquardt & Associates, L.L.C., Fairway, KS, for Hartford Accident and Indemnity Co.

Joe B. Whisler, Cooling & Herbers, P.C., Kansas City, MO, Russell C. Leffel, Shawnee Mission, KS, William D. Ellison, Lord, Bissell & Brook, Chicago, IL, for John Does.

Edward J. Barbosa, Edward L. Smith, Knipmeyer, McCann, Smith, Manz & Gotfredson, Kansas City, MO, Timothy M. Nolan, Robert N. Lane, Gleason, McGuire & Shreffler, Chicago, IL, Mary Fran Farley, Peter Petrou, Cuyler, Burk & Matthews, Parsippany, NJ, for Allstate Insurance Company.

Anthony F. Rupp, Charles J. Hyland, Shughart, Thomson & Kilroy, Overland Park, KS, Joel R. Mosher, Bradley D. Holmstrom, Shughart, Thomson & Kilroy, Kansas City, MO, for Manhattan Fire & Marine Insurance Company and Westport Insurance Corp.

Michael G. Norris, Norris & Keplinger, L.L.C., Overland Park, KS, for United States Fire Insurance Company and International Insurance Co.

W. Russell Welsh, William E. Hans, Polsinelli, White, Vardeman & Shalton, Kansas City, MO, Ignatius John Melito, Robert F. Walsh, Donna M. Rowley, Siff Rosen P.C., New York City, Andrew C. Marquardt, Marquardt & Associates, L.L.C., Fairway, KS, for Old Republic Insurance Co. and Twin City Fire Insurance Co.

Joe B. Whisler, Cooling & Herbers, P.C., Kansas City, MO, William D. Ellison, Lord, Bissell & Brook, Chicago, IL, for Ronald John Smith.

Thomas R. Hill, Hill & Beam-Ward, Overland Park, KS, John M. Lilla, Lindsay K. McFerrin, Jackson, Lilla & McFerrin, P.C., Kansas City, MO, Mark J. Hill, Thaddeus J. Weaver, Donald J. Matthews, Jr., Christie, Pabarue, Mortensen and Young, P.C., Philadelphia, PA, for Commercial Union Insurance Company.

Charles P. Efflandt, Foulston & Siefkin, Wichita, KS, for Foulston & Siefkin Law Firm.

MEMORANDUM AND ORDER

LUNGSTRUM, District Judge.

I. INTRODUCTION

This is an action for both recovery of damages and a declaratory judgment to determine whether insurance policies issued to the Cessna Aircraft Company (Cessna) by various defendant insurance companies require defendants to indemnify or pay on behalf of Cessna damage and loss resulting from claims made and costs incurred by Cessna due to groundwater contamination originating from the Obee Road Superfund Site, including the former City of Hutchinson municipal landfill (the Obee Road Landfill Subsite), the Fourth and Airport Road Subsite, and Cessna's former Fluid Power Facility in Hutchinson, Kansas (the East Fourth Street or Fluid Power Facility Site). Cessna also seeks a declaration of coverage for future loss, recovery of reasonably certain future losses and recovery of its attorneys' fees in this action.

This matter is currently before the court on the following motions: Cessna's motion for partial summary judgment (Doc. # 471)1; the motion of defendant Smith and Companies2 for partial summary judgment with respect to certain insurance contracts (Doc. # 442); the motion of defendants Commercial Union Insurance Company (CU), et al., for summary judgment based on Cessna's breach of contract (Doc. # 445); the motion of the United States Fire Insurance Company (US Fire), et al., for summary judgment on the issue of late notice of claims (Doc. # 448); the motion of defendants Westport Insurance Corp. (Westport), et al., for summary judgment as to Cessna's "estoppel" claim (Doc. # 451); the motion of defendants Hartford Accident and Indemnity Company (Hartford), et al., for summary judgment as to Cessna's claims for coverage with respect to the Fourth and Airport Road Subsite (Doc. # 453); the motion of defendants Westport, et al., for summary judgment based on the pollution exclusion (Doc. # 455); the motion of defendant Hartford for summary judgment based on collateral estoppel (Doc. # 468); the motion of defendants Allstate, et al., to strike paragraph 23 of section 8 of the pretrial order (Doc. # 480); the joint motion of defendants on allocation issues (Doc. # 492); the motion of defendants CU and Old Republic Insurance Company (Old Republic) to strike and for partial joinder (Doc. # 497); and on the motion of defendants International Insurance Company (International), et al., to strike or in the alternative motion pursuant to federal rule of civil procedure 56(f) (Doc. # 504).

For the reasons set forth fully below, Cessna's motion for partial summary judgment (Doc. # 471) is granted in part on the issue of damages and the owned-property exclusion, granted in part and denied in part on the issue of trigger of coverage, granted in part and denied in part on the issue of the meaning of "neither expected nor intended" in the policies and denied as to all other issues. The motion of defendant Smith and Companies for partial summary judgment with respect to certain insurance contracts (Doc. # 442) is denied on the grounds that issues of fact preclude judgment as a matter of law. The motion of defendants CU, et al., for summary judgment based on Cessna's breach of contract (Doc. # 445) is denied. The court finds that Cessna has breached relevant policy provisions, but that issues of fact as to prejudice preclude summary judgment. The motion of US Fire, et al., for summary judgment on the issue of late notice of claims (Doc. # 448) is denied because of the existence of questions of fact. The motion of defendants Westport, et al., for summary judgment as to Cessna's "estoppel" claim (Doc. # 451) is granted. The motion of defendants Hartford, et al., for summary judgment as to Cessna's claims for coverage with respect to the Fourth and Airport Road Subsite (Doc. # 453) is granted on the grounds that Cessna has not met its burden to show a genuine issue of material fact exists. The motion of defendants Westport, et al., for summary judgment based on the pollution exclusion (Doc. # 455) is denied on the grounds that questions of fact preclude judgment as a matter of law. The motion of defendant Hartford for summary judgment based on collateral estoppel (Doc. # 468) is denied as moot. The motion of defendants Allstate, et al., to strike paragraph 23 of section 8 of the pretrial order (Doc. # 480) is denied. The nondispositive joint motion of the defendants on allocation issues (Doc. # 492) is granted. The motion of defendants CU and Old Republic to strike and for partial joinder (Doc. # 497) is granted. And the motion of defendants International, et al., to strike or in the alternative motion pursuant to federal rule of civil procedure 56(f) (Doc. # 504) is granted in part and moot in part.

II. FACTUAL BACKGROUND

Cessna is a Kansas corporation engaged principally in the manufacture of small aircraft. This action, however, involves Cessna's manufacturing operation at its former Fluid Power Division in Hutchinson, Kansas. At Fluid Power, Cessna manufactured hydraulic components for manufacturers of farm machinery and heavy construction equipment. Cessna originally acquired the Hutchinson property in 1942.

Cessna began the manufacture of hydraulic components in 1952, after the Korean War. It was at this time that it first began to use trichloroethylene (TCE) at the Hutchinson facility. TCE is an organic solvent commonly used by manufacturers to degrease parts. Solvent degreasing is a physical method of removing wax, grease, or dirt from metal, glass and other material surfaces, by contracting the material with the solvent or its vapor.

From the inception of its manufacturing operations at the Fluid Power Facility, Cessna was connected to the City of Hutchinson water system for both industrial process lines and sanitary uses. In the fall of 1983 and 1984, solvent contamination was found in private residential wells tested by the Kansas Department of Health and Environment (KDHE) in Obeeville, a community close to the Obee Road Superfund Site.

On November 18, 1987, the Environmental Protection Agency (EPA) sent Cessna a section 1043 request for information with respect to Cessna's involvement with the area of the existing municipal airport4 near Hutchinson, Kansas, and the use of hazardous waste substances by Cessna. The letter indicated that hazardous materials had been improperly disposed of in the general area of the existing airport, that these compounds were originally detected in shallow groundwater near the community of Obeeville and had been found to exist in areas within and near the airport property. Cessna was given fifteen days to supply the requested information.

In response, Cessna indicated, among other things, that it had transported waste materials, including barrelled waste solvent to the municipal landfill located in the area from 1953 through 1968 when the landfill closed.

Cessna sold the Fluid Power plant to Eaton Corporation (Eaton) in July of 1988. After the sale, Eaton performed an environmental audit of the plant which disclosed a plume of contamination, apparently emanating from the plant area....

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