Chemical Leaman Tank Lines v. Aetna Cas. and Sur.
| Decision Date | 16 March 1993 |
| Docket Number | Civ. A. No. 89-1543 (SSB). |
| Citation | 817 F. Supp. 1136 |
| Parties | CHEMICAL LEAMAN TANK LINES, INC., Plaintiff, v. AETNA CASUALTY AND SURETY CO., Robin Anthony Gildart Jackson, an Underwriter at Lloyds, London, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
COPYRIGHT MATERIAL OMITTED
Stuart M. Feinblatt, Philip A. Bramson, Sills Cummis Zuckerman Radin Tischman Epstein & Gross, Newark, NJ, Kevin B. Clark, Willkie Farr & Gallagher, Washington, DC, for plaintiff Chemical Leaman Tank Lines, Inc.
Peter E. Mueller, and Brian J. Coyle, Harwood Lloyd, Hackensack, NJ, for defendant Aetna Cas. & Sur. Co.
William J. Hanley, Ronca McDonald & Hanley, Livingston, NJ, Henry Lee, Hannah O'Driscoll, Mendes & Mount, New York City, for defendants Robin Anthony Gildart Jackson, et al.
TABLE OF CONTENTS
I. Introduction................................................................... 1140
A. Background and Procedure.................................................... 1140
B. The Insurance Policies...................................................... 1141
1. Aetna's Comprehensive General Liability Policies......................... 1141
2. LMI's Excess and Umbrella Policies....................................... 1142
C. Standard for Summary Judgment............................................... 1143
II. The Expected/Intended Clause................................................... 1143
A. Legal Issues................................................................ 1143
1. Burden of Proof.......................................................... 1143
2. Objective or Subjective Intent........................................... 1145
B. Aetna's Motion for Summary Judgment on Its Pre-1961 "Accident"-
Based Policies............................................................ 1147
C. The Parties' Cross-Motions for Summary Judgment on the Expected/Intended
Issue..................................................................... 1148
1. Chemical Leaman's Evidence............................................... 1149
2. Defendants' Evidence..................................................... 1149
3. Conclusions.............................................................. 1150
III. Continuous Trigger Theory...................................................... 1152
IV. Pollution Exclusion Clause..................................................... 1154
A. The Broadwell Line of Cases................................................. 1154
B. The Ambiguous Meaning of the "Sudden and Accidental" Exception.............. 1155
C. Contra Proferentum vs. "Sophisticated Insured".............................. 1155
D. The Parties' Cross-Motions for Summary Judgment............................. 1156
V. Owned-Property Exclusion....................................................... 1157
VI. Late Notice.................................................................... 1157
A. Substantial Rights Irretrievably Lost....................................... 1158
B. Likelihood of Success in Defending the Underlying Claim..................... 1159
VII. Failure to Cooperate........................................................... 1160
VIII. Aetna's Duty to Defend......................................................... 1160
A. Pre-Notice Defense Costs.................................................... 1160
B. Post-Notice Defense Costs................................................... 1161
IX. Conclusion..................................................................... 1162
Presently before the court are the cross-motions for summary judgment of plaintiff Chemical Leaman Tank Lines, Inc. ("Chemical Leaman"), defendant Aetna Casualty and Surety Co. ("Aetna"), and the London market insurers Robin Anthony Gildart Jackson, et al. ("LMI"). The parties raise a plethora of legal and factual issues for the court's resolution.
In this diversity action, Chemical Leaman seeks a declaratory judgment that defendant Aetna must provide coverage under certain comprehensive general liability ("CGL") policies and that LMI must provide coverage under certain umbrella and excess liability insurance policies for environmental costs connected to the environmental cleanup of Chemical Leaman's Bridgeport, New Jersey, facility.
Chemical Leaman is a tank truck company specializing in the transportation of various chemicals and other liquids. Chemical Leaman used the Bridgeport site from at least 1960 to 1985 to clean trucks. From 1960 to 1969, Chemical Leaman placed contaminated rinsewater at its Bridgeport facility into a wastewater treatment system consisting of unlined ponds and lagoons. In 1969, the New Jersey Department of Health responded to community complaints about bad odors and ordered Chemical Leaman to construct a wastewater treatment and/or disposal plant. Chemical Leaman continued to use the pond and lagoons system until 1975, when it installed a water treatment system. By 1977, Chemical Leaman had drained the ponds and lagoons of liquid, dredged the accumulated sludge out of the lagoons, and filled all the ponds and lagoons with brickbat, sand, and concrete.
In 1981, the New Jersey Department of Environmental Protection ("DEP") ordered Chemical Leaman to investigate the extent and degree of groundwater contamination at and around the Bridgeport site. The investigation revealed that the ponds and lagoons were the primary source of groundwater contamination. In 1984, the federal Environmental Protection Agency ("EPA") placed the site on the Superfund national priorities list pursuant to section 105 of the Comprehensive Environmental Response, Compensation and Liabilities Act ("CERCLA"). 42 U.S.C. § 9605. The EPA alleged that Chemical Leaman is strictly liable for damages and cleanup costs resulting from the onsite contamination. In July 1985, Chemical Leaman entered into a consent order with the EPA. Chemical Leaman admitted liability under CERCLA and agreed to undertake a Remedial Investigation and Feasibility Study ("RI/FS") of the groundwater. Chemical Leaman incurred expenses in performing the RI/FS and is further obligated to pay for all costs of removal or remedial action incurred by the United States or the state of New Jersey, as well as for damages for injury to, destruction of, or loss of natural resources.
On or about April 18, 1988, Chemical Leaman gave notice to Aetna of claims under its applicable CGL policies. On or about March 30, 1989, Chemical Leaman notified LMI. The defendants have refused to defend or indemnify Chemical Leaman for costs already incurred or to be incurred in the future in connection with the cleanup of the Bridgeport site. Chemical Leaman filed the present suit on April 12, 1989. The court understands plaintiff's claims to be limited to coverage for its liabilities resulting from the EPA's suit under CERCLA.
On March 31, 1992, the court granted partial summary judgment in favor of Chemical Leaman on the following issues:
The court also refused to grant summary judgment in favor of defendants on the issue of coverage for contamination occurring after the date Chemical Leaman received notice from the New Jersey DEP of the extent of the groundwater contamination. Chemical Leaman Tank Lines, Inc. v. Aetna Casualty & Sur. Co., 788 F.Supp. 846 (D.N.J.1992).
Presently before the court are the various motions of the parties for summary judgment. On November 23, 1992, the court held oral argument on these motions and reserved its decision. Trial is scheduled to commence on March 15, 1993.
Chemical Leaman purchased comprehensive general liability insurance ("CGL") from Aetna covering successive years, from April 1, 1959 through April 1, 1985. Pl.'s 12G Statement ¶ 4.1 These comprehensive liability policies were standard form insurance agreements utilized by Aetna and some other insurance companies throughout the period 1960-1985. Chemical Leaman played no role in drafting or negotiating the terms of these policies. Joint Final Pretrial Order ¶ IV.5.
From April 1, 1959 through April 1, 1961, Aetna insured Chemical Leaman under its 1955 standard policy form. Pursuant to the terms of the policies in effect during this period, Aetna agreed to pay on behalf of Chemical Leaman:
From April 1, 1961 through April 1, 1967, Aetna continued to insure Chemical Leaman under its 1955 standard policy form. However, these policies substituted the...
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