Chemical Leaman Tank Lines, Inc. v. Aetna Cas. & Sur. Co.

• Citation: 788 F. Supp. 846
• Decision Date: 31 March 1992
• Docket Number: Civ. A. No. 89-1543 (SSB).
• Parties: CHEMICAL LEAMAN TANK LINES, INC., Plaintiff, v. THE AETNA CASUALTY & SURETY COMPANY; Robin Anthony Gildart Jackson, as representative Underwriter at Lloyd's, London, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

788 F. Supp. 846

CHEMICAL LEAMAN TANK LINES, INC., Plaintiff, v. THE AETNA CASUALTY & SURETY COMPANY; Robin Anthony Gildart Jackson, as representative Underwriter at Lloyd's, London, et al., Defendants.

Civ. A. No. 89-1543 (SSB).

United States District Court, D. New Jersey.

March 31, 1992.

Stephen D. Houck, Donovan, Leisure, Newton & Irvine, New York City, Stuart M. Feinblatt, Philip A. Bramson, Sills, Cummis, Zuckerman, Radin, Tischmann, Epstein & Gross, Newark, N.J., for plaintiff.

Brian J. Coyle, Peter E. Mueller, Hardwood Lloyd, Hackensack, N.J., for defendant Aetna Cas. & Sur. Co.

John C. McAndrews, Hannah M. O'Driscoll, Mendes & Mount, New York City, William J. Hanley, Ronca, McDonald & Hanley, Livingston, N.J., for defendants Jackson and London Market Insurers.

OPINION

BROTMAN, District Judge.

Presently before the court are the following partial summary judgment motions:

1) plaintiff Chemical Leaman Tank Lines, Inc. ("Chemical Leaman") moves that this court find:

a) that the cleanup costs which it is obligated to pay pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") with respect to ground and surface water contamination in the vicinity of its Bridgeport, New Jersey facility constitute "damages" on account of "property damage" within the meaning of the relevant insurance policies issued by defendants; and

b) that the owned-property exclusion does not apply to remedial measures taken by Chemical Leaman that are designed to correct injury or to prevent further injury to the ground and surface waters of New Jersey;

2) defendant Aetna Casualty & Surety Co. ("Aetna") and, in a separate motion, defendants Robin Anthony Gildart Jackson, as representative Underwriter at Lloyd's London ("Jackson") and 48 London market insurance companies ("London Market Insurers") move that this court find:

a) that Pennsylvania law governs the policy interpretation issues in this action; and

b) that there is no insurance coverage for the environmental contamination at issue in this action under any insurance policy in effect on or after January 7, 1981.

I. FACTS AND PROCEDURE

Chemical Leaman filed this declaratory judgment and damages action on April 12, 1989 arising from defendants' failure to provide coverage pursuant to certain comprehensive general liability ("CGL") and excess liability insurance policies. Aetna issued the CGL policies to Chemical Leaman for the period April 1, 1959 through April 1, 1985. Jackson and the London Market Insurers issued umbrella and excess liability insurance to Chemical Leaman for the period from April 1, 1958 through April 1, 1986.

Under Aetna's and the Jackson and the London Market Insurers' policies, the insurers agreed to pay on behalf of the insured all sums which the insured became legally obliged to pay as damages because of property damage.¹ Aetna's policies excluded coverage for damage to property owned or occupied by, rented to, used by, or in the care, custody or control of the insured.

For Aetna's policies issued after April 1, 1973 through the expiration of Aetna's coverage on April 1, 1985, the term "occurrence" was defined as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured. ... All bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence." For the Jackson and London Market Insurers' policies which were in effect on or after January 1, 1980, "occurrence" was defined as "an accident or a happening or event or a continuous or repeated exposure to conditions which unexpectedly and unintentionally results in ... property damage ... during the policy period." For these policies, Aetna and Jackson and the London Market Insurers were responsible to pay all sums for property damage arising out of each "occurrence."

Chemical Leaman is a tank truck company specializing in the transportation of various chemicals and other liquids. Since 1960, it has operated its Bridgeport truck terminal facility providing tank truck cleaning services, located in Logan Township, Gloucester County, New Jersey. In February, 1969, pursuant to complaints of odors emanating from the cleaning process and the on-site ponds and lagoons in which rinse water from the cleaning process was disposed of, the New Jersey Department of Health issued a Departmental Order to Chemical Leaman to construct a waste water treatment and/or disposal plant as a remedy for the odor problem. After Chemical Leaman installed a new rinse water containment system, the ponds and lagoons were drained and filled.

On or about January 7, 1981, as a result of a preliminary investigation, the New Jersey Department of Environmental Protection ("NJDEP") requested that Chemical Leaman undertake a hydrogeologic investigation to determine the extent and degree of groundwater contamination resulting from its facility operations. The hydrogeologic investigation indicated that certain areas of the groundwater at and in the vicinity of the facility were contaminated with hazardous substances. The EPA concluded that the ponds and lagoons ("the Site") were the primary sources of groundwater contamination.

In September 1984, the Site was placed on the National Priorities List of Superfund sites pursuant to Section 105 of CERCLA (42 U.S.C. § 9605). The EPA has alleged that the presence of hazardous substances at the facility and their migration to surrounding soils and groundwater constitute a release within the meaning of Section 101(22) of CERCLA (42 U.S.C. § 9601(22)). As owner and operator of the Bridgeport facility, Chemical Leaman is strictly liable under CERCLA for damages for injury to, destruction of, or loss of natural resources, as well as the reasonable costs of assessing such damage to natural resources, and for all costs of removal or remedial action incurred by the United States or the state of New Jersey. Chemical Leaman's liability for these damages is retroactive, joint and several, and is imposed regardless of fault. See Section 107 of CERCLA (42 U.S.C. § 9607).

In July, 1985, Chemical Leaman entered into an Administrative Order on Consent ("1985 Order") with the EPA pursuant to CERCLA.² The 1985 Order directed Chemical Leaman to conduct a Remedial Investigation and Feasibility Study ("RI/FS") of the groundwater. The 1985 Order also provided substantial civil penalties and punitive damages amounting to three times the total costs incurred by the government should Chemical Leaman fail to take proper action. Chemical Leaman has incurred substantial costs in connection with its conducting of the groundwater RI/FS. Because the RI/FS contained sufficient groundwater data to determine an appropriate remedy, the groundwater remediation is currently proceeding.

On or about April 18, 1988, Chemical Leaman filed a notice of claim under some of the Aetna policies, which included a description of the investigation and remediation work undertaken by Chemical Leaman at the Site. On or about March 30, 1989, Chemical Leaman notified Jackson and the London Market Insurers of its claim relating to the Site. The defendants have refused to defend or indemnify Chemical Leaman for the investigation and remediation costs incurred at the Site or for any future costs Chemical Leaman will incur in connection with the cleanup or remediation of the Site.

II. DISCUSSION

Summary Judgment Standard

The standard for granting summary judgment is a stringent one. A court may grant summary judgment only when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir.1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir.1983). In deciding whether there is a disputed issue of material fact the court must view all doubt in favor of the nonmoving party. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n. 2 (3d Cir.1983), cert. denied, 465 U.S. 1091, 104 S.Ct. 2144, 79 L.Ed.2d 910 (1984); Smith v. Pittsburgh Gage & Supply Co., 464 F.2d 870, 874 (3d Cir.1972). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

Supreme Court decisions mandate that "a motion for summary judgment must be granted unless the party opposing the motion can produce evidence which, when considered in light of that party's burden of proof at trial, could be the basis for a jury finding in that party's favor." J.E. Mamiye & Sons, Inc. v. Fidelity Bank, 813 F.2d 610, 618 (3d Cir.1987) (Becker, J., concurring) (citing Anderson, 477 U.S. 242, 106 S.Ct. 2505, and Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Moreover, once the moving party has carried its burden of establishing the absence of a genuine issue of material fact, "its opponent must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Thus, if the non-movant's evidence is merely "colorable" or is "not significantly probative," the court may grant summary judgment. Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2511.

1) New Jersey or Pennsylvania Law?

Defendants contend that Pennsylvania law should govern the policy interpretation issues in this action. They contend that since Chemical Leaman's principal place of business is in Pennsylvania and that since Chemical Leaman employed Pennsylvania insurance brokers to procure and...