Chisholm's-Vill. Plaza LLC v. Travelers Commercial Ins. Co.

Decision Date16 August 2022
Docket NumberCiv. 20-0920 JB/JHR
PartiesCHISHOLM'S VILLAGE PLAZA, LLC, Plaintiff, v. TRAVELERS COMMERCIAL INSURANCE COMPANY; THE CINCINNATI INSURANCE COMPANY; WILL BURKE and BURKE INSURANCE GROUP, Defendants.
CourtU.S. District Court — District of New Mexico

Counsel: Dioscoro A. Blanco The Rudnicki Firm PLLC Oklahoma City, Oklahoma -- and -- Thomas M. Hnasko Julie Sakura Hinkle Shanor LLP Santa Fe, New Mexico Attorneys for the Plaintiff

Daniel E. Feinberg Gordon Rees Scully Manuskhani, LLP Chicago Illinois -- and -- Jason J. Irvin Gordon Rees Scully Manuskhani, LLP Albuquerque, New Mexico Attorneys for Defendant Fidelity and Guaranty Insurance Underwriters a.k.a. Travelers Commercial Insurance Company

Robert C. Evans James G. Whitley Evans & Co. Durango, Colorado -- and -- JoHanna C. Cox Evans & Co. Farmington, New Mexico Attorneys for Defendant The Cincinnati Insurance Company

MEMORANDUM OPINION AND AMENDED ORDER [1]

THIS MATTER comes before the Court on: (i) Defendant Fidelity and Guaranty Insurance Underwriter's Motion for Summary Judgment on the Duty to Defend, filed September 21 2021 (Doc. 42)(“Fidelity MSJ Motion”);[2] (ii) Defendant Cincinnati Insurance Company's Memorandum of Law in Support of its Motion for Summary Judgment, filed February 26, 2021 (Doc. 28)(“Cincinnati MSJ”);[3] and (iii) Plaintiff Chisholm's Village Plaza, LLC's Motion for Summary Judgment on Breach of Duty to Defend, filed March 19, 2021 (Doc. 30). The Court held a hearing on November 3, 2021. See Clerk's Minutes at 1, filed November 3, 2021 (Doc. 46). The primary issue is whether Plaintiff Chisholm's Village Plaza, LLC (Chisholm's Village), is entitled to judgment as a matter of law, because Defendants Fidelity and Guaranty Insurance Underwriters (“Fidelity Insurance”) and Cincinnati Insurance Company (Cincinnati Insurance) have a duty to defend their Chisholm's Village in City of Las Cruces, et al. v. United States of America, No. CIV 17-0809 JCH/GW (“CERCLA Lawsuit”), in which the City of Las Cruces and Dona Ana County brought Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 (“CERCLA”), claims against Chisholm's Village, see Amended Complaint for Damages and Declaratory Relief at 14-31, filed March 19, 2021 (Doc. 26-1)(“CERCLA Complaint”), and where the insurance policies the Defendants issued to Chisholm's Village contain an absolute pollution exclusion. The Court concludes that Chisholm's Village is entitled to judgment as a matter of law, because the Court predicts that the Supreme Court of New Mexico would follow the approach to the absolute pollution exclusion that is most protective of the insured, and under that approach, the absolute pollution exclusion is ambiguous per se and as applied to this case's facts, creating the potential for coverage and triggering the duty to defend.

FACTUAL BACKGROUND

The Court draws the factual background from the parties' assertions of undisputed material fact in their summary judgment motion papers. See Fidelity and Guaranty Insurance Underwriters, Inc.'s Memorandum of Law in Support of its Motion for Summary Judgment on the Duty to Defend ¶¶ 1-10, at 2-5, filed February 26, 2021 (Doc. 26), and September 21, 2021 (Doc. 43)(“Fidelity MSJ”); Cincinnati MSJ ¶¶ A-H, 1-9, at 1-3; Plaintiff Chisholm's Village Plaza, LLC's Memorandum in Support of Motion for Summary Judgment on Breach of the Duty to Defend ¶¶ 1-10, at 5-8, filed March 19 2021 (Doc. 31)(“Chisholm MSJ”); Plaintiff Chisholm's Village Plaza, LLC's Consolidated Response in Opposition to Defendants' Motions for Summary Judgment ¶¶ A-B, at 4-5, ¶¶ A-H, at 5-6, filed March 19, 2021 (Doc. 32), and filed September 28, 2021 (Doc. 44)(“Chisholm Response”); Fidelity and Guaranty Insurance Underwriters, Inc.'s Consolidated Reply Brief in Further Support of its Motion for Summary Judgment/Opposition Brief to Plaintiff's Cross-Motion for Summary Judgment ¶¶ A-H, at 2-4, ¶¶ 1-10, at 5-7, filed April 2, 2021 (Doc. 33) and filed September 30, 2021 (Doc. 45)(“Fidelity Reply/Response”); Defendant Cincinnati Insurance Company's Consolidated Reply in Support of its Motion for Summary Judgment and Response to Plaintiff's Motion for Summary Judgment ¶¶ A-H, at 1-2, ¶¶ 1-9, at 3, filed April 2, 2021 (Doc. 34)(“Cincinnati Reply/Response”); Plaintiff Chisholm's Village Plaza, LLC's Reply in Support of Motion for Summary Judgment on Duty to Defend, filed April 21, 2021 (Doc. 36)(“Chisholm Reply”). Most of the facts in this case are undisputed. The Court states the undisputed material facts in the text. The Court specifically discusses facts that are purportedly disputed or actually disputed in the footnotes.

1. The CERCLA Lawsuit.

On August 23, 2018, the City of Las Cruces and Dona Ana County filed an Amended Complaint for Damages and Declaratory Relief against Chisholm's Village and other parties[4] in the CERCLA Lawsuit. See Fidelity MSJ ¶ A.1, at 2 (asserting this fact); Cincinnati MSJ ¶ A.1, at 2 (asserting this fact); Chisholm Response ¶ B.1, at 4 (admitting this fact); Id. B.1, at 5 (admitting this fact). Las Cruces and Dona Ana County brought claims pursuant to CERCLA, alleging that “groundwater and land have been contaminated by maintenance operations at a former National Guard Armory and by dry cleaning operations at various locations in Las Cruces, including one that [Chisholm's Village] currently owns.” Fidelity MSJ ¶¶ A.1-2, at 2 (asserting this fact); Cincinnati MSJ ¶¶ A.1-2, at 2 (asserting this fact). See Chisholm Response ¶ A.1, at 4 (admitting this fact).[5] The CERCLA Lawsuit alleges specifically that Chisholm's Village and others ‘released substances that are hazardous to human health and the environment into the soil and groundwater in Las Cruces,' and that such releases contributed to a plume of contaminated groundwater that the U.S. Environmental Protection Agency (‘EPA') has designated as a federal Superfund site (the ‘Site').” Fidelity MSJ ¶ A.2, at 2 (quoting CERCLA Complaint ¶¶ 6, 48, at 6, 14-15)(asserting this fact); Cincinnati MSJ ¶ A.2, at 2 (quoting CERCLA Complaint ¶¶ 6, 48, at 6, 14-15)(asserting this fact). See Chisholm Response ¶ A.1, at 4 (admitting this fact); Id. B.1, at 5 (admitting this fact).

The CERCLA Lawsuit alleges that Las Cruces and Dona Ana County have “spent millions of dollars in investigating and remediating the contamination of the Site in response to EPA demands.” Fidelity MSJ ¶ A.3, at 2-3 (citing CERCLA Complaint ¶¶ 8, 50, at 6-7, 15)(asserting this fact); Cincinnati MSJ ¶ A.3, at 3 (citing CERCLA Complaint ¶¶ 8, 50, at 6-7, 15)(asserting this fact). See Chisholm Response ¶ A.1, at 4 (admitting this fact); Id. B.1, at 5 (admitting this fact). The CERCLA Lawsuit further alleges that Chisholm's Village and its co-defendants “have not contributed to the investigation or remediation efforts and thus, the Plaintiffs ‘seek a declaration of responsibility and payment from Defendants for past, present, and future response costs incurred in response to Defendants' release of hazardous substances at and to the Site.' Fidelity MSJ ¶ A.3, at 2-3 (quoting CERCLA Complaint ¶ 10, at 7)(asserting this fact); Cincinnati MSJ ¶ A.3, at 3 (quoting CERCLA Complaint ¶ 10, at 7)(asserting this fact). See Chisholm Response ¶ A.1, at 4 (admitting this fact); Id. B.1, at 5 (admitting this fact). In the CERCLA Lawsuit, Las Cruces and Dona Ana County assert three main causes of action against Chisholm's Village: (a) Cost Recovery Under CERCLA; (b) Contribution Under CERCLA; and (c) Declaratory Relief.” Fidelity MSJ ¶ A.4, at 3 (citing CERCLA Complaint ¶¶ 52-73, at 15-19)(asserting this fact); Cincinnati MSJ ¶ A.4, at 3 (citing CERCLA Complaint ¶¶ 52-73, at 15-19)(asserting this fact). See Chisholm Response ¶ A.1, at 4 (admitting this fact); Id. B.1, at 5.

(admitting this fact). In the CERCLA Lawsuit, Las Cruces and Dona Ana County seek the following relief against Chisholm's Village:

(a) an award of damages reflecting the costs that Plaintiffs have incurred and will incur in response to the release or threat of release of hazardous substances; (b) a declaration that CVP is strictly, jointly and severally liable for environmental response costs incurred and to be incurred; (c) a declaration that [Chisholm's Village] is liable for costs “that Plaintiffs may incur as a result of the claims brought under 42. U.S.C. § 9609(a) and 42 U.S.C. § 9607(a) on behalf of EPA”; and (d) prejudgment interest.

Fidelity MSJ ¶ A.5, at 3 (citing CERCLA Complaint ¶¶ 52-73, at 15-19)(asserting this fact); Cincinnati MSJ ¶ A.5, at 3 (citing CERCLA Complaint ¶¶ 52-73, at 15-19)(asserting this fact). See Chisholm Response ¶ A.1, at 4 (admitting this fact); Id. B.1, at 5 (admitting this fact). The CERCLA Complaint “sought to impose joint and several liability on Chisholm's for an approximately 3.5 billion gallon subterranean plume.” Chisholm Response ¶ B, at 5 (asserting this fact). See Fidelity Reply/Response ¶ B, at 2 (admitting this fact); Cincinnati Reply/Response ¶ B, at 1 (admitting this fact). “In addition to seeking damages for [tetrachloroethylene (‘PCE')] contamination, the [CERCLA] Complaint also sought damages against Chisholm's for the release of unidentified ‘hazardous substances.' Chisholm Response ¶ D, at 6 (asserting this fact)(citing CERCLA Complaint ¶ 33, at 7-8). See Fidelity Reply/Response ¶ D, at 3 (admitting this fact); Cincinnati Reply/Response ¶ D, at 1 (admitting this fact).

2. The Fidelity Policy.

Fidelity Insurance issued the following liability insurance policies to Chisholm's Village's “alleged predecessors”: Policy No. 1MP30107954800, from October 10, 1994 to November 1, 1995; Policy No. 1MP30107954801, from November 1, 1995 to December 31, 1995; Policy No....

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT