City of Salina, Kan. v. Maryland Cas. Co.
| Decision Date | 29 April 1994 |
| Docket Number | No. 93-4005-DES.,93-4005-DES. |
| Citation | 856 F. Supp. 1467 |
| Parties | CITY OF SALINA, KANSAS, Plaintiff, v. MARYLAND CASUALTY COMPANY, Defendant. |
| Court | U.S. District Court — District of Kansas |
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David D. Moshier, J. Stan Sexton, Brian Wilson Wood, Hampton, Royce, Engleman & Nelson, Salina, KS, for City of Salina, KS.
Charles W. Hess, Smith, Gill, Fisher & Butts, Kansas City, MO, E. Charles Dann, Jr., Stephen E. Marshall, Goodell, DeVries, Leech & Greyheir, Baltimore, MD, for Maryland Cas. Co.
This matter is before the court on the following three motions: (1) plaintiff City of Salina's ("City") motion for summary judgment (Doc. 64); (2) defendant Maryland Casualty Company's ("Maryland Casualty") motion for summary judgment (Doc. 65); and (3) City's motion to review magistrate's order (Doc. 70).1
In this action, City seeks a declaratory judgment regarding Maryland Casualty's duty to defend and indemnify City under the terms of an insurance contract. City also seeks further monetary relief based on the declaratory judgment. Specifically, City seeks compensation for costs it incurred defending, and subsequently satisfying the judgment entered in, a case brought when alkaline wastewater from City's sewer backed up into a residence ("the Eisele litigation"). In support of their summary judgment motions, the parties make the following general arguments. City argues that the insurance contract required Maryland Casualty to defend and indemnify City in the Eisele litigation. City also argues that it is entitled to attorneys' fees under K.S.A. 40-256 because Maryland Casualty's refusal to defend or indemnify was without just cause or excuse. Maryland Casualty argues that it is obligated neither to defend nor indemnify City because the claims asserted clearly fall within the contract's "pollution exclusion."
After examining the record submitted by the parties, and the attached memoranda of law, the court (1) denies City's motion for summary judgment (Doc. 64); (2) grants Maryland Casualty's motion for summary judgment (Doc. 65); and (3) denies City's motion to review magistrate's order (Doc. 70).
Ramaco, Incorporated ("Ramaco") is a Kansas corporation. On January 1, 1990, Ramaco's business involved cleaning pizza pans at its facility on West Elm Street in Salina, Kansas. During the cleaning process, Ramaco submerged pizza pans in tanks containing a concentrated sodium hydroxide solution. The pans were then removed and rinsed.
Prior to January 1, 1991, City enacted a Pretreatment Ordinance that prohibited industries from discharging into City's sewer solutions with a pH in excess of 9. Ramaco was subject to the Pretreatment Ordinance. Ramaco could not legally discharge its cleaning solution into City's sewer because the solution had a pH in excess of 9.
Ramaco never intentionally dumped spent cleaning solution into City's sewer. After the cleaning solution had been used, it was taken off-site to Tony's Pizza where it was treated and then disposed of as a topical fertilizer.
Ramaco ordinarily discharged only two types of waste into City's sewer: (1) domestic waste from restrooms and sinks; and (2) rinse water following pretreatment and subject to Ramaco's discharge permit. The rinse water was not the cleaning solution.
On January 1, 1990, a pipe from one of Ramaco's cleaning tanks burst. Approximately 1,500 gallons of cleaning solution escaped. The cleaning solution flowed down a Ramaco drain, through Ramaco's private lateral sewer line, and into City's main sewer line. The presence of sodium hydroxide elevated the pH of the wastewater in City's sewer line to at least 12.
While in the City's sewer, the solution coagulated and clogged the line. City employees attempted to unclog the line. Additionally, the City employees performed work on private lateral lines affected by the coagulated substance.
At the time of the discharge, Debbie and Clyde Eisele, along with their daughter Crystal Aldridge, lived approximately one block south of the Ramaco facility. The Eiseles claimed that wastewater from City's sewer backed up into their residence. On July 31, 1991, the Eiseles sent City a demand letter in which they claimed property damage and bodily injury as a result of the presence in their residence of wastewater with an elevated pH.
City had a claims-made comprehensive general liability ("CGL") policy issued by Maryland Casualty.2 The CGL policy was effective from June 1, 1991, through June 1, 1992.
On August 8, 1991, following receipt of the Eiseles' demand letter, City provided Maryland Casualty with notice of the claim. City sought defense and indemnification under its CGL policy. City attached a copy of the Eiseles' letter to the notice of claim.
City's CGL policy contained a standard Insurance Service Office, Incorporated ("ISO") "pollution exclusion" which covered claims for bodily injury or property damage arising from pollution. In part, the "pollution exclusion" provides as follows:
Charles Endres, Jr., Environmental Claims Counsel for Maryland Casualty, sent a letter on behalf of Maryland Casualty rejecting City's August 8, 1991, demand for defense and indemnification. Mr. Endres based Maryland Casualty's denial on his belief that paragraph one of the "pollution exclusion" applied.
In November of 1991, City made a second demand for defense and indemnification. Maryland Casualty rejected this demand in a November 4, 1991, letter written by Mr. Endres.
On December 27, 1991, the Eiseles sued City in the United States District Court for the District of Kansas, Case No. 91-2477-V. City retained the services of its city attorney to defend it against the Eiseles' claims.
During discovery, City continued to demand defense and indemnification. In letters dated January 14, 1992, and February 28, 1992, Maryland Casualty rejected these additional demands.
After partial discovery, City concluded that its employees failed to follow established policy to warn citizens of the properties of materials discharged into City's sewer system causing a sewer back-up. City settled with the Eiseles. The parties stipulated to an entry of judgment which contained findings of fact and conclusions of law. On September 17, 1992, a journal entry of judgment was entered regarding the Eiseles' claims.
Under the terms of the judgment, City paid the Eiseles $36,250 for damages caused by City's failure to warn them that the sewer was blocked, that the material from the sewer had an elevated pH and was caustic, and that the material could cause injury to human tissue on contact. City satisfied the judgment.
In defense of the Eiseles' claims, City incurred $38,928.36 in defense costs.
Following the September 17, 1992, judgment, City made an additional demand for reimbursement of its defense and judgment costs. Maryland Casualty denied City's demand. City then filed the instant declaratory judgment action in the District Court of Saline County, Kansas. Maryland Casualty removed to this court.
A court shall render summary judgment upon a showing that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The rule provides that "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The substantive law identifies which issues are material. Id. at 248, 106 S.Ct. at 2510. A dispute over a material fact is genuine when the evidence is such that a reasonable jury could find for the nonmovant. Id. "Only disputes over facts that might properly affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id.
The movant has the initial burden of showing the absence of a genuine issue of material fact. Shapolia v. Los Alamos National Laboratory, 992 F.2d 1033, 1036 (10th Cir.1993). The movant may discharge its burden "by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmovant's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). The movant need not negate the nonmovant's claim. Id. at 323, 106 S.Ct. at 2552. Once the movant makes a properly supported motion, the nonmovant must do more than merely show there is some metaphysical doubt as to the material facts. Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S....
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