Compass Ins. Co. v. Cravens, Dargan and Co.

• Decision Date: 13 January 1988
• Docket Number: No. 87-27,87-27
• Citation: 748 P.2d 724
• Parties: COMPASS INSURANCE COMPANY, Appellant (Defendant), v. CRAVENS, DARGAN AND COMPANY, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 724

748 P.2d 724

COMPASS INSURANCE COMPANY, Appellant (Defendant), v. CRAVENS, DARGAN AND COMPANY, Appellee (Plaintiff).

No. 87-27.

Supreme Court of Wyoming.

Jan. 13, 1988.

Dennis W. Lancaster of Phillips, Lancaster and Thomas, P.C., Evanston, and Allan L. Larson of Snow, Christensen & Martineau, Salt Lake City, Utah, for appellant.

Timothy O. Beppler of Vehar, Beppler, Jacobson, Lavery & Rose, P.C., Evanston, for appellee.

Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT and MACY, JJ.

MACY, Justice.

This is an appeal from a judgment against appellant Compass Insurance Company (Compass) awarding complete reimbursement to appellee Cravens, Dargan and Company (Cravens) for the amount it paid to the State of Wyoming for the cleanup of an oil spill.

We affirm in part and reverse in part.

The issue to be resolved is which of these insurers for the State of Wyoming insured the cost of cleaning up the oil spill.

Sometime after 4:00 p.m. on March 18, 1984, an unknown person entered the Wyoming highway department maintenance yard at Evanston, Wyoming, and opened the valve on an oil storage tank. Surrounding the maintenance yard was a ten-foot high chain link fence with barbed wire on top. Access gates to the maintenance yard were locked after 4:00 p.m. The maintenance yard had never before been vandalized, and the highway department personnel had no reason to believe that it would be vandalized.

When the unlocked oil storage tank valve was opened, approximately 3,000 gallons of road oil valued at $2,337 flowed out of the tank, across the maintenance yard, down a hill, and into a drainage or irrigation ditch, and it was carried by water onto landowners' fields.

Upon discovering the oil spill, the highway department immediately took steps to have the oil spill cleaned up. No formal complaint was ever made against the State of Wyoming by any third party for damage to any property caused by the oil spill. However, the highway department personnel did receive complaints from landowners that a fence was destroyed and fields were rutted during the clean-up process. One landowner also complained that his cows could not drink the polluted stock water. The highway department caused the fence to be replaced, the ruts to be filled with top soil, and water to be hauled to the landowner's stock until the polluted water was clean enough for the stock to drink.

The cost of cleaning up the oil spill on the property owned by the State of Wyoming was $8,821, and the cost of cleaning up the oil spill on the property owned by others was $85,635.

At the time of the oil spill incident, the State of Wyoming had an effective comprehensive liability insurance policy issued by Compass and an effective property insurance policy issued by Cravens. Thereafter, the State of Wyoming made claims against Compass and Cravens for $96,792, which included the costs associated with cleaning up the oil spill and the value of the oil spilled. Cravens ultimately paid the $96,792 claim and accepted a subrogation receipt from the State of Wyoming wherein the State subrogated all its rights, claims, and interest which it might have against any person or corporation liable for the loss and authorized Cravens to sue, compromise, or settle the claim in the name of the State. Compass refused the demand made by Cravens for reimbursement of the $96,792 Cravens had paid to the State of Wyoming. On April 29, 1985, a complaint was filed in the Third Judicial District Court styled "STATE OF WYOMING, Plaintiff, v. COMPASS INSURANCE COMPANY, a New York Corporation, Defendant," alleging that the State of Wyoming was liable for the cost of cleaning up the oil spill and any monetary damages arising therefrom and that, pursuant to the terms of the State's insurance policy with Compass, Compass was obligated to pay for those amounts.

Compass filed its answer alleging that Cravens, and not the State of Wyoming, was the real party in interest and that, pursuant to the terms of the liability policy Compass had issued to the State, it owed no duty or obligation to either the State or Cravens for any expenses, costs, or damages occasioned by the oil spill.

Cross-motions for summary judgment were denied, and the court ordered that the caption of the case be amended to substitute Cravens as the real party in interest in place of the State of Wyoming. On October 9, 1986, a bench trial was held, and, on December 4, 1986, the trial court entered judgment generally in favor of Cravens and against Compass for the sum of $118 144.09, which amount represents clean-up costs of $94,455, prejudgment interest of $13,567.88, attorneys fees of $10,000, and costs of $121.21.

Two questions must be answered in order to resolve this case: (1) Does the Compass policy cover the oil spill; and (2) if the Compass policy does cover the oil spill, does Cravens have a right to reimbursement from Compass.

The primary coverage language in the comprehensive liability policy issued by Compass provides in relevant part:

"The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of * * * property damage * * * caused by an occurrence * * *."

The Compass policy defines "occurrence" 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 [.]" (Emphasis added.)

It also defines "property damage" as:

"(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period[.]"

We disagree with Compass' assertion that the incident may not be an occurrence. A general finding and judgment carry with them every finding of fact which reasonably and fairly can be drawn from the evidence. Burk v. Burzynski, Wyo., 672 P.2d 419 (1983). Our examination of the record reveals that the trial court reasonably and fairly could have drawn from the evidence that one would not expect vandals to climb the ten-foot high chain link fence and open the valve on the oil storage tank.

We also disagree with Compass' assertion that there is no evidence of damage to property of third parties. The evidence clearly shows that the oil spill resulted in the contamination of the ditch bank and the fields of landowners adjacent to the highway department maintenance yard and that the costs associated with cleaning up this property amounted to $85,635. The trial court could have reasonably and fairly drawn from the evidence that there was physical injury to, and loss of use of, tangible property; i.e., property damage as defined in the Compass policy.

In Lansco, Inc. v. Department of Environmental Protection, 138 N.J.Super. 275, 350 A.2d 520 (1975), aff'd 145 N.J.Super. 433, 368 A.2d 363, 88 A.L.R.3d 172 (1976), the Superior Court of New Jersey decided a case with facts nearly identical to this one. In that case, a person or persons unknown opened the valve on two storage tanks causing some 14,000 gallons of oil to leak from the tanks. The oil flowed into two storm drains which in turn emptied into the Hackensack River. At the time of the incident, Lansco had an effective general comprehensive liability policy with provisions the same or similar to the Compass policy.

The policy held by Lansco, like the Compass policy, defined an "occurrence" as an accident " 'which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.' " Id. 350 A.2d at 523. The court in Lansco, Inc. v. Department of Environmental Protection stated:

" 'Accidental' is defined as happening unexpectedly or by chance; taking place not according to usual course. Webster's New International Dictionary, and Black's Law Dictionary * * *; Furr v. Metropolitan Life Ins. Co., 111 N.J.Super. 596, 600, 270 A.2d 69 (Law Div.1970); see Linden Motor Freight Co. v. Travelers Ins. Co., 40 N.J. 511, 193 A.2d 217 (1963). Further, under the definition of 'occurrence' contained in the policy, whether the occurrence is accidental must be viewed from the standpoint of the insured, and since the oil spill was neither expected nor intended by Lansco, it follows that the spill was sudden and accidental under the exclusion clause even if caused by the deliberate act of a third party." Id. 350 A.2d at 524.

That court concluded that coverage under the comprehensive general liability policy extended to statutory liability for damages to the environment. Id. at 524. The insurer was required to reimburse Lansco for its costs to clean up the spill. Id. at 525; see also Chemical Applications Company, Inc. v. Home Indemnity Company, 425 F.Supp. 777 (D.Mass.1977).

Compass contends that the intent of its policy is to pay only damages for which the State is legally liable and that the State is not legally liable for the costs of cleaning up the property of a third party because no notice of claim has been filed against the State as required by law. ¹ Compass also contends that, in any event, the State cannot be held liable under the Wyoming Governmental Claims Act. ²

There is no question that the highway department had the legal liability to clean up the oil spill. The department of environmental quality, established by the Wyoming Environmental Quality Act, ³ has the obligation to promulgate rules and regulations necessary to prevent, reduce, and eliminate waste. Tri-State Generation and Transmission Association, Inc. v. Environmental Quality Council, Wyo., 590 P.2d 1324 (1979). In carrying out this obligation, the department prepared and put into effect Chapter IV, Section 5.c of its Water Quality Rules & Regulations, which provides that a person ⁴ owning oil which is...