Cont'l Ins. Co. v. George J. Beemsterboer, Inc., 2:14-CV-00382

• Decision Date: 08 December 2015
• Docket Number: NO. 2:14-CV-00382,2:14-CV-00382
• Citation: 148 F.Supp.3d 770
• Court: U.S. District Court — Northern District of Indiana
• Parties: The Continental Insurance Company, Plaintiff, v. George J. Beemsterboer, Inc., Beemsterboer Slag & Ballast Corporation, and Calumet Transload Railroad LLC, Defendants.

148 F.Supp.3d 770

The Continental Insurance Company, Plaintiff,

v.George J. Beemsterboer, Inc., Beemsterboer Slag & Ballast Corporation, and Calumet Transload Railroad LLC, Defendants.

NO. 2:14-CV-00382

United States District Court, N.D. Indiana, Hammond Division.

Signed December 8, 2015

Valerie L. Walker Rodriguez PHV, Elenius Frost & Walsh, Chicago, IL, Dennis F. Cantrell, Cantrell Strenski & Mehringer LLP, Indianapolis, IN, for Plaintiff.

Michael O. Nelson, Nelson Law Group LLC, Indianapolis, IN, for Defendants.

OPINION AND ORDER

RUDY LOZANO

, Judge, United States District Court

This matter is before the Court on the Motion for Partial Summary Judgment filed by Plaintiff Continental Insurance Company (“Continental”), on June 8, 2015 (DE# 23), and the Motion for Partial Summary Judgment against Plaintiff as to Liability on Count I of Plaintiff's Complaint and Counts I, II and IV of Defendants' Amended Counterclaims, filed by Defendants George J. Beemsterboer, Inc., Beemsterboer Slag & Ballast Corporation, and Calumet Transload Railroad LLC (collectively, “Beemsterboer”) on June 8, 2015 (DE# 24). For the reasons set forth below, Continental's Motion for Partial Summary Judgment (DE# 23) is GRANTED. Beemsterboer's Motion for Partial Summary Judgment (DE# 24) is DENIED.

FACTS

For the purposes of these motions for partial summary judgment, the facts below are undisputed:

Continental Insurance Policy

Continental issued insurance policy numbers H0864659 and H0864870 (the “Policies”) to Beemsterboer.¹ The declarations pages of the Policies indicate they are “hull” insurance policies with limits of $1 million. The Policies include the following coverage:

LANDING DOCK BAILEE LIABILITY

1. In consideration of the stipulations hereinafter named and the payment of premiums as hereinafter provided, and subject to the limits of the liability, exclusions, conditions and other terms of this policy, this Company agrees to indemnify the Insured to the extent of this policy's proportion as hereinafter stated of all sums which the Insured shall become obligated to pay:

A. By reason of the liabilities imposed upon the Insured by law for accidental:

(1) loss of or damage to barges and to towboats, their equipment, cargo, freight, and other interests on board ..., the property of others while such property is in the custody of the Insured at their landing and mooring facilities described below, but excluding all liability for loss or damage resulting from loading or unloading operations performed by or for the Insured;

(2) loss of or damage to barges, their equipment, cargo, freight and other interests on board ... the property of others, while such property is in the custody of the Insured at their landing and mooring facilities described below resulting from loading or unloading operations performed by or for the Insured;

(3) loss of or damage to property of others (other than as described above), including vessels of not exceeding 750 net registered tons approaching, at, and departing from the landing and mooring facilities described below, or for loss of life or personal injury; if arising out of only those operations covered above.

...

2. Coverage under Clauses lA(l) and 1A(2) attaches from the moment the said barges or towboats become at risk of the Insured at premises as specified below and covers continuously thereafter until removed from said premises, or until no longer at the risk of the Insured, whichever shall first occur. ...

...

4. This policy applies only to the Insured's landing and mooring facilities on the

MM [mile marker] 330, Calumet River at 106th St., Chicago, IL Calumet River at 10730 Burley Ave., Chicago, IL

...

(DE# 25-1 at 9-10.) Paragraph 5 includes the following relevant exclusion, “Exclusion K”:

5. Notwithstanding the foregoing, it is hereby expressly understood and agreed that this insurance does not cover against nor shall any liability at each hereunder:

...

K. For any loss, damage, cost, liability or expense of any kind or nature whatsoever, imposed on the Insured, directly or indirectly in consequence of, or with respect to, the actual or potential discharge, emission, spillage or leakage upon or into the seas, waters, land or air, of oil, petroleum products, chemicals or other substances of any kind or nature whatsoever.

(Id. at 11.) Paragraph 8 requires the Insured to log the arrival and departure of each vessel at risk under Section lA(l) or 1A(2), which is then used to compute the earned premium for the Policies, as follows:

$6.45 per vessel per day or any part thereof for coverage provided by Clause lA(l) and an additional premium of

$Incl. per vessel per day or any part thereof for coverage provided by Clause 1A(2) if such vessel was either loaded or unloaded by or for the Insured during the period of custody and an additional premium of

$Incl. per vessel per day or any part thereof for coverage provided by Clause 1A(3)

$125 per vessel berthing

...

(Id. ) The Policies also include the following relevant exclusion:

EXCLUSION—RESPIRABLE DUST

It is understood and agreed that this insurance does not apply to any liability for, or any loss, damage, injury or expense caused by, resulting from, or incurred by reason of any one or more of the following:

1. “Bodily injury” arising in whole or in part out of the actual, alleged or threatened respiration or ingestion at any time of “respirable dust”; or

2. “Property damage” arising in whole or in part out of the actual, alleged or threatened presence of “respirable dust”; or

3. “Personal and advertising injury” arising in whole or in part out of the actual, alleged or threatened exposure at any time to or the presence of “respirable dust”.

The following definition applies herein:

“Respirable dust” means respirable particulate matter but does not include living organisms.

(Id. at 27.)

The Class Action Litigation

In 2013, a consolidated class action complaint (“Class Action Complaint”) was filed against Beemsterboer and other defendants in the United States District Court for the Northern District of Illinois entitled, Rosalio Campos, et al. v. BP Products North America, Inc., et al., Case No. (“Class Action Litigation”).² (DE# 25-2.) According to the Class Action Complaint, defendants George J. Beemsterboer, Inc. (“Beemsterboer Inc.”) and Beemsterboer Slag & Ballast Corporation (“Beemsterboer Slag”) own, maintain, and/or control a storage and transfer terminal at 2900 East 106th Street in Chicago, situated on the west bank of the Calumet River (“106th Street Facility” or “Facility”), and defendant Calumet Transload Railroad LLC owned, operated, maintained and controlled a storage transfer terminal located at 10730 South Burley Avenue in Chicago, situated in the east bank of the Calumet River, until February 8, 2007 (together, the “Facilities”). (Id. ¶¶ 17, 20-21, 23).

The Class Action Complaint alleges that Beemsterboer failed to take reasonable measures to prevent petroleum coke (“pet coke”) and coal dust stored outside at the Facilities from contaminating nearby communities. Pet coke is alleged to be a lightweight and dust-like byproduct of the crude oil refining process that contains high concentrations of carbon and sulfur and trace elements of metals. At these Facilities, “petcoke and coal dust was and continues to be stored outside in large uncovered piles. The concerned piles of petcoke and coal dust are sometimes as high as five stories.” (Id. ¶ 44). The Class Action Complaint alleges that pet coke and coal dust has blown throughout the communities surrounding the Facilities, contaminating the air and coating homes, yards, schools, parks and other property, thereby reducing property values and interfering with the plaintiffs' use and enjoyment of the property. It also alleges that pet coke can be inhaled, and that if inhaled, pet coke can be harmful. It attaches a Safety Data Sheet for pet coke indicating that it may form a combustible dust that should not be breathed. The Class Action Complaint also alleges that the Illinois Environmental Protection Agency (“IEPA”) issued a violation notice to Beemsterboer, alleging violations of environmental laws, regulations and permits, and that Beemsterboer caused, threatened, or allowed “the discharge of particulate matter into the atmosphere generated during material handling operations causing or tending to cause air pollution.” (Id. ¶ 47(f); see also id. ¶¶ 46 & 48, Ex. F.)

The Class Action Complaint alleges legal and factual questions relevant to resolution of the case, including “[w]hether Defendants' conduct in the refining, manufacturing, handling, transporting, or storing of oil byproducts resulted in the release, discharge, or spilling of petcoke waste.” (Id. ¶ 63(b).) It also alleges that Beemsterboer and other defendants “had a duty to act with reasonable care in ... storing, distributing, and selling petcoke and coal dust in such a way that petcoke and coal dust would not migrate onto and contaminate Plaintiffs' and Class members' property.” (Id. ¶ 102.)³ One of the plaintiffs in the Class Action Litigation (“Class Action plaintiffs”), Lilly Martin, testified in a deposition that the allegations in the Class Action Complaint include damages to her property from pet coke and coal dust generated while being transferred from barges and ships by Beemsterboer at their Facilities. (DE# 31-1.)

State Litigation

On November 2, 2013, the State of Illinois and the City of Chicago commenced a lawsuit against defendants Beemsterboer Inc. and Beemsterboer Slag in the Circuit Court of Cook County, Chancery Division, entitled, People of the State of Illinois, ex rel. v. George J. Beemsterboer, Inc., et al., No. 13 CH 26175 (“State Litigation”), claiming that Beemsterboer's pet coke handling and storage operations at the 106th Street Facility were causing damage to surrounding properties. The original complaint in the State Litigation (“State Complaint”) alleges that Beemsterboer violated several state and local air pollution laws due to dust created...