Detrex Chem. Industries v. Emp. Ins. of Wausau

• Decision Date: 08 February 1988
• Docket Number: No. C85-2278Y.,C85-2278Y.
• Citation: 681 F. Supp. 438
• Parties: DETREX CHEMICAL INDUSTRIES, INC., Plaintiff, v. EMPLOYERS INSURANCE OF WAUSAU, A Mutual Company, Defendant/Third Party Plaintiff, v. HARTFORD ACCIDENT & INDEMNITY CO., INTERNATIONAL INSURANCE COMPANY, Third Party Defendants.
• Court: U.S. District Court — Northern District of Ohio

681 F. Supp. 438

DETREX CHEMICAL INDUSTRIES, INC., Plaintiff, v. EMPLOYERS INSURANCE OF WAUSAU, A Mutual Company, Defendant/Third Party Plaintiff, v. HARTFORD ACCIDENT & INDEMNITY CO., INTERNATIONAL INSURANCE COMPANY, Third Party Defendants.

No. C85-2278Y.

United States District Court, N.D. Ohio, E.D.

August 27, 1987.

As Corrected September 1, 1987.

On Motion for Partial Reconsideration February 8, 1988.

COPYRIGHT MATERIAL OMITTED

James P. Conroy and Ralph Streza, Porter, Wright Morris & Arthur, Cleveland, Ohio, Jerold Oshinsky, Robert H. Shulman, Anderson, Baker, Kill & Olick, and Lorelie S. Masters, Washington, D.C., for plaintiff.

Curtis L. Isler, Arter & Hadden, Cleveland, Ohio, for Employers Ins. of Wausau.

Paul L. Gingras, Thomas L. Hamlin, Robins, Zelle, Larson & Kaplan, and Janet Pollish-Forsberg, Minneapolis, Minn., Thomas Schick, McNeal, Schick, Archibald & Biro, Cleveland, Ohio, for Hartford.

Thomas A. Dugan, Ulmer, Berene, Laronge, Glickman & Curtis, Cleveland, Ohio, for International.

MEMORANDUM AND ORDER

WILLIAM K. THOMAS, Senior District Judge.

Plaintiff Detrex Corporation (Detrex), formerly known as Detrex Chemical Industries, Inc., brings its action for a declaratory judgment against Employers Insurance of Wausau (Wausau). In its complaint Detrex states that over several years it has purchased from Wausau liability insurance policies.¹ In its first amended complaint, Detrex asserts that it has given Wausau, and its other primary insurance companies,

notice of environmental proceedings against the plaintiff involving property that is located in Ohio and throughout the country and asserts that it is covered by the liability insurance policies sold by Wausau that are the subject of this action.

Noting that the proceedings have been described "with particularity in the notices sent to Wausau," Detrex identifies the "proceedings."

a. Fields Brook, and surrounding property, Ashtabula, Ohio — On March 17, 1982, the United States Environmental Protection Agency ("EPA") notified Detrex of its identification as a "potentially responsible party" ("PRP) regarding Fields Brook, and surrounding property. Detrex received a second such letter on May 16, 1986. In these letters, the EPA demanded that Detrex perform certain work to eliminate discharges of substances. These letters may serve to impose statutory liability upon Detrex under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"). Detrex notified Wausau of such proceeding on May 31, 1985.

b. National MicroDynamics Company (Lutex) site, 6153 Airways Boulevard, Chattanooga, Tennessee — On January 23, 1986, the Tennessee Department of Health and Environment demanded that Detrex show cause why it should not be named as a "liable party" with regard to this site under the Tennessee Hazardous Waste Management Act. Detrex notified Wausau of such proceeding on February 11, 1986.

c. Equipment Division of Detrex, Warren County, Bowling Green, Kentucky — On March 12, 1985, the state of Kentucky served upon Detrex a temporary restraining order with regard to this site, alleging certain violations under, inter alia, Kentucky Revised Statutes, Chapter 224, and seeking civil fines in the thousands of dollars. Detrex has expended sums for the cleanup of this site, as required by the state. Detrex also understands that the EPA has identified the Lost River, which runs underneath this site, as a Superfund site under CERCLA. Wausau received notice of such proceeding in Detrex's interrogatory answers of December 16, 1985; in addition, Detrex notified Wausau of such proceeding on June 26, 1986.

d. Gold Shield Facility, Grand Rapids, Michigan — On November 21, 1985, the Michigan Department of Natural Resources demanded that Detrex submit "a work plan" regarding purported discharges of substances at this site. Detrex notified Wausau of such proceeding on November 14, 1985, and December 5, 1985.

e. Cemetery (Milford Road) and Rose/Springfield sites, Rose Township, Oakland County, Michigan — On June 18, 1985, the EPA demanded, pursuant to CERCLA, that Detrex perform certain work to eliminate discharges of substances at the Cemetery site. On October 29, 1982, the EPA made a similar demand upon Detrex regarding the Rose site. Wausau received notice of such proceeding as a result of a related suit in 1979 in which Wausau defended Detrex and in Detrex's interrogatory answers of December 16, 1985; in addition, Detrex notified Wausau of such proceeding on June 26, 1986.

f. New Lyme Landfill, Ashtabula County, Ohio — On May 20, 1985, the EPA demanded, pursuant to CERCLA, that Detrex perform certain work to eliminate discharges of substances regarding the New Lyme site. Wausau received notice of such proceeding in Detrex's interrogatory answers of December 16, 1985. Detrex notified Wausau of such proceeding on June 26, 1986.

In its first claim for relief, Detrex states that Wausau has failed to honor its defense obligations and has either disputed, or will dispute, its "obligation to defend and to pay in full Detrex's defense costs in connection with the identified proceedings." As to this claim for relief, Detrex prays that this court determine and declare

that Wausau is obligated under its liability insurance policies to defend Detrex and to pay the costs of defense, in such proceedings.

In its second claim for relief, Detrex says that Wausau has failed to "agree to provide full indemnity in such proceedings or has disputed, or will dispute, its obligations to do so." As to this claim for relief, Detrex asks this court to determine and declare that Wausau is "obligated under its liability insurance policies to pay in full all sums that Detrex becomes legally obligated to pay as a result of such proceedings."

In its answer, defendant Wausau denies that it has any defense obligations as alleged, but it admits that an actual controversy exists between plaintiff and defendant regarding any alleged defense obligation of defendant.²

On August 21, 1986, plaintiff Detrex filed its motion for partial summary judgment. It seeks a declaration that "Wausau is obligated to investigate, defend, and pay in full for the defense of actions against Detrex instituted by the United States Environmental Protection Agency and state agencies as well as judicial actions."³

Wausau disputes the argument of Detrex that, for the purpose of determining whether the "duty to defend" exists, there is no difference between the nine "environmental matters." Wausau asserts that "clearly, each of the subject environmental matters must be considered separately and on its own merits."

The court will first examine and interpret the policy provisions. Then it will take up the Fields Brook site in Ashtabula County, and apply the policy provisions, as interpreted, to that environmental matter. The court commences with the Fields Brook site because conclusions reached in applying the policy provisions to this environmental matter are applicable to several of the other environmental matters presented in plaintiff Detrex's declaratory action.

I.

The court examines the policy provisions mindful that "where the meaning of the writing is clear and unambiguous upon its face, the words therein are to be understood in their plain, ordinary and popular sense." United States Fidelity & Guaranty Co. v. Guenther, 281 U.S. 34, 50 S.Ct. 165, 74 L.Ed. 683 (1930).

The Wausau policies contain the following insuring language:

The company will pay on behalf of the insured the sums which the insured shall become legally obligated to pay as damages because of

Coverage A. Bodily Injury or

Coverage B. Property Damage

to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent and may make such investigation and settlement of any claim or suit as it deems expedient, but the company, shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.

Thus, the insuring language of Wausau's policies obligated Wausau to "defend any suit against Detrex seeking damages on account of such bodily injury or property damage." This is true "even if any of the allegations of the suit are groundless, false or fraudulent...." The insurance policies do not define the term "suit," and standing alone the meaning of "suit" may be somewhat ambiguous. Nevertheless, the insuring language, just quoted, helps to mark out the meaning of "suit" as used. Thus, "allegations of the suit" indicate that a "suit" is composed of "allegations." This implies that the traditional meaning of "suit" is intended, i.e. that it contains allegations which seek "damages" on account of either "personal injury" or "property damage."⁴

While the insuring language imposes a duty to "defend any suit against the insured," the language further authorizes Wausau to "make such investigation or settlement of any claim or suit as it deems expedient." Thus, the language differentiates the term "claim" from "suit." The insuring language makes it clear that the duty to defend applies to a "suit against the insured," as distinguished from a "claim" against the insured.⁵ Similarly, in the clauses which place limitations on liability, the policy reads "regardless of ... claims made or suits brought...."

As seen, Wausau's duty to indemnify extends to all

sums which Detrex shall be legally obligated to pay as damages because of

A. bodily injury

B. property damage....

This insuring language obligates Wausau

to pay on behalf of an insured all damages that the insured `shall become legally obligated to pay' or liability `imposed by law' and is a description of the kind of liability insurer agreed to

...