Doe Run Res. Corp. v. Am. Guarantee & Liab. Ins.

• Decision Date: 31 October 2017
• Docket Number: No. SC 96107,SC 96107
• Citation: 531 S.W.3d 508
• Court: Missouri Supreme Court
• Parties: The DOE RUN RESOURCES CORPORATION, Respondent, v. AMERICAN GUARANTEE & LIABILITY INSURANCE and Lexington Insurance Company, Defendants, and St. Paul Fire and Marine Insurance Company, Appellant.

531 S.W.3d 508

The DOE RUN RESOURCES CORPORATION, Respondent,

v. AMERICAN GUARANTEE & LIABILITY INSURANCE and Lexington Insurance Company, Defendants,andSt. Paul Fire and Marine Insurance Company, Appellant.

No. SC 96107

Supreme Court of Missouri, en banc.

Opinion issued October 31, 2017

St. Paul was represented by Robert T. Haar and Lisa A. Pake of Haar & Woods LLP in St. Louis, (314) 241-2224; David M. Fedder and Deborah C. Campbell of Dentons US LLP in St. Louis, (314) 440-6901; and Robert C. Johnson of Dentons US LLP in Chicago, Illinois, (312) 876-8000.

Doe Run was represented by Jamie L. Boyer of Stinson Leonard Street LLP in St. Louis, (314) 259-4546; and Marc D. Halpern, Vince H. Herron and Heather L. Mayer of Abelson Herron Halpern LLP in San Diego, California, (619) 618-7000.

Mary R. Russell, Judge

The Doe Run Resources Corporation was sued by several minor plaintiffs allegedly injured by toxic pollution released from Doe Run's smelting facility in La Oroya, Peru. Doe Run sued its insurer, St. Paul Fire and Marine Insurance Company, for reimbursement of defense costs incurred during the litigation of these claims. St. Paul denied any duty to defend Doe Run, alleging coverage was barred under the insurance policy's pollution exclusion. The circuit court entered summary judgment in favor of Doe Run, finding the pollution exclusion ambiguous and unenforceable. St. Paul appeals. Because the pollution exclusion is not ambiguous, coverage is barred and St. Paul has no duty to defend Doe Run. The judgment is reversed, and this Court enters judgment in favor of St. Paul pursuant to Rule 84.14.¹

Background

Doe Run is a Missouri corporation that produces lead and lead concentrate through its mining, milling, and smelting operations. While its primary business is in Missouri, Doe Run also houses a metallurgical industrial complex in La Oroya, Peru. In 2007, a class action lawsuit was filed against Doe Run on behalf of individuals living in the vicinity of the La Oroya facility, alleging bodily harm caused by exposure to toxic emissions emanating from Doe Run's facility. After the class action lawsuit was voluntarily dismissed, more than 25 minor plaintiffs filed individual lawsuits against Doe Run ("the Reid lawsuits"). Each lawsuit raises identical allegations that Doe Run released harmful substances, such as lead, arsenic, cadmium, and sulfur dioxide, into the environment. Plaintiffs claim these emissions created a dust that permeated the surrounding air and water, "enter[ing] and settle[ing] inside the minor plaintiffs' houses and ... on ... [their] furniture, clothing, water, and crops." Litigation in the Reid lawsuits is ongoing.

In 2010, Doe Run filed suit in St. Louis County Circuit Court against four insurance companies, not including St. Paul, seeking reimbursement of costs incurred defending against the Reid lawsuits.² Doe Run added St. Paul to the suit in 2012 under St. Paul's Commercial General Liability Policy. The policy provided two terms of general liability insurance to Doe Run, spanning from December 2005 to November 2007. Subject to its terms, conditions, and exclusions, the policy covers bodily injury and property damage arising during the policy period for any event occurring outside the United States.

St. Paul denied it was legally obligated to defend Doe Run, and both parties moved for summary judgment. St. Paul argued the policy's pollution exclusion barred coverage of the underlying allegations in the Reid lawsuits. St. Paul also denied coverage under the policy's "other insurance" provision, which eliminates any duty to defend when the policy provides excess, rather than primary, coverage. In the alternative, St. Paul argued if the court did find a duty to defend, St. Paul need not reimburse Doe Run for any costs incurred before March 2012, when Doe Run first tendered to St. Paul the defense of the Reid lawsuits, and it did not owe Doe Run any prejudgment interest. Doe Run argued the pollution exclusion was ambiguous and, because ambiguous policies must be construed against the insurer, St. Paul could not avoid its duty to defend under the policy. Doe Run also argued St. Paul was a primary insurer of Doe Run and the policy's other insurance provision could have no preclusive effect on coverage. The trial court entered summary judgment in favor of Doe Run, finding the pollution exclusion ambiguous and that St. Paul is a primary insurer of Doe Run and, therefore, has a duty to defend.

Before a trial on damages, St. Paul filed a motion in limine to prevent Doe Run from recovering any defense costs incurred before it officially demanded defense from St. Paul. During the trial, St. Paul filed a motion for judgment under Rule 73.01, again arguing it could not legally be required to reimburse Doe Run for any costs incurred prior to Doe Run's tender of defense. The trial court denied both motions. It entered judgment against St. Paul and awarded Doe Run approximately $1.75 million for unpaid defense costs plus prejudgment interest. Two months later, the trial court entered its final judgment, reiterating its core findings as to St. Paul's duty to defend, St. Paul'sbreach of that duty, and the damages owed. The court awarded Doe Run $2.1 million in damages and prejudgment interest and $12,000 in costs. St. Paul appeals.³

St. Paul asserts four points on appeal, arguing the trial court erred by: (1) finding St. Paul owes a duty to defend Doe Run because the unambiguous pollution exclusion bars defense coverage; (2) finding St. Paul has a duty to defend Doe Run because the other insurance provision precludes defense coverage; (3) awarding defense costs to Doe Run incurred before the March 2012 tender of the Reid lawsuits to St. Paul; and (4) awarding prejudgment interest to Doe Run. Because this Court finds the pollution exclusion unambiguous and enforceable, the trial court's judgment is reversed and judgment is entered in favor of St. Paul pursuant to Rule 84.14.

Standard of Review

Appellate review of summary judgment is de novo. ITT Comm'l Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Summary judgment is appropriate when there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Id.

Analysis

This case presents an issue of first impression for this Court: whether an insurance policy's general pollution exclusion bars defense coverage of a toxic tort claim arising from alleged industrial pollution. Because the pollution exclusion is unambiguous and bars coverage, St. Paul does not have a duty to defend Doe Run.

I. Interpreting Insurance Contracts

The interpretation of an insurance contract is a question of law and is given de novo review. Mendenhall v. Prop. and Cas. Ins. Co. of Hartford, 375 S.W.3d 90, 92 (Mo. banc 2012). When interpreting an insurance policy, this Court gives the policy language its plain meaning, or the meaning that would be attached by an ordinary purchaser of insurance. Gavan v. Bituminous Cas. Corp., 242 S.W.3d 718, 720 (Mo. banc 2008). If the policy language is clear and unambiguous, it must be construed as written. Id. An ambiguity exists only if a phrase is "reasonably open to different constructions." Mendenhall, 375 S.W.3d at 92. Courts may not create an ambiguity when none exists. Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 160 (Mo. banc 2007).

II. The Pollution Exclusion

The policy's pollution exclusion bars coverage for any injury or damage resulting from pollution on any protected person's premises. It provides in pertinent part:

Exclusions—What This Agreement Won't Cover

...

Pollution injury or damage. We won't cover injury or damage or medical expenses that result from pollution at, on, in[,] or from any[ ] protected person's premises.

...

Pollution means any actual, alleged, or threatened discharge, dispersal, escape, migration, release, or seepage of any pollutant.

Pollutant means any solid, liquid, gaseous, or thermal irritant or contaminant, including[ ] smoke, vapor, soot, fumes[,] acids, alkalis, chemicals[,] and waste.

Protected person's premises means any premises, site, or location that is or was at any time owned, rented, leased, borrowed, or occupied by any protected person.

The trial court found this language ambiguous, relying on Hocker Oil Co. v. Barker–Phillips–Jackson, Inc., 997 S.W.2d 510 (Mo. App. 1999), which held a pollution exclusion not explicitly identifying gasoline as a pollutant was ambiguous as to a gasoline company, which considered gasoline a product, not a pollutant. Id. at 518.

St. Paul argued in its summary judgment motion that, as an outlier, Hocker Oil should not be followed. Further, it challenged Hocker Oil's applicability to these facts, arguing the Reid lawsuits allege no injury by Doe Run's products and the policy need not explicitly list "lead" or "metals" in the pollution exclusion for the court to find it unambiguous. Though the trial court found this argument "enticing," it elected to apply the Hocker Oil reasoning "[u]ntil our higher courts resolve the issue."

III. The Pollution Exclusion is Unambiguous and Bars Coverage

Doe Run argues the pollution exclusion has many layers of ambiguity and is incapable of precluding defense coverage here. First, Doe Run maintains that whether lead is a pollutant—and covered by the exclusion—is ambiguous. Furthermore, Doe Run argues the underlying claims in the Reid lawsuits allege injuries caused by its commercial products. Because these commercial products—lead or lead concentrates—were not listed in the pollution exclusion, Doe Run contends it is ambiguous under Hocker Oil because an ordinary insured would not construe the policy to exclude the very business operations for which it purchased the coverage. St. Paul, in response, argues lead, in its particulate form, is unambiguously a pollutant, and the Reid lawsuits do not allege any injuries resulting from Doe Run's business products. This Court agrees.

1. Lead, in...