EAD Metallurgical, Inc. v. Aetna Cas. & Sur. Co.

• Decision Date: 17 May 1990
• Docket Number: No. 763,D,763
• Parties: , 58 USLW 2735, 20 Envtl. L. Rep. 20,930 EAD METALLURGICAL, INCORPORATED, E. Lee Walker, Norman F. Ernst, Jr., John B. Fisher, C. Victor Raiser, II, Anthony C. Madonia, and 71 Pearce Avenue, Incorporated, Plaintiffs-Appellants, v. AETNA CASUALTY & SURETY COMPANY, North River Insurance Company & American Nuclear Insurers, Defendants-Appellees. ocket 89-7954.
• Court: U.S. Court of Appeals — Second Circuit

Page 8

905 F.2d 8

31 ERC 1361, 58 USLW 2735, 20 Envtl.

L. Rep. 20,930

EAD METALLURGICAL, INCORPORATED, E. Lee Walker, Norman F Ernst, Jr., John B. Fisher, C. Victor Raiser, II Anthony C. Madonia, and 71 Pearce Avenue, Incorporated Plaintiffs-Appellants, v. AETNA CASUALTY & SURETY COMPANY, North River Insurance Company & American Nuclear Insurers, Defendants-Appellees.

No. 763, Docket 89-7954.

United States Court of Appeals Second Circuit.

Argued Feb. 21, 1990.

Decided May 17, 1990.

James J. Duane, Buffalo, N.Y. (Terrence M. Connors, Connors & Vilardo, Buffalo, N.Y., of counsel), for appellant EAD Metallurgical, Inc.

Laura A. Foggan, Washington, D.C. (Thomas W. Brunner, Frederick S. Ansell, Wiley, Rein & Fielding, Washington, D.C., of counsel), for appellee Aetna Cas. and Sur. Co.

Thomas F. Segalla, Buffalo, N.Y. (Richard A. Galbo, Laurence D. Behr, Saperston & Day, Buffalo, N.Y., of counsel), for appellee North River Ins. Co.

Before FEINBERG, CARDAMONE, and MINER, Circuit Judges.

CARDAMONE, Circuit Judge:

This is another case of the same sort as Avondale Industries, Inc. v. Travelers Indemnity Company, 887 F.2d 1200 (2d Cir.1989), reh'g denied, 894 F.2d 498 (2d Cir.1990) (per curiam), cert. denied, --- U.S. ----, 110 S.Ct. 2588, 110 L.Ed.2d 269 (1990), that seeks construction of the elusive pollution exclusion in general liability insurance policies which exempts coverage for pollution damage that is not both "sudden and accidental." Here unlike Avondale we hold that--because the insured's dispersal of pollutants was intentional and continuous--coverage was excluded under the applicable policies. Hence, we affirm.

FACTS

This action arises from complex litigation involving damage to the environment resulting from the disposal of a radioactive substance, americium-241, into the sewer lines, sewage treatment facility and landfill of the Town of Tonawanda, New York. Americium-241 was produced in a facility owned by appellant EAD Metallurgical, Inc. (EAD) that manufactured foil elements for use in smoke detectors. The facility was located at 71 Pearce Avenue in Tonawanda township from 1977 through 1983.

In August 1985 the State of New York commenced an action in federal court against EAD and the owner of the land it occupied--71 Pearce Avenue, Inc. (Pearce)--alleging violations inter alia of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.A. Secs. 9601-9657 (West Supp.1990) (CERCLA). The State contended that [t]hroughout its operation, EAD disposed of and/or arranged for the disposal of americium-241 into the Town's sewer system, and ultimately into the Town's sewage treatment plant and landfill.

In its answer Pearce asserted third-party claims against certain officers, directors or stockholders of EAD, Inc. and cross-claimed against EAD for indemnification. Pearce subsequently brought an action in New York State Supreme Court against EAD and its President, claiming that they caused damage to the premises and the surrounding community through their negligent and reckless manufacture of foils containing americium-241.

EAD and the individuals named in Pearce's third-party complaint (collectively referred to as EAD) sought to be indemnified and defended in the state and federal actions pending against them by their general liability insurers, Aetna Casualty & Surety Company (Aetna) and North River Insurance Company (North River), and by their nuclear energy liability insurer, American Nuclear Insurers (Nuclear Insurers). EAD had three policies from Aetna that insured it from March 25, 1977 to March 25, 1982; a policy from North River that covered the period from March 25, 1982 to March 25, 1985; and a policy from Nuclear Insurers providing coverage from April 8, 1977 to January 5, 1984. Aetna and North River denied any obligation to indemnify or defend EAD. Nuclear Insurers has defended EAD in the CERCLA action.

EAD commenced the present suit in federal district court seeking a declaratory judgment that Aetna and North River are obligated to defend and indemnify it in the underlying federal and state actions. Appellants moved and appellees cross-moved for partial summary judgment regarding the insurers' duty to defend and/or indemnify. Both insurers relied upon two exclusions in their general liability policies: an exclusion for pollution damage that is not "sudden and accidental" (pollution exclusion), and an exclusion for damage that is covered by a nuclear energy liability policy (nuclear exclusion). North River made the additional argument that coverage was excluded under an exclusion for damage to property owned, occupied or rented to the insured (insured's own property exclusion).

Writing before we decided Avondale, the district court granted Aetna and North River summary judgment on the basis that North River was not bound to defend and Aetna was not bound to defend or indemnify EAD in the CERCLA action under the terms of the pollution exclusions of their insurance policies. The trial court did not reach the issue of whether the insurers would also be relieved of their respective duties under the nuclear exclusion or the insured's own property exclusion.

EAD appeals the district court's determination that Aetna and North River were not bound to defend or indemnify them under their policies' pollution exclusion.

DISCUSSION

We review an appeal from a grant of summary judgment under Fed.R.Civ.P. 56(c) de novo. Although the record is considered in the light most favorable to the non-moving party, the non-movant must establish a genuine issue of material fact for reversal on appeal. See Delaware & Hudson Railway Co. v. Consolidated Rail Corp., 902 F.2d 174, 177-78 (2d Cir.1990). Here, EAD did not meet this burden.

Discussion necessarily must begin with the language of the exclusion. The pollution exclusion provides in pertinent part:

[This insurance does not apply] to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or...