Edo Corp. v. Newark Ins. Co.

• Decision Date: 16 February 1995
• Docket Number: Civ. No. H-90-951 (AHN).
• Citation: 878 F. Supp. 366
• Parties: EDO CORPORATION v. NEWARK INSURANCE CO., et al.
• Court: U.S. District Court — District of Connecticut

878 F. Supp. 366

EDO CORPORATION v. NEWARK INSURANCE CO., et al.

Civ. No. H-90-951 (AHN).

United States District Court, D. Connecticut.

February 16, 1995.

John B. Beringer, Anderson, Kill, Olick & Oshinsky, P.C., New York City and John W. Colleran, Colleran & Carboni, P.C., New Haven, CT, for plaintiff.

Louis B. Blumenfeld, Cooney, Scully and Dowling, Hartford, CT, Robert L. Joyce, Wilson, Elser, Moskowit, Edelman & Dicker, New York City, Bruce M. Engel, Blatt, Hammesfahr & Eaton, and Daniel G. Joran, Caron & Fitzgerald, Chicago, IL, for defendants.

RULING ON THE INTERPRETATION AND APPLICATION OF DEFENDANTS' POLICIES' POLLUTION EXCLUSION CLAUSES

NEVAS, District Judge.

Plaintiff EDO Corporation ("EDO") commenced this declaratory judgment action against primary insurers, Newark Insurance Co. ("Newark") and Aetna Insurance Company ("Aetna") and against excess insurers Burnhope and Companies ("Burnhope") and American Insurance Company ("American") (collectively "the insurers"), seeking a declaration that it is entitled to insurance coverage for expenditures it incurred in connection with environmental contamination.

The final determination of whether the insurers owe EDO the duties of defense and indemnification turns upon several issues and all of the parties have filed motions for summary judgment, each on multiple grounds.¹ Pursuant to an agreement between the court and the parties, however, the sole issue now before the court is the interpretation to be accorded the insurance policies' pollution exclusion clauses and the application of the policies to the undisputed facts. Therefore, the court does not, at this time, decide the dispositive issue: whether the insurers are required to defend and/or indemnify EDO.²

STANDARD

In a motion for summary judgment, the burden is on the moving party to establish that there are no genuine issues of material fact in dispute and that it is entitled to judgment as a matter of law. Rule 56(c), Fed.R.Civ.P.; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). A court must grant summary judgment "`if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact....'" Miner v. Glen Falls, 999 F.2d 655, 661 (2d Cir.1993) (citation omitted). A dispute regarding a material fact is genuine "`if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir.) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. at 2510), cert. denied, ___ U.S. ___, 113 S.Ct. 440, 121 L.Ed.2d 359 (1992). After discovery, if the nonmoving party "has failed to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof," then summary judgment is appropriate. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The court resolves "all ambiguities and draws all inferences in favor of the nonmoving party in order to determine how a reasonable jury would decide." Aldrich, 963 F.2d at 523. Thus, "only when reasonable minds could not differ as to the import of the evidence is summary judgment proper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.), cert. denied, 502 U.S. 849, 112 S.Ct. 152, 116 L.Ed.2d 117 (1991). See also Suburban Propane v. Proctor Gas, Inc., 953 F.2d 780, 788 (2d Cir.1992).

FINDINGS OF FACT

Keeping this standard in mind, the court finds the following facts to be undisputed.

Newark issued ten successive primary Comprehensive General Liability ("CGL") policies to EDO, which together cover the period from December 31, 1972 through December 31, 1982. (See Andrako Aff. ¶ 3 doc. # 231.) These policies provide insurance coverage for "all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies, caused by an occurrence." (Id. ¶ 11.) Each of Newark's policies also excludes coverage for "bodily injury or property damage arising out of the discharge, dispersal, release or escape ... of pollutants" unless such "discharge, dispersal, release or escape is sudden and accidental." (Id. ¶ 10.)

Aetna issued CGL or excess policies to EDO for the policy years of December 31, 1980-1981; December 31, 1982-December 31, 1983; December 31, 1983-December 31, 1984; and December 31, 1984-December 31, 1985. (See Velez Aff.Exs. A-J doc. # 196.) All of these policies contain the "sudden and accidental" exception to the pollution exclusion clause. (See id. Exs. A-E, G-I.) Aetna also issued CGL and excess insurance policies to EDO for the policy year December 31, 1985-1986 ("the 1986 policies"). (Id. Ex. F, J.) The 1986 policies contain an "absolute" pollution exclusion; they exclude coverage for "bodily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, release, escape or contamination by pollutants." (Id. Ex. F, J.)

American issued to EDO three excess policies providing EDO with coverage from January 1, 1978 through January 1, 1980. (Jordan Aff.Exs. A-C doc. # 208.) Burnhope issued excess policies to EDO between 1974 and 1980. (Whiting Aff.Ex. 1, 2 doc. # 206.) These excess policies confer upon the insurers the duty to indemnify EDO, but exclude coverage for personal injury or property damage "caused by seepage, pollution or contamination" unless "such seepage, pollution or contamination is caused by a sudden, unintended and unexpected happening during the period of this Insurance." (See, e.g., Jordan Aff. ¶ 7.)

From 1973 to 1985, EDO's former Electric Indicator Company, ELINCO, occupied a facility at 272 Main Avenue, Norwalk, Connecticut. (Berringor Supp.Aff.Ex. 1 (Hegarty Aff. ¶ 6) doc. # 235.) ELINCO used trichloroethylene ("TCE") in its manufacturing process to degrease parts. (Joyce Aff.Ex. 25 (Lender Aff. at ¶ 5) doc. # 232.) New TCE solvent was delivered to ELINCO's solvent storage tank, located outside of the facility. (Berringer Supp.Aff.Ex. 2 (Lender Depo. at 87).) The solvent was thereafter pumped from the storage tank into a degreasing unit in the manufacturing area. (Id. at 131, 134, 162-63.) When dirty, the TCE solvent was pumped into 55 gallon drums. (Id. at 84, 113, 212.) Until June of 1983, these drums were stored outside of the ELINCO building in the waste storage area. (Joyce Aff.Ex 5.)

In 1975, it was discovered that the Kellogg-Deering Well Field ("KDWF"), a nearby public water supply, was contaminated with trichloroethylene ("TCE"). (Id. Ex. 1.)

In June of 1983, the Connecticut Department of Environmental Protection ("CDEP") performed an on-site hazardous waste inspection of the ELINCO facility at 272 Main Avenue. (See id. Ex. 16.) The investigator "discovered that several storage drums were leaking." (Id.) The investigator also found that EDO had "historical problems" with waste handling and storage, including "10 years of waste trichloroethylene in drum storage." (Id. Ex. 31.)

Subsequently, CDEP issued an abatement order requiring EDO to "investigate the extent and degree of groundwater, surface water and soil contamination resulting from chemical storage, handling and disposal activities at 272 Main Avenue, Norwalk, Connecticut." (Id. Ex. 8.) In its Finding in Support of Pollution Abatement Order, the CDEP recorded its assessment that there were "serious problems with the trichloroethylene drum storage in rear of building with evidence of leakage and/or spillage," which the CDEP investigator surmised "may have existed since 1973 when ELINCO began operations at this site." (Id. Ex. 31.) The CDEP reiterated the finding of leakage and spillage problems at the "bulk storage tank for trichloroethylene at back of building" (id.), and specifically noted that there were "leaking drums to ground" and that TCE was stored in a tank that "shows signs of spill." (Id.)

EDO retained HRP associates ("HRP") as consultants to determine the "nature and extent of soil, ground water and surface water contamination possibly related to chemical storage and handling at the ELINCO Division facility." (Id. Ex. 14.) On August 29, 1984, HRP submitted to the CDEP a Hydrogeologic and Engineering Report. (Id. Ex. 5.) The 1984 report concluded that "some leakage and spillage of TCE has occurred over time." (Id.) The 1984 report also disclosed TCE contamination in the soil and groundwater and concluded that the potential sources of this contamination "include or might include" ELINCO's waste storage area, virgin solvent storage tank, the degreasing process area within the ELINCO manufacturing building, the historic raw material storage and waste storage and disposal practices of former occupants of the ELINCO building, and floor drain discharges from the ELINCO Building. (Id.)

In July of 1986, the Environmental Protection Agency ("EPA"), issued a letter to EDO, naming EDO a "potentially responsible party" for the contamination at the KDWF. (Berringer Supp.Aff. Ex. 7) ("PRP letter"). The PRP letter stated that the EPA "has reason to believe that the EDO Corporation through its ELINCO Division was the operator of the facility ... at ... 272 Main Avenue in Norwalk, Connecticut" and "has determined that a release of hazardous substances ... has occurred at the above-mentioned facility." (Id.) The letter also stated that, "at the present time, trichoroethylene sic (TCE), as well as other chemicals, is contaminating the groundwater aquifer underneath the above mentioned facility." (Id.)

In May of 1990, EDO received a Special Notice Letter from the EPA demanding that EDO conduct remediation of the KDWF site, and reimburse the EPA for its past costs associated with the investigation of that site. (See Berringer Supp.Aff.Ex. 9.) In February of 1991, the EPA filed suit against EDO and others, seeking to recover costs incurred in response to the...