Employers Ins. of Wausau v. Burlington Northern
| Decision Date | 16 July 2003 |
| Docket Number | No. 6:01-CV-536.,6:01-CV-536. |
| Citation | 336 F.Supp.2d 637 |
| Parties | EMPLOYERS INSURANCE OF WAUSAU, A Mutual Company, Plaintiff, v. The BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, Intervenor, v. Longview Creosoting Company, et al, Defendants. |
| Court | U.S. District Court — Eastern District of Texas |
Brad Eugene Brewer, Zelle Hofmann Voelbel Mason & Gette, Dallas, TX, David Elias Cowen, McLeod Alexander Powel & Apffel, Galveston, TX, Edwin Lawrence Merriman, Merriman Patterson Connolly & Hughes, Longview, TX, for Plaintiff.
J. Don Westbrook, Coghlan Crowson Fitzpatrick Westbrook & Westhington, Longview, TX, for Defendants.
Before the Court is Plaintiff Employers Insurance of Wausau a Mutual Company's Motion for Partial Summary Judgment (Doc. # 29), Defendants' Motion for Summary Judgment and Response (Doc. # 30). Plaintiff's Response and Intervenor's Reply. Based on the party's filings and the applicable law. Plaintiff Employers Insurance of Wausau a Mutual Company's Motion for Partial Summary Judgment and Defendants' Motion for Summary Judgment and Response are both hereby GRANTED in part and DENIED in part.
In 1999, the Burlington Northern & Santa Fe Railway Company ("BNSF") spent almost $5 million in cleanup costs to decontaminate its property in Longview, Texas. Longview Creosoting Company and the McDaniels (collectively "Longview") previously leased the property from BNSF for use as a tie treating plant. In another action currently pending before this Court,2 BNSF brings suit against Longview (the "Underlying Lawsuit") asserting contribution claims under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the Texas Solid Waste Disposal Act, and seeking damages for chemical trespass, breach of contract, negligence, gross negligence, and negligence per se. BNSF, the plaintiff in the Underlying Suit, alleges that Longview released pollutants onto the property leased from and owned by BNSF.
Longview, insured by Employers Insurance of Wausau, a Mutual Company ("Wausau"), demands that Wausau defend them in the Underlying Lawsuit. Wausau then filed this complaint for declaratory judgment asking this Court to determine that Wausau has no duty to defend or indemnify Longview in the Underlying Lawsuit under the terms of the Wausau insurance policies. BNSF, claiming to be an interested party in the outcome of the declaratory judgment action, was allowed to intervene. Wausau and Longview now assert motions for summary judgment.
A motion for summary judgment should be granted if the record, taken as a whole, "together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir.1998). A fact is "material" if it might affect the outcome of the suit under the governing law. Merritt-Campbell, Inc. v. RxP Prods., Inc., 164 F.3d 957, 961 (5th Cir.1999). Issues of material fact are "genuine" only if they require resolution by a trier of fact and if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Merritt-Campbell, Inc., 164 F.3d at 961. When ruling on a motion for summary judgment, the Court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The party seeking summary judgment bears the initial burden of demonstrating the lack of a genuine issue of material fact. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994). If the moving party "fails to meet [its] initial burden, the motion must be denied, regardless of the nonmovant's response." Id. If the movant meets its burden, Rule 56 requires the opposing party to go beyond the pleadings and to show by affidavits, depositions, answers to interrogatories, admissions on file, or other admissible evidence that specific facts exist over which there is a genuine issue for trial. Anderson, 477 U.S. at 250, 106 S.Ct. 2505; EEOC v. Texas Instruments Inc., 100 F.3d 1173, 1180 (5th Cir.1996). The nonmovant's burden may not be satisfied by argument, conclusory allegations, unsubstantiated assertions, metaphysical doubt as to the facts, or a mere scintilla of evidence. Matsushita, 475 U.S. at 585, 106 S.Ct. 1348; Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 (5th Cir.1996).
In its Partial Motion for Summary Judgment, Plaintiff Wausau seeks two rulings. First, Wausau requests a declaration that each policy has a $25,000.00 aggregate limit for property damage claims. Second, Wausau seeks a declaration that Defendants Longview cannot stack, or add together, the limits of liability of the various insurance policies. Longview responds with its own Motion for Summary Judgment and asserts three arguments. Longview first claims Wausau's Motion is not ripe until the Underlying Lawsuit has been adjudicated. Next, Longview avers that Wausau's pre-1967 policies have no aggregate limits for property damage, and that some of the property damage was caused by factors other than "wood preserving." Finally, Longview argues that these insurance policies may be stacked. The Court addresses each argument in turn.
Longview asserts that the Court should either deny Wausau's Motion or defer ruling until the Underlying Lawsuit concludes. Since Longview has yet to be found liable in the Underlying Lawsuit. Longview argues that an examination of Wausau's insurance policies is premature and constitutes an advisory opinion. Longview characterizes this declaratory judgment action as a determination of Wausau's duty to indemnify, and states that an insurer's duty to indemnify is not justiciable until the underlying suit reaches its end. Wausau, however, defines the issue as one of construing the terms of the policy and claims it does not seek a ruling that there is no duty to indemnify.
"A district court has broad, but not unfettered, discretion to retain or dismiss a declaratory judgment suit." American States Ins. Co. v. Bailey, 133 F.3d 363, 368 (5th Cir.1998). It is fundamental, however, that a federal court may not issue a declaratory judgment unless an "actual controversy" exists. Middle South Energy Inc. v. City of New Orleans, 800 F.2d 488, 490 (5th Cir.1986). Most Texas courts are at odds with Longview's contention that determinations of an insurer's duty to indemnify does not constitute an "actual controversy" until the underlying suit concludes.3 While a smattering of Texas cases seems to support Longview's position, a closer look proves enlightening. Although the First District Court of Appeals wrote that a trial court has no jurisdiction to declare an insurer's liability to indemnify its insured for damages that may be assessed in a pending lawsuit, it noted that a "determination of an insurer's duty to pay would be hypothetical before judgment is granted against the insured, and the court's opinion would be purely advisory." J.E.M. v. Fid. & Cas. Co. of New York, 928 S.W.2d 668, 671-72 (Tex.App. — Houston [1st Dist.] 1996, no writ) (emphasis added). Wausau's declaratory judgment action does not seek a determination of its duty to pay. As explained in a similar case, the declaratory judgment "does not state that [the insurer] will have to pay ... the limits of the policy, it simply defines those limits." Foust v. Ranger Ins. Co., 975 S.W.2d 329, 332 (Tex.App. — San Antonio 1998, writ denied). The Court, therefore, must define the limits of the Wausau policies. It need not address Wausau's duty to indemnify.
The Court finds Foust instructive. There, while the underlying suit pended, the insurer filed a declaratory judgment asking the court to determine whether the damage at issue was caused by a single occurrence or multiple occurrences as defined by the policy. Id. at 331. The San Antonio court found the issue justiciable and issued a declaratory judgment prior to the completion of the underlying case. Id. at 332. Admittedly, Foust concerns an insurer's duty to defend, but it should not be so narrowly read. The court makes clear that an interpretation of the terms of a policy is often separate and apart from the issue of an insurer's duty to indemnify. Such is the case here. This is not an indemnity issue. That is, the Court is not asked to determine whether Wausau will have to pay on its policy. Wausau seeks an interpretation of policy terms regarding aggregate limits and the law concerning stacking. The Court, therefore, finds this declaratory judgment judicable. The Court now turns to the substance of the Motions.
Wausau seeks a declaration that each policy has a $25,000.00 aggregate limit for property damage claims. Longview, however, claims these aggregate limits do not apply. According to Longview, the pre-1967 policies assign limits to various kinds of property damage, but these specific damages are not included. Longview concedes that the post-1967 policies contain applicable aggregate limits. Defendant's Motion for Summary Judgment and Response at 4, Wausau (No. 6:01-CV-536). Analysis will be confined, therefore, to the six pre-1967 Wausau insurance policies at issue.
First, the Court addresses whether the pre-1967 policies have a $25,000.00 aggregate limit for property damage claims. Several rules of construction steer the Court's analysis. Insurance contracts are examined with the same rules of construction as other contracts. Nat. Union Fire Ins. Co. v. CBI Indus., 907 S.W.2d 517, 520 (Tex.1995)....
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