Employers' Liability Assur. Corp., Ltd. v. Hoechst Celanese Corp.

• Decision Date: 23 October 1997
• Docket Number: No. 96-P-184,96-P-184
• Citation: 43 Mass.App.Ct. 465,684 N.E.2d 600
• Parties: EMPLOYERS' LIABILITY ASSURANCE CORPORATION, LTD. & others 1 v. HOECHST CELANESE CORPORATION.
• Court: Appeals Court of Massachusetts

Page 600

684 N.E.2d 600

43 Mass.App.Ct. 465

EMPLOYERS' LIABILITY ASSURANCE CORPORATION, LTD. & others ¹ v. HOECHST CELANESE CORPORATION.

No. 96-P-184.

Appeals Court of Massachusetts,

Suffolk.

Argued Feb. 4, 1997.

Decided Sept. 4, 1997.

Further Appellate Review Denied Oct. 23, 1997.

Sheldon Karasik, New York City, for American Home Assurance Company & others.

John T. Harding, Jr., Waltham, for Continental Casualty Company & another.

Richard Feldman, for Employers' Liability Assurance Corporation, Ltd., & others.

William J. Cheeseman, Boston, for the defendant.

R. Paul Roecker, Boston, for The Home Insurance Company, was present but did not argue.

Before PERRETTA, KAPLAN and DREBEN, JJ.

KAPLAN, Justice.

This is an interlocutory appeal by eleven insurance companies, plaintiffs (now reduced to nine plaintiffs because of settlements pending appeal), from an order of the Superior Court so far as it denied their motions for summary judgment in the declaratory action they have maintained against their insured, Hoechst Celanese Corporation (HCC), defendant.

The plaintiffs issued policies affording various layers of "excess" insurance in favor of HCC over and above the "primary" policies provided to HCC by Liberty Mutual Insurance Company (Liberty Mutual)--the latter being comprehensive general liability policies (CGL) with limits of $1 million per "occurrence," as defined. The Liberty Mutual policies covered (among other things) environmental contamination through pollutants chargeable to HCC. Such damage could be found at sites around the country to which the insured's operations extended, directly or indirectly.

The plaintiffs have sought a declaration that they are free of liability toward HCC as matter of law. On this appeal, they rely on the claim that HCC was in breach of the "notice" or "assistance and cooperation" provisions of the excess policies. The plaintiffs also contend they are relieved of indemnifying HCC for various expenditures because HCC made them without adversarial claims against it. Certain plaintiffs claim entitlement to judgment on particular policies attributed to them because, as they say, the policies are "lost," their existence not confirmed. The Superior Court judge concluded that summary judgment was precluded in large part because the record assembled for and against the motions left, unresolved, genuine issues of material fact. We agree that a case has not been made for summary judgment. In the present opinion we enlarge on certain points considered in the judge's memorandum of decision.

I. Procedural Sequence. Liberty Mutual was originally the sole plaintiff in the case. On July 26, 1990, it filed a complaint for a declaration of nonliability naming HCC and the excess insurers as defendants. On August 29, 1990, it moved to stay the action pending the outcome of an action by HCC filed earlier, on February 16, 1989, in the New Jersey Superior Court involving the same parties. That action was dismissed on grounds of forum non conveniens. ² The parties in the present action then moved to vacate the stay; this was allowed on October 30, 1991. HCC answered and counterclaimed and cross-claimed on December 20, 1991. Responsive pleadings were filed. On January 31, 1992, the parties filed a joint motion for realignment and the excess insurers joined Liberty Mutual as plaintiffs, leaving HCC as sole defendant. The plaintiffs entered a "first amended" complaint but it was agreed this would not require a further round of pleadings.

Liberty Mutual moved for summary judgment on November 4, 1994, as did the other plaintiffs, some of the latter filing individually, some joining the motions of others. After a record was made on both sides, the parties, at the judge's request, prepared a joint statement of the facts on which they could agree (which two plaintiffs, however, declined to join in certain respects). HCC filed a statement of what it considered to be disputed facts.

The judge ruled on the motions on September 19, 1995. Liberty Mutual was granted summary judgment of nonliability as to environmental damage at three sites (Baton Rouge, Louisiana; Leominster, Massachusetts and Bayou Sorrell, Louisiana) where HCC had entered into settlement arrangements with outsiders without the company's consent: HCC was found in breach of the clause of the Liberty Mutual policies prohibiting "voluntary payments" by the insured. ³ Summary judgment entered for Liberty Mutual and several plaintiffs (American Home, National Union, Lexington, Appalachian, Affiliated FM, Harbor, and Continental) as excess insurers in respect to the so-called Brewer-Averette (Louisiana) site, where HCC had not shown that the contamination was "sudden and accidental" and thus excepted from the familiar "pollution exclusion" clause appearing in those excess policies and in the Liberty Mutual policies. As to the remaining sites, the judge found disputes on this "sudden and accidental" question not amenable to summary judgment. Regarding one site (Huntsman), the judge found Liberty Mutual and three excess insurers (American Home, National Union, and Lexington) entitled to qualified summary judgment leaving them still open to liability for failure to indemnify under their policies.

Liberty Mutual settled with HCC and is out of the case, leaving only the excess insurers as plaintiffs. These plaintiffs applied to a single justice of this court for leave to appeal from so much of the judge's order as denied them summary judgment; leave was granted on January 12, 1996. Pending the appeal, two plaintiffs (Appalachian and Affiliated FM) settled with HCC and departed the litigation.

II. Sketch of the Situations at Four Sites. The summary judgment proceedings, involving Liberty Mutual as well as eleven excess insurers, generated an extensive record with materials pertaining to eleven sites where contamination ultimately chargeable to HCC had been discovered. As noted, Liberty Mutual and two excess insurers settled with HCC. The plaintiffs who remain are all excess insurers with policies that provide coverage at various points above $1 million. ⁴ There is no question here as to seven of the sites. ⁵ So, too, the appeal presents a narrower range of issues than was put to the judge below. ⁶

Known popularly as a maker of sunglasses, Foster Grant Company, Inc. (Foster Grant) was engaged from 1953 to 1978 in the manufacture of petrochemicals and plastics at several places in this country and abroad. HCC as corporate successor of Foster Grant assumed its relevant liabilities. ⁷ Foster Grant's operations yielded an assortment of by-products and wastes which it disposed of in some ways offensive to current standards of environmental protection. Eventually contamination was discovered at sites where the company carried on its work or where its by-products or wastes were deposited. We are interested in the sites Baton Rouge Works, Petro-Processors, Brio, and Leominster.

Baton Rouge Works. For many years Foster Grant maintained a plant at Baton Rouge, Louisiana, to produce styrene monomer for the manufacture of polystyrene. There are valuable byproducts of the production of styrene monomer, including toluene and styrene tar, which Foster Grant sold to others. Amounts of excess styrene tar accumulating from time to time before disposal were stored in five clay-bottomed "tar ponds" at the site and also at various off-site locations.

One such location was the Brewer-Averette site, with two tar ponds. In September, 1984, the Louisiana Department of Environmental Quality (LDEQ), the agency charged with enforcing the State environmental statute (La.Rev.Stat. Ann. §§ 30.2001 et seq. [West 1989] ), issued a letter notifying HCC that styrene tar was classified as a hazardous material and that remedial action was required at Brewer-Averette. LDEQ and HCC conferred extensively. HCC was told that the five on-site tar ponds at the Baton Rouge Works also required remediation. In July, 1985, LDEQ and HCC entered into a written cooperative settlement agreement regarding Brewer-Averette, and HCC engaged GDC Engineering, Inc., to undertake the cleanup work there. Without a separate writing LDEQ agreed, if the Brewer-Averette cleanup proceeded satisfactorily, to permit HCC to continue with the remediation of the five tar ponds at Baton Rouge under the same standards and methodology and with the same reporting requirements and LDEQ oversight procedures that obtained at Brewer-Averette. LDEQ wanted rapid, efficient cleanup of all tar ponds because of the threat of expanding contamination in the soil and groundwater.

Cleanup of the tar ponds at Baton Rouge ran from 1986 to 1990. In 1988-1989 contamination was found in other places at Baton Rouge, including the Badger Unit in the processing area itself; remediation efforts began in 1989 and continued.

In January, 1989, HCC sold the Baton Rouge plant to Deltech Corporation for $14.25 million, HCC continuing liable for pre-sale contamination and agreeing to complete the ongoing remediation.

Notice under the insurance policies regarding contamination at Baton Rouge is taken to have been given to the excess insurers in April, 1989 (shortly after the commencement of the New Jersey action). At that time work on two of the tar ponds had been completed (1987, 1988); work on the other three was in progress (completed in 1990).

For purposes of this appeal, HCC's remediation expenses through April, 1989, for Baton Rouge are taken as $17 million, in large part incurred in the cleanup of the two tar ponds. From 1989 to the present HCC has spent an additional $30 million for cleanup of the remaining three tar ponds and various other contaminated areas at the site.

Petro-Processors. From 1968-1971 Petro-Processors of Louisiana, Inc., removed Foster Grant's styrene tars from Baton Rouge Works to Petro-Processors' waste-handling facility at Scotlandville, Louisiana. In 1970, one Ewell, owning land abutting the...