Employers Mut. Cas. Co. v. Arbella Prot. Ins. Co.

• Decision Date: 12 July 2011
• Docket Number: No. 2009–330–Appeal.,2009–330–Appeal.
• Citation: 24 A.3d 544
• Parties: EMPLOYERS MUTUAL CASUALTY CO.v.ARBELLA PROTECTION INSURANCE CO. et al.
• Court: Rhode Island Supreme Court

24 A.3d 544

EMPLOYERS MUTUAL CASUALTY CO.

v.ARBELLA PROTECTION INSURANCE CO. et al.

No. 2009–330–Appeal.

Supreme Court of Rhode Island.

July 12, 2011.

James D'Ambra, Esq., Providence, for Plaintiff.Charles N. Redihan, Jr., Esq., Providence, for Defendant.Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.

OPINION

Justice ROBINSON for the Court.

The defendants, Arbella Protection Insurance Company and Arbella Insurance Group (Arbella),¹ appeal from the Superior Court's grant of partial summary judgment in favor of the plaintiff, Employers Mutual Casualty Company (Employers). In granting partial summary judgment, the hearing justice determined that Employers did not owe a duty to defend or indemnify the insured party, Viking Stone Corporation (Viking Stone), in connection with a certain civil action wherein Viking Stone was named as a defendant. On appeal, the defendants argue, inter alia, that genuine issues of material fact precluded the grant of summary judgment. For the reasons set forth below, we agree and therefore vacate the judgment of the Superior Court.

IFacts and Travel

AThe Underlying Civil Action Against Viking Stone

The insurance coverage dispute at issue in this case stems from a civil action brought by Ronald Destremps and Mildred Destremps against Viking Stone and a principal of that corporation, Frank Mello, and his wife Shirley Mello. The Destremps filed their complaint in September of 2007 in the Superior Court for Newport County.² In the first count of their complaint, the Destremps averred that they were the owners of real property located at 1570 Fish Road in Tiverton, and they further averred that their property was directly across the street from a quarry located at 1635 Fish Road, which quarry was owned and operated by Viking Stone.

The complaint alleged that Frank Mello was “actively involved” in the operation of the quarry and that the Mellos owned other property “on Fish Road adjacent to” the Viking Stone property that was used in connection with the quarry operation. The complaint further alleged that Viking Stone had begun its quarry operation on Fish Road “in or about 2001.” The complaint then set forth the following allegation:

“Over the years since then, Viking Stone and defendant Frank Mello have caused water containing contaminants from the quarry operation to cross over and under Fish Road from their respective properties and onto the Destremps' property.”

The Destremps further alleged that, “[a]s a result, numerous trees and other vegetation” on their property had been killed; in addition, they alleged that the foundation of their home had been “infiltrated by the contaminated water;” and they also alleged, “on information and belief,” that the “quality of the soils and well” on their property had been impaired. The Destremps also alleged that “water from Viking Stone's quarry operation [from] time to time has flooded Fish Road causing the road to be impassable and dangerous.”

The first count of the complaint additionally alleged that the Destremps had requested that “defendants take action to prevent water from the quarry operation to continue to flood their property,” but it then averred that defendants had “failed and refused to do so.” The Destremps asserted that, as a result of what they alleged in their complaint, their property “continue[d] to be damaged * * *.” They further alleged that, unless defendants were “enjoined from depositing water under and over Fish Road” onto their property, they would suffer “further irreparable harm.”

The second count of the Destremps' complaint incorporated all of the allegations contained in the first count and then proceeded to further allege that “[t]he flooding condition” caused by Viking Stone's quarry operations “constitute[d] a public and/or private nuisance.” The Destremps requested that the court enjoin defendants “from causing water from [the] quarry operation to be deposited on, over, and under Fish Road [and] onto” their property, and they also sought an award of compensatory damages, punitive damages in the amount of $1 million, and attorneys' fees.

At the time that the Destremps filed their complaint in the underlying civil action (September of 2007), Viking Stone was insured by Employers, the plaintiff in the instant case. Arbella, the defendant in the instant case, had previously provided insurance coverage to Viking Stone under a commercial general liability policy from March 30, 1999 through November 6, 2002. It appears that Viking Stone was uninsured from the latter date until March 30, 2004—at which time Employers began to provide it with insurance coverage, also under a commercial general liability policy. Both the Arbella and the Employers commercial general liability policies provided coverage for property damage which was “caused by an ‘occurrence’ ” and which took place “during the policy period.” Significantly, both policies defined an “occurrence” as being “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

BEmployers' Petition for Declaratory Judgment and Motion for Summary Judgment

On April 11, 2008, Employers filed in the Superior Court for Providence County a petition for declaratory judgment, seeking a declaration that Arbella had a duty to defend and indemnify Viking Stone in connection with the Destremps' complaint. In its petition, Employers alleged that, upon information and belief, Arbella had provided commercial general liability coverage to Viking Stone “from at least March of 1999 through 2002” Employers contended that, because the Destremps' complaint in the underlying civil action ³ alleged that Viking Stone began its quarry operation in or about 2001 and further alleged that since that time Viking Stone had caused water to come onto and damage their property, Arbella's “defense obligations” with respect to the Destremps' complaint were “triggered” under Arbella's liability policy. Employers alleged that Arbella had “failed to provide a defense” to Viking Stone, and it further alleged that Employers had been providing a defense to Viking Stone “given Arbella's breach of its defense obligations.” Accordingly, Employers sought a declaration that Arbella had breached its duty to defend and indemnify Viking Stone, and it requested that the court “declare that Arbella's defense obligations [were] primary to those of Employers” and that Employers should therefore “be reimbursed for defense costs it ha[d] incurred due to the wrongful breach by Arbella of its duty to defend” Viking Stone.

On December 8, 2008, Employers filed a motion to amend its petition for declaratory judgment so as to include a second count. In that second count, Employers alleged that the facts “as alleged in the underlying complaint filed by the Destremps trigger one occurrence under the Arbella policy and as such no coverage is afforded to Viking Stone under

[Employers'

] policy.” Employers further averred that, as a result, it did “not owe a defense or indemnity to Viking Stone * * * given that there is only one trigger of occurrence, which is under Arbella's policy, for the damages claimed in the underlying complaint.” For that reason, Employers requested that the court declare (1) that the facts claimed in the Destremps' complaint “triggered” one occurrence under Arbella's policy and (2) that, accordingly, no coverage is afforded to Viking Stone under Employers' policy with respect to the claims made in the underlying complaint against Viking Stone. The defendants did not object to Employers' motion to amend; and on February 3, 2009, an order entered granting the motion.

On April 20, 2009, Employers filed a motion for summary judgment with respect to both counts of its amended petition for declaratory judgment. It stated that it was seeking a declaration (1) that Arbella owed a duty to defend and indemnify Viking Stone in connection with the Destremps' complaint and (2) that the facts claimed in the Destremps' complaint “triggered” one occurrence under the Arbella policy and that, for that reason, no coverage was afforded to Viking Stone under the Employers policy.

In support of its motion for summary judgment, Employers stated that the central issues presented were: (1) “whether the property damage alleged by the plaintiffs in the underlying complaint is the result of one occurrence or multiple occurrences” and (2) “when did the alleged property damage occur for the purpose[ ] of insurance coverage.” As a starting point, Employers noted that its insurance policy, which provided coverage to Viking Stone from March 30, 2004 to March 30, 2008, provided liability protection for property damage only if the damage was (1) “caused by an ‘occurrence,’ ” the latter term being defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions,” and (2) the damage occurred “during the policy period.” Employers further noted that the Arbella policy, which provided coverage to Viking Stone from March 30, 1999 to November 6, 2002, contained identical provisions with respect to coverage for property damage.

Employers contended that, “in order for there to be any potential coverage under the [Employers] policy, the damage as alleged by the [Destremps] must fit the definition of ‘property damage’ caused by an ‘occurrence’ as defined in the [Employers] policy, which occurrence took place during the policy period.” Employers contended that there existed no potential for such coverage because the Destremps' complaint alleged that contaminated water had flowed onto their property and caused damage since 2001. According to Employers, the facts alleged in the Destremps' complaint therefore related to a single “occurrence” that took place before the Employers policy period began in 2004; Employers asserted that, as a result of the foregoing considerations and pursuant to the clear terms of its...