Federated Mut. Ins. Co. v. Botkin Grain Co., Civ. A. No. 91-1223-MLB.

• Citation: 856 F. Supp. 607
• Decision Date: 16 June 1994
• Docket Number: Civ. A. No. 91-1223-MLB.
• Court: U.S. District Court — District of Kansas
• Parties: FEDERATED MUTUAL INSURANCE COMPANY and Grain Dealers Mutual Insurance Company, Plaintiffs, v. BOTKIN GRAIN COMPANY, Defendant.

856 F. Supp. 607

FEDERATED MUTUAL INSURANCE COMPANY and Grain Dealers Mutual Insurance Company, Plaintiffs, v. BOTKIN GRAIN COMPANY, Defendant.

Civ. A. No. 91-1223-MLB.

United States District Court, D. Kansas.

June 16, 1994.

Timothy J. Finnerty, McDonald, Tinker, Skaer, Quinn & Herrington, Wichita, KS, for plaintiff Federated Mut. Ins. Co., a MN Corp.

Lee H. Woodard, Michael M. Walker, Woodard, Blaylock, Hernandez, Roth & Day, Timothy J. Finnerty, McDonald, Tinker, Skaer, Quinn & Herrington, Lynn D. Preheim, Morrison & Hecker, Wichita, KS, for plaintiff Grain Dealers Mut. Ins. Co.

Charles E. Millsap, Fleeson, Gooing, Coulson & Kitch, L.L.C., Wichita, KS, for defendant Botkin Grain Co., a KS Corp.

MEMORANDUM AND ORDER

BELOT, District Judge.

Botkin Grain Company, Inc. (Botkin Grain) has filed a motion to alter or amend the judgment entered on February 8, 1994 (Doc. 80) in favor of plaintiff insurance companies in this case, 844 F.Supp. 673. Both insurance companies have responded (Docs. 83 and 88). Botkin Grain has not filed a reply. However, some three months after filing its original motion, Botkin Grain has requested permission to supplement its earlier motion to present briefs filed by plaintiff Federated Mutual Insurance Company (Federated) in other cases which Botkin Grain contends assert positions diametrically opposed to the positions Federated has asserted in this case (Doc. 89). Federated has responded in opposition to this motion (Doc. 91).

Fed.R.Civ.P. 59(e) was adopted to clarify that the district court possesses the power to correct its own mistakes in the period immediately following entry of the judgment. White v. New Hampshire Department of Employment Security, 455 U.S. 445, 450, 102 S.Ct. 1162, 1165, 71 L.Ed.2d 325 (1982). Rule 59(e) is properly invoked to support reconsideration of matters properly encompassed in a decision on the merits. Id. at 451, 102 S.Ct. at 1166. A Rule 59(e) motion allows a party to allege fundamental legal errors which require the court to reconsider an earlier decision. A Rule 59(e) motion is directed at reconsideration, not initial consideration. Buell v. Security General Life Insurance Co., 784 F.Supp. 1533, 1535 (D.Colo.1992), aff'd in part, rev'd in part on other grounds, 987 F.2d 1467 (10th Cir.1993). A party cannot invoke Rule 59(e) to raise arguments or evidence that could and should have been presented in the first instance. 784 F.Supp. at 1536.

Botkin Grain requests the court to alter and set aside its order for the following reasons:

1. The court failed to view the evidence in a light most favorable to Botkin Grain, or to give Botkin Grain the benefit of all reasonable inferences which can be drawn from that evidence;

2. The court erroneously placed the burden of proof on Botkin Grain in examining the application of the pollution exclusion and Federated's clarification of that exclusion;

3. The court went beyond the scope of Federated's summary judgment motion in finding as a matter of uncontroverted fact that no leakage of petroleum products occurred from the tanks or underground piping; and

4. The court failed to address the separate issue of the insurance companies' duties to defend Botkin Grain.

Each of these grounds will be discussed separately.

The Court's Consideration of the Evidence

Botkin Grain contends that in ruling favorably upon the insurance companies' motions for summary judgment, the court failed to view the evidence in the light most favorable to Botkin Grain. Botkin Grain says that:

The Court in effect has found it to be an uncontroverted matter of fact that petroleum products never leaked from the tanks and piping at the Argonia fuel depot. Such a finding was made in spite of the following:

1. There are no other possible sources for groundwater contamination.

2. Mobil Oil Corporation, which sold the depot to Botkin Grain in 1978, was suffering from unexplained shortages in its inventory just prior to the sale.

3. When tank No. 5 was lifted from the ground after Botkin Grain decided to close the fuel depot, it was discovered that the ground was discolored at that spot, indicating probable leakage from that tank.

4. The Court found that there were no surface spills which caused the groundwater contamination, leaving as the only possible source of pollution leaking of tanks or lines.

5. Botkin Grain's petroleum product inventory records, during the time it operated the fuel depot, showed shortages.

The court's findings of uncontroverted facts regarding the fuel depot are listed on pages 2 and 3 of its memorandum and order (Doc. 80). Botkin Grain has not specifically challenged the accuracy of any of the facts recited by the court. Nor has Botkin Grain deigned to favor the court with citations to the record supporting the facts which it now claims the court overlooked. Despite this failure, the court will consider each of the claimed deficiencies.

In Fact No. 1, Botkin Grain contends that there are no possible sources for the underground contamination other than leaks in the tanks or piping. This is not strictly so because, as the court previously noted, the KDHE inspector expressed his opinion that it was "possible" that an accumulation of several small surface spills, presumably when trucks were being loaded or during some similar event, could have caused the contamination. Be that as it may, the factual issues raised in the parties' cross-motions focused more narrowly than just all possible causes of the contamination.

The pollution exclusion which was present in all the policies issued by both insurance companies expressly excluded liability for property damage caused by the discharge of liquids into or upon lands except when the discharge was "sudden and accidental." Botkin Grain sought summary judgment that the exclusion did not apply (Doc. 54, p. 87) and, of course, the insurance companies sought summary judgment that the exclusion did apply. Thus, the issue was not merely whether the source of the contamination was a discharge from tanks or piping; rather, in order for there to be coverage, any discharge had to be "sudden and accidental."¹ The court's ultimate finding was that there was no evidence of a "sudden and accidental" discharge. This finding remains unchallenged.

In Fact No. 2, Botkin Grain avers that Mobil Oil was suffering from unexplained inventory shortages "just prior to the sale in 1978." In its order, the court noted that inventories taken during the period when Mobil Oil owned the depot were always short, but it cannot now locate any evidence that these shortages were "just prior to the sale." Moreover, assuming such evidence exists, the court is left to speculate why Botkin Grain believes evidence of shortages "just prior to the sale" is material.

In Fact No. 3, Botkin Grain contends that when tank No. 5 was lifted from the ground² (apparently some time after the depot was closed in 1989), discoloration was discovered "indicating probable leakage from that tank." The only evidence regarding tank No. 5 is in the deposition of Archie Watts, who worked at the depot when it was operated by Mobil Oil prior to 1978. Watts testified:

Q: I want to make sure I'm clear on when these bottoms were replaced.

A: Okay.

Q: Were they replaced before the tanks were ever installed?

A: Well they were — they brought them in here before they filled them, they put the new bottoms in. But they were used tanks. Now, if Mobil owned them someplace else, I couldn't tell you, or if they bought them.

A: Okay.

A: But they had product in them, but they had been pumped out. But as far as the product that I had anything to do with, there was nothing put in them until the new bottoms were put in.

Q: Okay. Do you know why the old bottoms were replaced?

A: The only thing I can figure is that they figured, well, we're going to start out with a new man, new bulk plant, we'll just put new bottoms in while we can. Now, probably they put some in the older tanks if they had been empty at that particular time or something like that. But they never was empty completely.

Q: Do you know of any leaks directly out of the tank themselves?

A: None whatsoever that I recall.

Q: Do you have any idea where this product could have come from?

A: Which product now are you talking about?

Q: The product that was found in the groundwater around the depot.

A: I have no idea.

Q: Have you — I mean do you have a speculation³ about whether it came out of the pipes or out of the tanks or out of the spills from overflows or —.

A: Well, the only thing I can tell you, I think that No. 5 was the one they found some holes in. I didn't know that until they had already found them.

Q: Who told you that there were holes in No. 5?

A: Well, I think when we was looking at them or something, wasn't it, John? Wasn't No. 5 the one that was leaking on the sand?

Mr. Botkin: No. 5 showed a little discoloration underneath the tank on the sand.

A: But —

Q: And that held diesel fuel?

A: Unleaded gas.

Mr. Botkin, who operated the depot after 1978, testified:

Q: Okay do you have any evidence of when the fuel or the petroleum products got into the groundwater?

A: No.

Q: When you were operating the fuel depot, did you have any procedure in place to monitor possible spills or leaks?

A: No.

Q: Do you know if there were — if you experienced any spills or leaks while you were operating the fuel depot?

A: No not that I know of.

Q: Could the groundwater contamination have come from the operation when it was in Mobil's hands?

A: Yes.⁴

Mr. Botkin also testified that after the depot was closed in 1989, he tried, unsuccessfully, to have the pipes tested for leakage and to have the petroleum found in the groundwater tested for "age." Mr. Botkin stated that prior to August 1986, he kept no records which would show fuel discrepancies in the tanks and that while he kept records after August 1986 which showed "very little" discrepancies, he attributed them to...