Fireman's Fund Ins. Companies v. Ex-Cell-O Corp.
| Decision Date | 18 May 1987 |
| Docket Number | Civ. A. No. 85-71371. |
| Citation | 662 F. Supp. 71 |
| Parties | FIREMAN'S FUND INSURANCE COMPANIES and American Insurance Company, Plaintiffs, v. EX-CELL-O CORPORATION, et al., Defendants. EX-CELL-O CORPORATION, et al., Third-Party Plaintiffs, v. AIU INSURANCE COMPANY (successor to American International Insurance Company), et al., Third-Party Defendants. |
| Court | U.S. District Court — Western District of Michigan |
Jeffrey Silberfeld, Rivkin, Leff & Radler, Garden City, N.Y., Robt. S. Cubbin, Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, P.C., Detroit, Mich., for plaintiffs.
Robert B. Webster, Richard C. Sanders, Hill, Lewis, Adams, Goodrich & Tait, Detroit, Mich., for Ex-Cell-O, McCord and Davidson; Eugene R. Anderson, Avraham C. Moskowitz, Steven P. Vincent, Anderson, Russell, Kill & Olick, P.C., New York City, of counsel.
Raymond I. Foley, Jerome C. Gropman & Associates, Birmingham, Mich., Paul L. Gingras and Thomas L. Hamlin, Robins, Zelle, Larson & Kaplan, Minneapolis, Minn., for Wausau Ins. Co.
Barry M. Kelman, Gofrank and Kelman, Southfield, Mich., for Travelers; H.G. Sparrow, III, Dickinson, Wright, Moon, Van Dusen & Freeman, Detroit, Mich., of counsel.
Stephen Ormond, Peter B. Kupelian, Southfield, Mich., for Zurich Am. Ins. Co.
Leonard B. Schwartz, Southfield, Mich., for Royal Indem.
Deborah A. Pitts, Robert A. Zeavin, Buchalter, Nemer, Fields, Chrystie & Younger, Los Angeles, Cal., for AIU Ins. Co. and Highland Ins. Co.
Stephen M. Kelley, Kitch, Saurbier, Drutchas, Wagner & Kenney, P.C., Detroit, Mich., Mitchell L. Lathrop, Adams, Duque & Hazeltine, San Diego, Cal., James R. Case, Kerr, Russell and Weber, Detroit, Mich., for St. Paul Fire & Marine Ins. Co.
Michael W. Hartmann, Miller, Canfield, Paddock & Stone, Detroit, Mich., Timothy C. Russell, Wilson M. Brown, III, Patricia A. Gotschalk, Drinker, Biddle & Reath, Washington, D.C., for Am. Motorists, Am. Manu. Mut. and Lumbermens Mut.
Charles C. Cheatham, Detroit, Mich., for American Employers Ins. Co.
David M. Tyler, Sullivan, Ward, Bone, Tyler, Fiott & Asher, Detroit, Mich., and Samuel B. Issacson, Pretzel, Stouffer, Chartered, Chicago, Ill., for Prudential Re-Ins. Co.
Thomas F. Myers, Garan, Lucow, Miller, Seward, Cooper & Becker, P.C. Detroit, Mich., and Andrea Sykes Foote, Lord, Bissell & Brook, Chicago, Ill., for Certain Underwriters at Lloyd's London and London Market Ins. Co.
Paul S. Koczkur, Harvey, Kruse, Westen & Milan, Detroit, Mich., for Mission Ins. Co., Mission Natl., and Integrity Ins. Co.
Bernard P. McClorey, Ronald G. Acho, T. Joseph Seward, Cummings, McClorey, Davis & Acho, Livonia, Mich., for Hartford Acc. and Indem. Ins. Co.
Scott L. Gorland, Claudia V. Babiarz, Pepper, Hamilton & Scheetz, Detroit, Mich., Stephen Jacobs, Siff, Newman, Rosen & Parker, New York City, for First State Ins. Co. New England Reinsurance Corp.
James N. Martin, Martin, Bacon & Martin, P.C., Mt. Clemens, Mich., Thomas G. McHugh, for Pacific Employers Ins. Co.
William Jamieson and David Bocan, Deneberg, Tuffley, Bocan, Jamieson, Black, Hopkins & Ewald, Southfield, Mich., for Northbrook Excess and Surplus Ins. Co. (NESCO) n/k/a Allstate Ins. Co.
J.R. Zanetti, Jr., Highland & Currier, P.C., Southfield, Mich., for Transport Indem. Co.
Ex-Cell-O Corporation ("Ex-Cell-O"), its subsidiary McCord Gasket Corporation ("McCord"), and McCord's subsidiary Davidson Rubber Company ("Davidson") ("policyholders") move for partial summary judgment declaring the duty of Fireman's Fund Insurance Companies ("Fireman's Fund"), Wausau Insurance Companies ("Wausau"), and Zurich Insurance Company ("Zurich") ("primary insurers" or "insurers")1 to defend the policyholders against potential liability for allegedly contributing to environmental contamination at twenty-two locations. I have jurisdiction pursuant to 28 U.S.C. § 1332.
Each site requires clean-up of environmental damage. The critical question is who will pay for the work. Congress addressed the question in the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9657, which authorizes administrative and judicial proceedings to effect clean-up of contaminated sites and to compel contributions to the cost of clean-up by owners and operators of the sites, and by generators of materials dumped at the sites. Some states have enacted similar legislation.
At least one government agency has taken or is contemplating action pursuant to these statutes at each site. The policyholders have received written notice, familiarly known as a "PRP letter," from a government agency that considers them potentially responsible for contamination at sixteen sites.2 From the owner or operator of four other sites, the policyholders have received written notice that an agency has taken action, and that the owner or operator considers the policyholders potentially responsible.3 The policyholders expect imminent agency action at one site.4 Finally, for one site, the policyholders are third-party defendants in a federal court action.5
The policyholders seek a defense at each site. The insurers deny coverage. The insurers on the risk during the time the policyholders allegedly used each site are:
Site Alleged Use Insurer
Alburn 1982 Fireman's Fund
Cannons-Bridgewater* 9/74-6/78 Wausau
Cannons-Plymouth* 9/74-6/78 Wausau
Cardinal* 1965-1969 Travelers
1970-1978 Wausau
1979-1985 Fireman's Fund
1986-present No known insurer
Charles George* 2/77-12/78 Wausau
1/79-8/79 Fireman's Fund
City Chemical 12/81 Fireman's Fund
Clare 1966-1983 Fireman's Fund
Conservation* 8/75 Wausau
Davidson* 1967-1969 Travelers
1970-1978 Wausau
1979-1985 Fireman's Fund
1986-present No known insurer
Dover* 1955-1961 No known insurer
1962-1969 Travelers
1970-1978 Wausau
Enviro-Chem 8/21/81 & 12/1/81 Fireman's Fund
Keefe* 1/14/77-12/31/78 Wausau
1/1/79-1/31/81 Fireman's Fund
Kingston (Ottati & 1965-1969 Travelers
Goss)* 1970-1976 Wausau
Liquid Disposal 1979-1981 Fireman's Fund
Pagel's 1/79-8/83 Fireman's Fund
QuVoe 1983 Fireman's Fund
Re-Solve 3/80-10/80 Fireman's Fund
Silresim* 2/74-9/74 & 2/75 Wausau
Springfield 4/12/65-11/30/65 Zurich
12/1/65-7/31/67 Fireman's Fund
Tinkham Garage* 1978 Wausau
Union Chemical 1981-1984 Fireman's Fund
Wayne 4/80-12/82 Fireman's Fund
Asterisked sites involve alleged dumping by McCord or Davidson prior to Ex-Cell-O's purchase of the companies in 1978. Ex-Cell-O contends that its own insurance policies, as well as the policies issued separately to McCord and Davidson, cover these sites, but it does not test this claim on its motion for partial summary judgment. Accordingly, the asterisked sites identify only the separate insurer for McCord or Davidson.
The policyholders purchased comprehensive general liability policies that define the insurers' duty to defend broadly. Fireman's Fund and Wausau use identical language:
The Company shall have the right and duty to defend any such suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such an investigation and settlement of any claim or suit as it deems expedient....
The Zurich policy is only slightly different:
The company shall ... defend any such suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient....
The language obligates the insurers to defend any claim against the policyholders "so long as the allegations against the insured even arguably come within the policy coverage." The Detroit Edison Company v. Michigan Mutual Insurance Company, 102 Mich.App. 136, 142, 301 N.W.2d 832 (1980) (emphasis original).
The insurers claim they have no duty to defend the environmental claims until the policyholders become defendants in a traditional lawsuit for money damages. The insurers construe their policies too narrowly: coverage does not hinge on the form of action taken or the nature of relief sought, but on an actual or threatened use of legal process to coerce payment or conduct by a policyholder. In United States Aviex Company v. Travelers Insurance Company, 125 Mich.App. 579, 586, 336 N.W.2d 838 (1983), an insured won judgment declaring its insurer's duty to defend based only on "threats of legal action" by the Michigan Department of Natural Resources. Later, the Michigan Attorney General filed a court action seeking an injunction directing the insured to clean up a chemical spill at its own expense. United States Aviex, 125 Mich.App. at 588, 336 N.W.2d 838. The court of appeals affirmed judgment against the insurer even though the Attorney General's suit sought only injunctive relief:
It is merely fortuitous ... that the state has chosen to have plaintiff remedy the contamination problem, rather than choosing to incur the costs of clean-up itself and then...
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