GenCorp, Inc. v. American Intern. Underwriters
| Citation | 167 F.3d 249 |
| Decision Date | 05 February 1999 |
| Docket Number | No. 97-3869,97-3869 |
| Parties | 29 Envtl. L. Rep. 20,478 GENCORP, INC., Plaintiff-Appellant, v. AMERICAN INTERNATIONAL UNDERWRITERS, also known as A.I.U. Insurance Company; Riunione Adriatica Di Sicurta, also known as Adriatic Insurance Company; Allianz Versicherungs-A.G., also known as Allianz Insurance Company; American Insurance Company, also known as American Auto Insurance; American Home Assurance Company; American Re-Insurance Company; Associated International Insurance Company; Cigna Specialty Insurance Company; Central National Insurance Company of Omaha; Continental Casualty Company; Dairyland Insurance Company; Employers' Insurance of Wausau; Employers Reinsurance Corporation; Federal Insurance Company; Fidelity and Casualty Company of New York; Fireman's Fund Insurance Company; First State Insurance Company; Granite State Insurance Company; Insurance Company of North America; International Insurance Company; International Surplus Lines Insurance Company; Lexington Insurance Company; Liberty Mutual Insurance Company; Certain Underwriters at Lloyd's London; National Casualty Company; National Union Fire Insurance Co. of Pittsburgh, PA; Everset Reinsurance Company, formerly known as Everest Reinsurance Company; Republic Insurance Company; St. Paul Fire and Marine Insurance Company; Twin City Fire Insurance Company; United Insurance Company; Gibraltar Casualty Company; United National Insurance Company; Lumbermens Mutual Casualty Company; Certain London Market Insurance Companies; Bellefonte Insurance Company, Ltd.; CNA Reinsurance of London Limited; Lexington Insurance Company, Ltd.; North Atlantic Insurance Company, Ltd.; St. Katherine Insurance Company, Ltd.; Stronghold Insurance Company, Ltd.; Wintrethur Swiss Insurance Company, Ltd. Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
Thomas W. Ladd (argued and briefed), McCarter & English, Newark, New Jersey, for Appellant.
Michael P. Comiskey (argued and briefed), Lord, Bissell & Brook, Chicago, Illinois, for Appellees.
Before: SUHRHEINRICH, DAUGHTREY, and GILMAN, Circuit Judges.
This is a declaratory judgment action brought to determine whether certain excess insurance policies, which "sit above" and "follow form" to two underlying umbrella insurance policies, incorporate from the underlying umbrella policies an absolute pollution exclusion endorsement added after the policy period had ended and made retroactive to the inception date of the underlying umbrella policies.
Plaintiff GenCorp, Inc. ("GenCorp") seeks coverage for alleged environmental liabilities under various insurance policies, including certain excess insurance policies 1 (the "Excess Policies") issued by Defendants 2 (the "Excess Insurers"). The Excess Policies generally required GenCorp to maintain underlying insurance coverage. Each Excess Policy also allegedly follows form to, and incorporates the terms, conditions, and exclusions contained in the applicable underlying umbrella policies. 3
During the relevant period, GenCorp's underlying umbrella coverage insurer was Genco Insurance Limited ("Genco"). Genco is a captive insurance company that is wholly-owned by GenCorp. GenCorp purchased the following two insurance policies from Genco: (1) Policy No. 47002, covering January 1, 1975 through January 1, 1978; and (2) Policy No. 47005, covering January 1, 1979 through December 1, 1982 (collectively "Genco Policies"). These policies are umbrella excess third-party liability policies, providing first-level excess coverage to GenCorp. All of the Excess Policies at issue were in effect during all or part of the coverage periods of the Genco Policies.
In 1989, GenCorp filed a prior insurance coverage action in Ohio state court against various insurance carriers, including Genco, and many of the Excess Insurers, for pollution claims relating to different sites not at issue in this case ("State Action"). 4 On April 7, 1994, GenCorp and Genco executed a settlement agreement ("Settlement Agreement") relating to the State Action. Pursuant to the Settlement Agreement, Genco agreed to pay GenCorp approximately $20 million in exchange for dismissal of the State Action as it related to Genco for a full and unconditional release from "all Environmental Claims that [GenCorp and related entities] or any of them have or may have against Genco."
The Settlement Agreement further provides:
3.6 Policy Endorsement Amendment. Subject only to Genco's payment and GenCorp's receipt of the Settlement Amount pursuant to Section 3.2, GenCorp agrees that Policy Numbers 47002 and 47005 each shall thereupon be amended, by separate endorsement retroactive in fact and effect to the date each of said policies were issued, each said separate endorsement retroactive in fact and effect to the date each of said policies were issued, and each said separate endorsement to read:
THIS POLICY SHALL NOT APPLY:
to any liability whatsoever for:
(1) bodily injury, personal injury or property damage arising out of the seepage, discharge, dispersal, release or escape or transmission of any solid, liquid, or resulting from: gaseous, thermal, audio or electromagnetic irritant, including, but not limited to, smoke, vapors, soot, waves, fumes, acid, alkalies, fibers, toxic chemicals, liquids or gases, waste materials, or other irritants, contaminants or pollutants into, or upon, land, the environment or any watercourse or body of water; or
(2) any liability loss, cost or expense of the insured arising out of any direction or request by any governmental authority, that pollutants be tested for [sic] monitored, cleaned up, removed, contained, treated, detoxified or neutralized; or
(3) any payment for the investigation or defense of any loss, injury or damage, or any cost, fine or penalty, or for any expense or claim or suit related to any of the above.
Notwithstanding the generality of this exclusion, it shall not exclude coverage for claims by any person alleging personal injury, bodily injury or property damage caused by a product when such damage occurs or is alleged to have occurred after the product has been sold and before the product has become a waste product or part of a waste product.
(hereinafter the "Endorsements").
The parties executed the Endorsements on January 18, 1995. Each Endorsement states that it is "effective from inception" of the policy. See Endorsement Eleven to Genco Policy 47002; Endorsement Nineteen to Genco Policy 47005.
The Settlement Agreement also called for Genco's reinsurers to pay $11 million of the $19,910,000 settlement amount. The Excess Insurers did not participate in the settlement.
In the underlying action, GenCorp has been sued for polluting six locations in Ohio, Michigan, New Hampshire, and Connecticut. 5 In November 1995, GenCorp filed this suit against numerous insurance companies, including Defendants-Appellees, seeking defense costs and/or indemnification for losses incurred as a result of those actions. Although GenCorp did not name Genco as a party--presumably because of the Endorsements--one of the Excess Insurers added Genco as a third-party defendant. In response, Genco defended by claiming that the Endorsements precluded it from any liability.
So did the Excess Insurers. They moved for summary judgment, claiming that their policies followed form to the Genco Policies and therefore contained the absolute pollution exclusion contained in the Endorsements. 6
On May 20, 1997, the district court granted summary judgment to the Excess Insurers, holding that the Excess Insurers had no duty under the Excess Policies to defend or indemnify GenCorp for pollution claims. The district court found that, as a matter of contract law, the Excess Insurers were entitled to take advantage of the absolute pollution exclusion. See GenCorp, Inc. v. AIU Ins. Co., 970 F.Supp. 1253, 1260 (N.D.Ohio 1997). On June 6, 1997, the district court executed a judgment granting partial or total summary judgment to various Excess Insurers, and certified the entry of final judgment under Rule 54(b). 7
Also on June 6, 1997, GenCorp moved the district court to stay entry of final judgment and reconsider its ruling because GenCorp and Genco had entered into negotiations aimed at removing the policy Endorsements created by the 1994 Settlement Agreement. On June 17, 1997, GenCorp and Genco amended the Settlement Agreement, retroactively voiding the Policy Endorsements. On June 19, 1997, GenCorp moved to vacate the judgment under Fed.R.Civ.P. 59(e) based on the June 17 amendment to the Settlement Agreement. On June 20, 1997, the court denied GenCorp's June 6 motion for reconsideration and its June 19 motion to vacate.
On July 19, 1997, GenCorp filed its notice of appeal, appealing in whole or in part the Judgment Entry of June of 6, 1997, the Memorandum Opinion of May 20, 1997, the Memorandum Opinion and Order of June 6, 1997, the Memorandum Opinion and Order of June 20, 1997.
GenCorp argues that the district court erred in granting summary judgment to the Excess Insurers based on the GenCorp/Genco Settlement Agreement because: (1) the Excess Insurers did not provide any consideration for, and GenCorp did not consent to, the incorporation of the absolute pollution exclusion into the Excess Policies; (2) the alleged change in coverage took place after Defendants' policies had expired and after GenCorp had begun to incur covered losses; (3) Defendants' policies are ambiguous and must be construed in favor of coverage; and (4) equity and public policy preclude such a result. In the alternative, GenCorp claims that the district court erred in denying its motion to vacate summary judgment because the factual basis for summary judgment no longer exists.
We review a district court's grant of summary judgment de...
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Morales v. Coyle, No. 1:95 CV 2674.
...discovered evidence, an intervening change in controlling law, or to prevent manifest injustice." Gencorp, Inc. v. American International Underwriters, 167 F.3d 249, 275 (6th Cir. 1999) (citations omitted). The Petitioner has asserted that this Court has committed clear errors of law, that ......