General Linen Service v. Charter Oak Fire Ins. Co.
| Decision Date | 20 June 1995 |
| Docket Number | Civil No. 94-398-JD. |
| Parties | GENERAL LINEN SERVICE CO., INC. v. CHARTER OAK FIRE INS. CO., et al. |
| Court | U.S. District Court — District of New Hampshire |
R. Timothy Phoenix, Hoefle, Phoenix & Gormley, PA, Portsmouth, NH, for General Linen Serv. Co., Inc.
John A. Nadas, Choate, Hall, & Stewart, Boston, MA, E. Tupper Kinder, Nelson, Kinder, Mosseau & Gordon, PC, Manchester, NH, for Charter Oak Fire Ins. Co., Travelers Indemnity Co.
Daniel J. Harkinson, Cooper, Hall, Whittum & Shillaber, Rochester, NH, Dianne Bresee Mayberger, O'Connor & O'Connor, Albany, NY, for Royal Ins. Co.
Cindy Robertson, McDonough & O'Shaughnessy, Manchester, NH, Robert J. Kelly, McElroy, Deutsch & Mulvaney, Morristown, NJ, for U.S. Fire Ins. Co.
Kevin C. Devine, Devine & Nyquist, Manchester, NH, Peter C. Kober, Driscoll & Kober, P.C., Boston, MA, for American Employers Ins. Co.
The plaintiff, General Linen Service Company ("General"), has brought this declaratory judgment and breach of contract action to determine the scope of and receive coverage under various insurance policies issued by the defendant insurance companies. Before the court is the motion of defendant American Employers Insurance Company ("American") to dismiss (document no. 25). Defendant Royal Insurance Company of America ("Royal"), defendant Charter Oak Fire Insurance Company ("Charter"), and defendant Travelers Insurance Company ("Travelers") have joined in American's motion (document nos. 27, 32).
General disposed of waste materials at a landfill located in Somersworth, New Hampshire, from the early 1960s until 1980. The landfill ceased to accept industrial and municipal waste in 1981 when the city of Somersworth limited its use pursuant to a landfill closure plan implemented in conjunction with state waste management officials. The site was voluntarily closed the following year.
Following closure in 1982, the Environmental Protection Agency ("EPA") announced the discovery of groundwater, soil and air contamination at and around the landfill and, in turn, placed the site on its National Priorities List ("NPL"). The EPA has alleged that the contamination resulted, in part, from the disposal of General's waste.
The EPA and the New Hampshire Department of Environmental Services undertook a remedial investigation and feasibility study and, in or about 1988, the EPA notified General that it may be a potentially responsible party ("PRP") for the alleged contamination. Since that time General has negotiated with the EPA and at some point consented to an administrative order requiring it to subsidize the cost of the remedial investigation and feasibility study. General was officially named as a PRP in December 1993, at which time the EPA estimated the total cost of site remediation to be in excess of twenty million dollars.
From 1974 until 1989 General purchased various general liability and umbrella policies from the defendants, each with liability limits of between $300,000 and seven million dollars. General has identified at least ten such policies issued by American, two of which provided coverage beginning on April 4, 1983. In addition, General has
claimed coverage under previous or other policies issued by American Employers Insurance Company and/or Commercial Union Insurance Company prior to 4/1/83 and/or after 4/1/89, the policy numbers and dates of which are currently unavailable.
Amended Complaint, Exhibit A.
In April 1988, General first notified the defendants of its potential environmental liability and requested coverage. Each defendant denied coverage, refused to defend and indemnify, or otherwise reserved its rights to do so in the future. In early 1994, General notified the defendants of its status as an official PRP and again demanded coverage. To date the defendants have refused each such request.
American asserts that General may not proceed against any defendant under the state declaratory judgment act, N.H.Rev. Stat. Ann. ("RSA") § 491:22, because "there has been no `writ' filed in an underlying action in a New Hampshire state court." Motion to Dismiss at ¶ 1. In the alternative, American asserts that it alone should be dismissed from this action because General has failed to allege the manifestation of property damage during the time period it was insured under an American policy. Id. at ¶ 2.
A motion to dismiss under Fed.R.Civ.P. 12(b)(6) is one of limited inquiry, focusing not on "whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). Accordingly, the court must take the factual averments contained in the complaint as true, "indulging every reasonable inference helpful to the plaintiff's cause." Garita Hotel Ltd. Partnership v. Ponce Fed. Bank, 958 F.2d 15, 17 (1st Cir.1992); see also Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir. 1989). In the end, the court may grant a motion to dismiss under Rule 12(b)(6) "`only if it clearly appears, according to the facts alleged, that the plaintiff cannot recover on any viable theory.'" Garita, 958 F.2d at 17 (quoting Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir.1990)).
Under Erie v. Tompkins and its progeny, the court may apply state-law remedies to federal diversity actions. Titan Holdings Syndicate, Inc. v. City of Keene, N.H., 898 F.2d 265, 273 (1st Cir.1990) (citing Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)); Plaza 28 Associates v. Vermont Mutual Ins. Co., No. 89-494-JD, slip op. at 3 (D.N.H. Feb. 28, 1995); Johnson v. Watts Regulator Co., No. 92-508, slip op. at 12, 1994 WL 587801 (D.N.H. Oct. 26, 1994). New Hampshire law provides for a declaratory judgment remedy. See RSA § 491:22 (1983 & Supp.1994).
Policyholders regularly file declaratory judgment petitions to determine whether an insurance policy covers a given loss. Johnson v. Watts, slip op. at 13; Andrews v. Nationwide Mut. Ins. Co., 124 N.H. 148, 150-51, 467 A.2d 254, 256-57 (1983) (citing Grimes v. Concord Gen'l Mut. Ins. Co., 120 N.H. 718, 422 A.2d 1312 (1980); Shea v. United Services Auto. Ass'n, 120 N.H. 106, 411 A.2d 1118 (1980)). The statute, by its express terms, anticipates that declaratory judgments may be filed "to determine coverage of an insurance policy...." RSA § 491:22. The phrase "to determine coverage" includes a "determination either of the existence of an insurance contract or that an existing insurance contract covers the particular incident in question, or both." Johnson v. Watts, slip op. at 13 (). Moreover, because a declaratory judgment action is a "broad remedy which should be liberally construed" it is considered a "proper means for determining first-party insurance coverage claims." Andrews, 124 N.H. at 151-52, 467 A.2d at 256 (quoting Beaudoin v. State, 113 N.H. 559, 562, 311 A.2d 310, 313 (1973)); see Plaza 28 Associates, slip op. at 5 () (emphasis in original); Johnson v. Watts, slip op. at 14, n.6 (same).
The defendant argues that General may not invoke the declaratory judgment provisions of RSA § 491:22 because this action is not predicated on a writ filed in an underlying action in New Hampshire state court.
The argument is unavailing as it rests on an incomplete reading of the cited authority and New Hampshire law. The defendant is correct that, where there is an underlying lawsuit, RSA § 491:22, as it existed prior to amendment effective January 1995, would not apply "unless the underlying liability suit is brought in New Hampshire state court." Town of Allenstown v. National Casualty Co., 36 F.3d 229, 232 (1st Cir.1994); Plaza 28 Associates, slip op. at n.3.2 Significantly, Allenstown and other cases cited by American on the issue involved a declaratory judgment based on an underlying lawsuit filed in a forum other than a New Hampshire state court, such as federal court or another state court. See, e.g., Allenstown, 36 F.3d at 232; Town of Peterborough v. Hartford Fire Ins. Co., 824 F.Supp. 1102, 1107 (D.N.H.1993); Scully's Auto-Marine Upholstery v. Peerless Ins. Co., 136 N.H. 65, 66-67, 611 A.2d 635, 636 (1992). These cases do not bar the plaintiff from maintaining a first-party action under RSA § 491:22 in federal court. See Plaza 28 Associates, slip op. at n. 3 (); Johnson v. Watts, slip op. at 13-15 (same) see also Allenstown, 36 F.3d at 232; Peterborough, 824 F.Supp. at 1107. Compare New Hampshire Ball Bearings v. Aetna Casualty, 848 F.Supp. 1082, 1089 (D.N.H.1994), rev'd on other grounds, 43 F.3d 749, 752 (1st Cir.1995) (). Thus, the absence of a writ in an underlying New Hampshire state court lawsuit or, for that matter, the absence of an underlying lawsuit in any court, does not impair a litigant's ability to maintain a first-party action under RSA § 491:22.
The plaintiff has filed a first-party action seeking a determination of whether the defendants' policies cover losses related to the Somersworth site. The defendants deny they are obligated to insure General for the claimed losses. This case presents a classic application of the declaratory judgment remedy and the plaintiff may proceed under RSA §...
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