Great Am. Ins. Co. v. ACE Am. Ins. Co.
| Decision Date | 10 July 2018 |
| Docket Number | NO. 4:18-CV-114-A,4:18-CV-114-A |
| Citation | 325 F.Supp.3d 719 |
| Parties | GREAT AMERICAN INSURANCE COMPANY, Plaintiff, v. ACE AMERICAN INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
James H Moody, III, Whitney Lee Warren, Quilling, Selander, Lownds, Winslett & Moser, P.C., Dallas, TX, for Defendants.
Came on for consideration the motion of plaintiff, Great American Insurance Company, for summary judgment against defendant Eastern Concrete Materials, Inc. ("Eastern"). The court, having considered the motion, Eastern's response, the reply, the summary judgment evidence, the record, and applicable authorities, finds that the motion should be granted.
As recited in the court's memorandum opinion and order of April 20, 2018, plaintiff filed its complaint for declaratory relief against Eastern and ACE American Insurance Company ("ACE") on February 9, 2018. Doc.1 39. Plaintiff alleges: ACE issued a commercial general liability insurance policy to Eastern and/or its parent company, U.S. Concrete, Inc. ("U.S. Concrete") for the policy period December 31, 2016, to December 31, 2017. Plaintiff issued a commercial umbrella insurance policy, No. TUU 2-53-45-62-18, (the "policy") for the same period under which U.S. Concrete and certain of its subsidiaries, including Eastern, are named insureds. Eastern contends that both the ACE policy and plaintiff's policy cover or potentially cover amounts it has paid or may pay in connection with a certain New Jersey pollution claim arising out of the discharge of rock fines into the Spruce Run (as further described herein).
With regard to Eastern, plaintiff seeks a declaratory judgment that (1) it has no duty to defend Eastern against the New Jersey pollution claim or to pay its defense costs; (2) it has no duty to indemnify Eastern against any liability arising from or relating to the New Jersey pollution claim; and (3) to the extent that plaintiff has any potential coverage obligations to Eastern in connection with the New Jersey pollution claim, its obligations are excess to coverage provided by the ACE policy. And, plaintiff seeks a judicial determination of the rights and obligations of the parties with respect to Eastern's claims for insurance coverage in connection with the New Jersey pollution claim.
Plaintiff says that it is entitled to judgment as a matter of law because the absolute pollution exclusion provision of its policy bars coverage for the New Jersey pollution claim. For the same reason, plaintiff does not, and will not, have any defense or payment obligations to Eastern. Further, Eastern cannot prevail on its counterclaims.2
Rule 56(a) of the Federal Rules of Civil Procedure provides that the court shall grant summary judgment on a claim or defense if there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The movant bears the initial burden of pointing out to the court that there is no genuine dispute as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The movant can discharge this burden by pointing out the absence of evidence supporting one or more essential elements of the nonmoving party's claim, "since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 323, 106 S.Ct. 2548. Once the movant has carried its burden under Rule 56(a), the nonmoving party must identify evidence in the record that creates a genuine dispute as to each of the challenged elements of its case. Id. at 324, 106 S.Ct. 2548 ; see also Fed. R. Civ. P. 56(c) (). If the evidence identified could not lead a rational trier of fact to find in favor of the nonmoving party as to each essential element of the nonmoving party's case, there is no genuine dispute for trial and summary judgment is appropriate. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 597, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In Mississippi Prot. & Advocacy Sys., Inc. v. Cotten, the Fifth Circuit explained:
Where the record, including affidavits, interrogatories, admissions, and depositions could not, as a whole, lead a rational trier of fact to find for the nonmoving party, there is no issue for trial.
929 F.2d 1054, 1058 (5th Cir. 1991).
The standard for granting a motion for summary judgment is the same as the standard for rendering judgment as a matter of law.3 Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548. If the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial. Matsushita, 475 U.S. at 597, 106 S.Ct. 1348 ; see also Mississippi Prot. & Advocacy Sys., 929 F.2d at 1058.
Eastern is a wholly-owned subsidiary of U.S. Concrete, a holding company with its principal place of business in the Northern District of Texas. Doc. 47 at PA 112, PA 172, PA 254. As a general rule, U.S. Concrete does not maintain insurance to cover environmental liabilities. Id. at PA 132.
Plaintiff's policy at issue is a commercial umbrella insurance policy issued to U.S. Concrete for the policy period December 31, 2016, to December 31, 2017. Id. at PA 011. Eastern is one of more than sixty subsidiaries named as an insured under the policy. Id. at PA 022-023. The payment and defense obligations under the policy are limited in pertinent part by an absolute pollution exclusion, which provides:
This insurance does not apply to:
Id. at PA 035-036, 60.
Eastern operates a rock quarry in Glen Gardner, New Jersey, where it quarries rock and crushes the rock into small stones and fines. The rock fines are small particles of rock generated as part of the stone crushing process. The rock fines are washed off with water and placed into settling ponds. Once they are settled out, they are removed, dried out, and prepared for use as reclamation fill at the quarry or sold as fill material. Id. at PA 269.
Beginning on July 28, 2017, in anticipation of substantial rain fall, Eastern began lowering the level of its quarry water settling ponds through permitted pumping into the adjacent Spruce Run, a tributary to the Spruce Run Reservoir. The quarry manager failed to shut off the pumping before the rock fines began to be pumped into Spruce Run on July 29, 2017. As a result, substantial amounts of rock fines were pumped into Spruce Run. The pumping of rock fines into Spruce Run caused physical damage to the stream and stream bed by changing the flow and contours of the stream and filling in depressions in the stream bed. Up to two feet of rock fines were pumped into some portions of Spruce Run. As a result, the New Jersey Department of Environmental Protection Bureaus of Coastal and Land Use Compliance and Enforcement and Water Compliance and Enforcement ("New Jersey") issued notices of violation dated July 31 and August 2, 2017. Id. at PA 269. The notices of violation reflected that Eastern had violated the New Jersey Water Pollution Control Act, N.J.S.A. 58:10A-1 et seq., Freshwater Wetland Protection Act, N.J.S.A. 13:9B-l and rules at N.J.A.C. 7:7A-1, and the Flood Hazard Area Control Act, N.J.S.A. 58:16A-52 et seq. and rules at N.J.A.C. 7:13-1. Id. at PA 085-086. And, according to Eastern's counsel, New Jersey also maintained that Eastern had violated the Fish and Game Act "by pumping of a deleterious substance resulting in a negative impact to a trout producing stream and a documented habitat for threatened or endangered species." Id., at PA 093-094. New Jersey required Eastern to remove the rock fines to ensure protection of fish habitats that had been covered by the fines and prevent further migration of the fines. Id. at PA 269-70. Eastern admits that remediation was necessary to protect the environment. Id. at PA 339. New Jersey also said that Eastern was liable to pay the State for alleged violations of State statutes that caused, among other things, physical alteration to the channel of Spruce Run, placement of materials in a floodway, and other alleged violations arising from damage to State resources. Id. at PA 272, PA 343.
By letter dated October 24, 2017, Eastern notified plaintiff of the Spruce Run claim and demanded reimbursement for all costs to remove the rock fines and costs of defense of the claim. Id. at PA...
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