Heyman Associates No. 1 v. Insurance Co. of State of Pa.

Decision Date17 January 1995
Docket NumberNo. 14938,14938
CourtConnecticut Supreme Court
PartiesHEYMAN ASSOCIATES NO. 1 v. INSURANCE COMPANY OF the STATE OF PENNSYLVANIA et al.

Jerold Oshinsky, pro hac vice, with whom were Steven Berglass, Andrew M. Reidy, pro hac vice, and, on the brief, Michelle M. Jardine, pro hac vice, for appellant (plaintiff).

Thomas J. Groark, Jr., with whom were Jonathan Tropp, Michael J. McManus, pro hac vice, and, on the brief, Frank Santoro, Kathleen Munroe, M. Elizabeth Medaglia, pro hac vice, and Richard S. Kuhl, pro hac vice, for appellees (defendants).

Scott P. Moser, David J. Elliott, Laura A. Foggan, pro hac vice, Daniel E. Troy, pro hac vice, and John C. Yang, pro hac vice, filed a brief for Ins. Environmental Litigation Ass'n as amicus curiae.

Before PETERS, C.J., and CALLAHAN, BERDON, KATZ and PALMER, JJ.

KATZ, Associate Justice.

This appeal arises from a dispute over whether "absolute pollution" exclusions in the plaintiff's commercial liability policies with the defendants exclude coverage for damages caused by a fuel oil spill from the plaintiff's property into Stamford Harbor. The plaintiff, Heyman Associates No. 1, brought suit against the defendants, the Insurance Company of the State of Pennsylvania (ISOP) and National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union), after the defendants denied coverage based on the exclusions. Both the plaintiff and the defendants moved for summary judgment on select counts of the plaintiff's six count complaint. The trial court ruled in favor of the defendants on both motions and rendered judgment nunc pro tunc on the remaining counts. The plaintiff appealed and raises three primary issues for consideration. We affirm.

The following facts are not disputed. The plaintiff is a general partnership in the business of owning and operating commercial real estate. Late in January, 1991, the United States Coast Guard discovered that a large quantity of fuel oil had leaked from the plaintiff's property into Stamford Harbor. By letter dated February 1, 1991, the Coast Guard informed the plaintiff that as the party responsible for the spill, it was "liable for, among other things, removal costs and damages resulting from th[e] incident." In its letter, the Coast Guard required that, inter alia, the plaintiff "[i]dentify and remediate" the oil's impact on the water, shoreline and affected wildlife. 1 Further, the Coast Guard explained that under the Federal Water Pollution Control Act, the plaintiff's failure to remediate the incident or to comply with necessary administrative orders would subject it to substantial civil penalties. In response to the Coast Guard's letter, the plaintiff undertook the required remediation of the affected harbor area.

On February 14, 1991, the plaintiff sent to ISOP notice of a claim on its primary comprehensive general liability insurance policy in effect with ISOP. 2 On April 19, 1991, the plaintiff notified National Union of a claim on its excess liability policy in effect with National Union. 3 After numerous communications between the parties concerning the fuel oil spill and purported insurance coverage, ISOP denied coverage on March 13, 1991, and National Union denied coverage on June 10, 1991. 4 Each defendant denied coverage relying on an exclusion contained in its insurance policy with the plaintiff. 5

In response to the denials of coverage, the plaintiff filed in the Superior Court a six count complaint against the defendants alleging that: (1) the policies issued by the defendants provide coverage for property damage claims, and that the defendants have failed to assume their obligation under the policies to defend and indemnify the plaintiff; (2) the defendants waived any defenses to coverage that they may have had because they failed to provide the plaintiff with timely notice of their denials of coverage; (3) National Union acted in violation of the common law and General Statutes § 38a-321 6 in "wrongful[ly] attempt[ing] to alter and cancel the plaintiff's insurance policy after the plaintiff notified [National Union] of its claim"; (4) the defendants' conduct violated General Statutes §§ 38a-815 and 38a-816(6) of the Connecticut Unfair Insurance Practices Act (CUIPA) 7 and General Statutes § 42-110a et seq. of the Connecticut Unfair Trade Practices Act (CUTPA); 8 (5) the defendants' conduct violated CUIPA under General Statutes §§ 38a-815 and 38a-816(1) and (2); 9 and (6) the defendants breached their duty of good faith and fair dealing. The defendants filed an answer to the complaint, along with thirty-five "affirmative defenses," on September 3, 1991. The plaintiff filed its reply to the defendants' affirmative defenses on November 13, 1991.

On September 30, 1991, the plaintiff moved the trial court to grant partial summary judgment and to declare that: (1) the defendants "are obligated under either or both of their insurance policies to pay on behalf of [the plaintiff] any expenses, by way of defense and/or liability, incurred by [the plaintiff] in connection with the fuel oil product spill from [its] property into Stamford Harbor; (2) ... [the defendants] have waived any purported defenses to coverage as a result of their untimely denials of coverage; and (3) ... National Union violated [CUIPA] and [CUTPA]." In response, on October 28, 1991, the defendants filed a motion for summary judgment requesting that the trial court declare that, in light of the policy exclusions, they had no duty to defend or to indemnify the plaintiff for costs arising from the fuel oil spill.

On January 7, 1992, the plaintiff served on the defendants a set of requests for the production of documents, seeking, inter alia, broad disclosure of all writings pertaining to the existence and extent of its own insurance coverage. 10 On February 6, 1992, the defendants countered the plaintiff's motion, moving that the trial court grant a protective order authorizing them to withhold disclosure of their responses to the plaintiff's requests for production of documents. In its memorandum of decision of February 25, 1993, the trial court granted the motion for summary judgment in favor of the defendants on the first, 11 second, 12 fourth and fifth 13 counts of the complaint. 14 Further, the trial court denied the plaintiff's request to compel discovery.

On March 12, 1993, the plaintiff filed a motion to open the judgment and/or to reargue the trial court's decision of February 25, 1993, claiming that: (1) newly received information from the commissioner of insurance revealed that the defendants had failed to file the exclusions properly, thereby invalidating the exclusions and requiring summary judgment in its favor as a matter of law; and (2) it had moved for summary judgment only on the first, second and third counts and that the trial court therefore acted improperly in rendering judgment on the first, second, fourth and fifth counts.

On May 17, 1993, the trial court denied the plaintiff's motion, concluding that: (1) the plaintiff had waived consideration of the filing issues by failing to raise them in its memoranda in support of its motion for partial summary judgment and in opposition to the defendants' motion for summary judgment; and (2) it properly had rendered summary judgment on those counts of the complaint that contained CUIPA and CUTPA causes of action. The plaintiff appealed to the Appellate Court, 15 and we thereafter transferred the case to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c).

I

The plaintiff first claims that the trial court improperly granted the motion for summary judgment in favor of the defendants on the first and second counts of the complaint, the counts related to the defendants' duty to defend and to indemnify it for claims arising from the fuel oil spill. More specifically, the plaintiff claims that the trial court erroneously granted the motion for summary judgment on the basis of its incorrect conclusion that the policy provisions excluded all coverage for its fuel oil spill into Stamford Harbor. In support of this claim, the plaintiff asserts two primary arguments: (1) that the trial court improperly interpreted the meaning of the insurance contracts and the exclusions; and (2) that the trial court wrongly found that the defendants did not waive their right to rely on the policy exclusions. We disagree.

A

On the issue of the trial court's interpretation of the insurance contracts and the pollution exclusions, the plaintiff principally argues that the pollution exclusions do not exclude a fuel oil spill of any type. In the alternative, the plaintiff avers that even if the clauses may exclude fuel oil spills under certain circumstances, they do not exclude coverage for a spill of the particular nature involved in this case. Moreover, the plaintiff contends that, at a minimum, the exclusions are ambiguous and therefore should be interpreted against the defendants, requiring summary judgment in its favor. In opposition, the defendants argue that the pollution exclusions unambiguously exclude coverage for damages caused by the release of fuel oil into a waterway such as Stamford Harbor. 16 We agree with the defendants' interpretation of the exclusions and hold that coverage for the plaintiff's fuel oil spill into Stamford Harbor was excluded by the applicable exclusions. Therefore, we conclude that the trial court properly granted the motion for summary judgment in favor of the defendants on the first and second counts of the complaint. 17

"Under our law, the terms of an insurance policy are to be construed according to the general rules of contract construction. See, e.g., Weingarten v. Allstate Ins. Co., 169 Conn. 502, 509-10, 363 A.2d 1055 [ (1975), overruled in part, Streitweiser v. Middlesex Mutual Assurance Co., 219 Conn. 371, 593 A.2d 498 (1991) ]; A.M. Larson...

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