E.I. du Pont de Nemours & Co. v. Admiral Ins. Co.

• Decision Date: 11 August 1995
• Docket Number: No. 89C-AU-99,89C-AU-99
• Citation: 711 A.2d 45
• Parties: E.I. DU PONT DE NEMOURS AND COMPANY, Plaintiff, v. ADMIRAL INSURANCE COMPANY, et al., Defendants. . Submitted:
• Court: Delaware Superior Court

Page 45

711 A.2d 45

E.I. DU PONT DE NEMOURS AND COMPANY, Plaintiff, v. ADMIRAL INSURANCE COMPANY, et al., Defendants.

No. 89C-AU-99.

Superior Court of Delaware New Castle County.

Submitted: Aug. 11, 1995.

Decided: Aug. 23, 1995.

Plaintiff's Motion for Partial Summary Judgment Regarding the Proper Interpretation of Certain Pollution Exclusions Found in 1970-1985 Insurance Policies.

Certain Defendants' Joint Motion for Partial Summary Judgment on Pollution Exclusion Defenses.

Charles S. Crompton, Jr. and Richard L. Horwitz of Potter, Anderson & Corroon and Richard Allen Paul and Erin Kelly of E.I. du Pont de Nemours & Company, Wilmington and Peter J. Kalis, Michael J. Lynch, Stephanie A.J. Dangel and Carolyn M. Branthoover of Kirkpatrick & Lockhart, Pittsburgh, Pennsylvania, for plaintiff E.I. du Pont de Nemours & Company.

Anthony G. Flynn of Young, Conaway, Stargatt & Taylor, Wilmington, coordinating counsel for defendants.

Donald L. Gouge, Jr. of Heiman, Aber & Goldlust, Wilmington and James E. Rocap, III, Stephen L. Braga, Scott L. Nelson and Cynthia Thomas Calvert of Miller, Cassidy, Larroca & Lewin, Washington, D.C. and Roy L. Reardon and Robert F. Cusumano of Simpson, Thacher & Bartlett, New York City, for Aetna Casualty and Surety Company on behalf of Certain Defendants.

Robert J. Katzenstein of Smith, Katzenstein & Furlow, Wilmington, for Allstate Insurance Company.

Warren B. Burt of Burt & Burt, Wilmington, for Federal Insurance Company.

Norman M. Monhait and Carmella P. Keener of Rosenthal, Monhait, Gross & Goddess, Wilmington, and Stephen A. Fennell, Steven J. Barber and Hania E. Farah of Steptoe & Johnson, Washington, D.C., for the Home Insurance Company and on behalf of Certain Defendants.

Anthony G. Flynn of Young, Conaway, Stargatt & Taylor, Wilmington, and Marjorie H. Mintzer and Ellen G. Margolis of Sheft & Sheft, New York City, for Lexington Insurance Company.

Richard K. Herrmann and Scott R. Harrison of Bayard, Handelman & Murdoch, P.A., Wilmington, for National Casualty Company.

Anthony G. Flynn of Young, Conaway, Stargatt & Taylor, Wilmington and Kimball Ann Lane and Patricia Dee Bilka of Luce, Forward, Hamilton & Scripps, New York City, for St. Paul Fire & Marine Insurance Company.

Richard K. Herrmann and Scott R. Harrison of Bayard, Handelman & Murdoch, P.A., Wilmington, for Swiss Reinsurance Company.

Judith Nichols Renzulli of Duane, Morris & Heckscher, Wilmington and Bert W. Rein, Richard L. McConnell and Lon A. Berk of Wiley, Rein & Fielding, Washington, D.C., for Travelers Indemnity Company.

OPINION

STEELE, Vice Chancellor.

Plaintiff E.I. du Pont de Nemours and Company ("DuPont") filed this action against Admiral Insurance Company and numerous other insurance companies seeking a declaration of the parties' rights, duties and liabilities under umbrella and excess liability insurance policies issued to DuPont by the defendants from 1967 to 1986. ¹ DuPont also seeks compensatory damages for defendants' alleged breach of the indemnity provisions concerning environmental claims against DuPont at a multitude of manufacturing and waste disposal sites.

The Court arranged the sites into four trial groups. See E.I. du Pont de Nemours and Co. v. Admiral Ins. Co., Del.Super., C.A. No. 89C-AU-99, Steele, R.J. (Jun. 15, 1993) (Dkt. No. 910) (Order). The first trial group involves two sites, Pompton Lakes, New Jersey and Necco Park/Niagara Falls, New York (collectively, "Trial Group I Sites"). See id. The parties filed nineteen motions for summary judgment or partial summary judgment regarding the Trial Group I Sites, each motion asserting a different legal theory. This opinion addresses two of these motions.

DuPont seeks partial summary judgment to determine the proper interpretation of pollution exclusions found in certain policies issued between 1970 and 1985. Certain Defendants ² seek summary judgment arguing pollution exclusions preclude coverage for DuPont's claims. This is the decision on these motions.

I. BACKGROUND

DuPont is a Delaware corporation with its principal place of business in Wilmington, Delaware. DuPont's primary business is the manufacture of chemical and specialty products. DuPont owns and operates several plants at sites located world-wide.

The defendants are numerous national and international insurance companies which sold DuPont umbrella excess insurance policies between 1967 and 1986. DuPont purchased the insurance policies to provide coverage for DuPont plants worldwide. Each defendant has separate policies with DuPont.

Before 1967, DuPont elected to self-insure risks arising from liabilities caused by third-party personal injury or property damage. When it began to purchase excess liability insurance in 1967, DuPont continued to self-insure the primary layer in the following amounts: $2.5 million from 1967-72; $5 million in 1972-78; $10 million in 1978-80; and $50 million in 1980. The defendants' insurance policies provide coverage in excess of DuPont's self-insured retention.

I now turn to a description of the Trial Group I sites and DuPont's activities at the Trial Group I sites which contributed to the environmental contamination.

A. Pompton Lakes Works

The first site, Pompton Lakes Works, was an explosives manufacturing facility in New Jersey. DuPont operated the facility from 1902 to 1993. DuPont disposed of waste in over 100 separate locations at the Pompton Lakes Works site, including the following principal sites of contamination:

(1) The Shooting Pond: An unlined pond in the northern part of the site where DuPont detonated millions of off-specification blasting caps every year from 1953 to 1988. DuPont dredged the lead-contaminated sludge on the bottom of the pond and spread it over an extensive area immediately adjacent to Acid Brook, a stream running through the property.

(2) The Old Shooting Pond: An unlined basin where DuPont detonated explosives, resulting in an extensive area of lead and mercury contaminated soil.

(3) The Upper and Lower Burning Grounds: An area where DuPont burned lead-based explosive powders and other materials contaminated with the powder on a daily basis from the 1940s to the 1980s. Lead-contaminated residues accumulated within the drainage basin of Acid Brook.

(4) The Lead Azide Factory: DuPont discharged wastewaters containing lead compounds into Acid Brook through settling ponds. The settling ponds were unlined from the 1930s to 1977, and concrete-lined from 1977 to 1986.

(5) Powder Processing, Cap Production and Laboratory Facilities: DuPont discharged washwater contaminated with lead-based powders either into Acid Brook, unlined ponds, sand pits and sumps or onto the ground in the immediate vicinity of Acid Brook at numerous facilities' locations. The discharges occurred until the early to mid-1980s.

(6) The Mercury Fulminate Factory: From 1912 until the end of mercury fulminate production in the 1950s, DuPont discharged mercury-contaminated wastewater into an unlined pond or pit within the floodplain of Acid Brook. DuPont also discharged fumes containing residual amounts of mercury and mercury fulminate into fume lines that ran up a hill overlooking Acid Brook.

(7) The Sawdust Waste Pile: DuPont dumped sawdust mixed with mercury and lead-based explosives directly onto the ground in a ravine draining to Acid Brook.

Not surprisingly, DuPont's waste disposal activities contaminated Acid Brook and the plant's soil and sediment with heavy metals, including lead and mercury. Contaminants travelled through Acid Brook and contaminated the area downstream from the plant at least between the years 1970 and 1986. DuPont has spent approximately 63.3 million dollars for extensive excavations of Acid Brook's streambed, banks and flood plain as well as the plant's soil and sediment.

Pompton Lakes Works also has extensive ground water contamination, resulting from additional DuPont waste disposal practices. For decades, DuPont placed thousands of gallons of untreated wastes, including cleaning solvents, into unlined lagoons. Two facilities, the "shell plant" (where DuPont created bronze and aluminum shells in blasting caps) and the "wire room" (where DuPont coated wire with tin in a chemical bath) primarily created the wastes. These practices ended in the early 1980s. Several other DuPont waste disposal practices contributed to the groundwater contamination, including dumping waste solvents directly on the ground or into unlined solvent "sumps", dumping laboratory liquid wastes down sink drains into pits or sumps and storing waste solvents and oils in unsealed drums which were allowed to overflow during rain.

B. Niagara Falls Plant

The Niagara Falls Plant began chemical manufacturing activities in 1896, producing a variety of chemicals including sodium, sodium compounds, cyanide compounds, ammonia, cholorinated organic solvents (referred to as "C-1" and "C-2"), polyvinyl alcohol, and adiponitrile. DuPont purchased the plant in 1930 and continued production. DuPont's principal chemical discharges at the Niagara Plant are as follows:

(1) Tank Washouts at the B-107 and B-84 Tank Farms: DuPont stored C-2 solvents in on-site storage tanks. DuPont washed solvent residues, known as "tank heels", from the tanks onto the bare ground. DuPont continued the practice until the 1970s.

(2) Solvent Burning Area: DuPont burned waste solvents in three open pits. Defendants do not concede the solvent burning areas are sources of contamination.

(3) Copper Sludge Disposal Pit: DuPont disposed of drum quantities of "copper sludge" at this site.

(4) On-Site Weathering Areas: From the 1940s to the 1970s, DuPont placed equipment and waste materials from the sodium, sodium cyanide, metal cyanide processes as well as other cyanide residues on the bare ground at several locations. The "weathering process" caused barium and cyanide to leach into the ground.

(5) Process Leaks and Spills: DuPont released chemicals into the...