In re Idleaire Technologies Corporation, Case No. 08-10960(KG) (Bankr.Del. 2/18/2009)
| Decision Date | 18 February 2009 |
| Docket Number | Re Dkt.No. 17.,Adv. No. 08-51227(KG).,Re Dkt.No. 11.,Case No. 08-10960(KG). |
| Parties | In re: IDLEAIRE TECHNOLOGIES CORPORATION, Chapter 11, Debtor. WAUSAU BUSINESS INSURANCE COMPANY and EMPLOYERS INSURANCE OF WAUSAU COMPANY, Plaintiffs/Counterclaim Defendants, v. IDLEAIRE TECHNOLOGIES CORPORATION, Debtor/Defendant/Counterclaim Plaintiff, and NANCY YOUNGER and ESTATE OF WILLIAM YOUNGER, Claimants/Movants/Defendants. |
| Court | U.S. Bankruptcy Court — District of Delaware |
Charlene D. Davis, Esq., BAYARD, P.A. Wilmington, DE, Laura A. Foggan, Esq., WILEY REIN LLP, Washington, DC, Attorneys for Wausau Business Insurance Company and Employers Insurance of Wausau:
John C. Phillips, Esq., PHILLIPS, GOLDMAN & SPENCE, PA, Wilmington, DE, Elizabeth Russo, Esq. LAW OFFICE OF DON RUSSO, P.A., Miami, FL, Attorneys for Idleaire Technologies Corp. and Estate of William Younger:
In this declaratory judgment adversary proceeding, insurers seek to exclude coverage of defendant/debtors, IdleAire Technologies Corporation's ("IdleAire" or the "Debtors") insurance policies and thereby avoid paying losses from a potential judgment against Debtors in a personal injury action. Plaintiffs Wausau Business Insurance Company and Employers Insurance of Wausau Company (collectively "Wausau") have filed a motion for summary judgment and claimants/defendants Nancy Younger and the Estate of William Younger (the "Youngers"), the plaintiffs in the personal injury action, have cross-moved for summary judgment. Wausau bases its motion on two arguments: (1) that certain pollution exclusion endorsements (the "Pollution Exclusions") in the IdleAire Insurance Policies (the "Policies") exclude coverage for the Youngers' injuries, and (2) that actions taken by the IdleAire executives breached the terms of the Policies, negating Wausau's responsibility to pay the Youngers' claims. The Youngers cross-moved for summary judgment on the Pollution Exclusions argument and contend that summary judgment is inappropriate as to the breach of Policies argument. The Court heard oral argument on these motions on January 22, 2009. For the reasons set forth below, the Court will grant summary judgment in favor of the Youngers on the Pollution Exclusions issue and deny summary judgment with respect to the breach of Policies issue.
The Court's jurisdiction rests upon 28 U.S.C. §§ 157(b)(1) and 1334(b) and (d). The adversary proceeding is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B) and (O).
IdleAire produced HVAC delivery systems which were units intended to provide heating, cooling, and ventilation at truck stops to cabs of trucks so that they could be used as resting and sleeping accommodations for drivers while their engines were shut off. On or about July 12, 2007, the Youngers suffered injuries stemming from carbon monoxide poisoning which was allegedly caused by a malfunctioning Idleaire HVAC unit while they slept in the cab of their truck. Specifically, they allege that instead of filtering and removing all toxins from fumes in the air and emissions surrounding the truck, the unit drew those poisonous emissions into the cab of their truck. Nancy Younger suffered permanent and disabling injuries and William Younger subsequently died of complications related to the accident.
According to the Youngers, they promptly asserted a claim against IdleAire, and in the following weeks, communicated with a number of IdleAire executives, including a telephone conversation on July 25, 2007 with Thomas Badgett, IdleAire's Assistant General Counsel. The Youngers further allege that during these communications, IdleAire offered to compensate them for any costs associated with the incident, indicating that they had visited the site of the accident and admitting that there was a problem, one which they were grateful that the Youngers had brought to their attention.
Wausau contends that IdleAire first provided notice to them of the Younger claims on January 18, 2009, more than five months after becoming aware of them. On both February 14 and April 14, 2008, Wausua denied coverage to IdleAire for the Youngers' claims, citing the Pollution Exclusions included in the Policies as cause for the denial.
The Youngers filed a wrongful death action against Debtors on or about April 30, 2008 in the Circuit Court for Knox County, Tennessee (the "Action"). Their complaint asserts causes of action for strict product liability, negligent failure to warn, breach of express and implied warranties and negligence. They are seeking $18 million for compensatory damages, discretionary costs and attorney's fees. On May 12, 2008, the Debtors filed a Chapter 11 Voluntary Petition in this Court, staying the Action pursuant to 11 U.S.C. §362(a). Wausau filed an adversary proceeding in the IdleAire case against the Debtors and the Youngers on August 13, 2008, seeking declaratory relief regarding the availability of coverage for the Action under the Policies. On October 27, Wausau filed the motion for summary judgment at issue here (D.I. 12). The Youngers filed their Response and Cross-Motion for Summary Judgment on December 3, 2008 (D.I. 17). IdleAire did not participate in the briefing or argument of the motions.
Wausau issued two policies, a primary policy and a secondary, umbrella, policy to the Debtors. Wausau Business Insurance Company issued a Commercial Package Policy (the "CGL Policy") which none of the parties dispute was in effect at the time of the Youngers' injuries. The CGL Policy contains a Total Pollution Exclusion Endorsement, language used industry-wide to exempt insurers from covering those sums for which the insured is liable for polluting events. That language is as follows:
This insurance does not apply to:
f. (1) The "contamination" of any "environment" by "pollutants" that are introduced at any time, anywhere, in anyway.
(2) Any "bodily injury," "personal and advertising injury" or "property damage arising out of such "contamination". . .
15 "Pollutant" means any irritant, including noise or sound, or any solid, liquid, gaseous or thermal "contaminant," including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.
As used in this endorsement, the following terms have the following meanings:
"Contamination" means any unclean or unsafe damaging or injurious or unhealthful condition arising out of the presence of "pollutants," whether permanent or transient in any "environment."
"Environment" includes any person, any man-made object or feature, animals, crops or vegetation, land, bodies of water, underground water or water table supplies, air and any other feature of the earth or its atmosphere, whether or not altered, developed or cultivated, including, but not limited to any of the above, owned, controlled or occupied by the insured.1
Employers Insurance of Wausau Company issued an Umbrella Excess Liability Policy (the"UEL Policy") to the Debtors, a separate policy which was also in effect at the time of the incident. This policy similarly contains a pollution exclusion providing:
This insurance does not apply to:
1. Pollution
a. "Bodily injury," "property damage" or "personal and advertising injury" which would not have occurred in whole or part but for the actual, alleged, potential or threatened discharge, dispersal, seepage, migration, release, escape or presence of "pollutants" at any time and whether occurring indoors or outdoors. . .2
In their motion for summary judgment, Wausau asserted two bases for granting their request. Primarily, they argued that under Tennessee law,3 the circumstances presented in this case bar coverage under the pollution exclusions. They further argued that in the alternative, if this Court holds that the facts in this case do not trigger the Pollution Exclusions, the actions of the IdleAire executives, alleged admissions of guilt in response to the Youngers' claims, constitute a breach of the insurance contract, forfeiting their coverage. The Youngers, in their cross-motion, argued that as a matter of law, the Pollution Exclusion argument should be resolved in their favor, and that granting summary judgment on the notice argument would be improper because Wausau has not met its burden in demonstrating prejudice to the insurers, a necessary element for the Court to grant the requested relief.
Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law."4 In a motion for summary judgment, the moving party "always bears the initial responsibility of informing the. . . court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories and admission on file, together with affidavits, if any,' which it believes demonstrate the absence of a genuine issue of fact."5
The party opposing the motion "must do more than simply show that there is some metaphysical doubt as to the material facts."7
Before a court will find that a dispute about a material fact is genuine, there must be sufficient evidence upon which a reasonable...
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