Industrial Indem. Ins. Co. v. Crown Auto Dealerships, Inc.
| Decision Date | 10 July 1991 |
| Docket Number | No. 90-3359,90-3359 |
| Parties | INDUSTRIAL INDEMNITY INSURANCE COMPANY, a foreign insurance corporation, Plaintiff-Counterdefendant, v. CROWN AUTO DEALERSHIPS, INC., a Florida corporation, Stone Buice, Inc., a Florida corporation, Defendants-Counterplaintiffs. SOUTHEASTERN FIDELITY INSURANCE CORPORATION, Plaintiff-Appellee, v. DIMMITT CHEVROLET, INC., Larry Dimmitt Cadillac, Inc., Defendants-Appellants. FEDERATED MUTUAL INSURANCE COMPANY, Plaintiff-Counterdefendant, v. LEE RAGATZ VOLKSWAGEN, INC., Defendant-Counterplaintiff. FEDERATED MUTUAL INSURANCE COMPANY, Plaintiff, v. KENYON DODGE, INC., Defendant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
William F. McGowan, Jr., Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tampa, Fla., Joseph W. Dorn, Kilpatrick & Cody, Thomas K. Bick, Washington, D.C., for defendants-appellants.
Robert E. Austin, Jr., Austin, Lawrence & Landis, Leesburg, Fla., Hal K. Litchford, Orlando, Fla., for plaintiff-appellee.
Jeff G. Peters, Asst. Atty. Gen., Tallahassee, Fla., amicus curiae State of Fla.
Thomas W. Brunner, Wiley, Rein & Fielding, Washington, D.C., amicus curiae Insurance Environmental Litigation Ass'n.
Appeal from the United States District Court for the Middle District of Florida.
Before ANDERSON and DUBINA, Circuit Judges, and GIBSON *, Senior Circuit Judge.
This case involves an important issue of Florida law that has not been addressed by the Supreme Court of Florida--i.e., whether the liability insurance policy at issue provides coverage for claims against the insured by environmental authorities arising out of hazardous waste contamination. Because similar insurance contracts have received varied interpretations in other jurisdictions throughout the country, we believe that the issue is one appropriate for resolution by Florida's highest court. We therefore certify the question to the Supreme Court of Florida.
TO THE SUPREME COURT OF FLORIDA AND ITS HONORABLE JUSTICES:
I. Statement of the Facts and Procedural History
The following facts, taken from the district court's opinion, Industrial Indem. Ins. Co. v. Crown Auto Dealerships, 731 F.Supp. 1517, 1518-19 (M.D.Fla.1990), are undisputed. Appellants Dimmitt Chevrolet, Inc. and Larry Dimmitt Cadillac, Inc. ("Dimmitt") operated two automobile dealerships. From 1974 through 1979, Dimmitt sold the used crankcase oil generated by its business to Peak Oil Company ("Peak"). From 1954 to 1979, Peak recycled the oil at its plant in Hillsborough County, Florida for sale as used oil.
In 1983, the Environmental Protection Agency ("EPA") determined that Peak's oil operations had resulted in extensive soil and groundwater pollution at and around the plant site. Much of this pollution resulted from Peak's placement of waste oil sludge in unlined storage ponds. Chemicals from the sludge then leached into the soil and groundwater. Some of the pollution also derived from oil spills and leaks at the site, including a 1978 incident in which a dike collapsed and allowed oily wastewater to be released from a holding pond, 1 and the occasional runoff of contaminated rainwater.
In July 1987, the EPA notified appellants that a release of hazardous substances had occurred at the Peak site and that appellants were potentially responsible parties ("PRP") for the costs of investigating and cleaning up the pollution. This liability is imposed, pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Sec. 9607 et seq., on anyone who generates, transports, or disposes of hazardous substances. In February 1989, Dimmitt and other PRPs entered into two administrative orders with EPA. Without conceding liability, appellants agreed to undertake remedial measures at the Peak site.
Appellee Southeastern Fidelity Insurance Corporation ("Southeastern") provided comprehensive general liability ("CGL") insurance coverage to Dimmitt from 1972 through 1980. 2 The policy covered Dimmitt
for all sums which the INSURED shall become legally obligated to pay as DAMAGES because of A. BODILY INJURY or B. PROPERTY DAMAGE to which this insurance applies, caused by an occurrence, and the Company shall have the right and duty to defend any suit against the INSURED seeking DAMAGES on account of such BODILY INJURY or PROPERTY DAMAGE, even if any of the allegations of the suit are groundless....
An "occurrence" is defined by the policy as
an accident including continuous or repeated exposure to conditions, which result in BODILY INJURY or PROPERTY DAMAGE neither expected nor intended from the standpoint of the INSURED....
However, the policy excluded coverage for
BODILY INJURY or PROPERTY DAMAGE arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids, or gases, waste materials ... into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental....
In October 1988, Southeastern filed a declaratory judgment action against Dimmitt, seeking a declaration by the district court that Southeastern owed no duty to defend or indemnify Dimmitt under the CGL policy. Dimmitt filed a counterclaim seeking a contrary declaration. Both parties subsequently filed motions for summary judgment. The district court granted summary judgment in favor of Southeastern, reasoning that the pollution exclusion was not ambiguous and that the word "sudden" should be given a temporal meaning. Industrial Indem. Ins. Co. v. Crown Auto Dealerships, 731 F.Supp. 1517 (M.D.Fla.19...
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