Joy Technologies, Inc. v. Liberty Mut. Ins. Co.
| Decision Date | 21 July 1992 |
| Docket Number | No. 20153,20153 |
| Citation | 187 W.Va. 742,421 S.E.2d 493 |
| Court | West Virginia Supreme Court |
| Parties | , 35 ERC 1782 JOY TECHNOLOGIES, INC., Plaintiff Below, Appellant, v. LIBERTY MUTUAL INSURANCE COMPANY, et al., Defendants Below, Appellee. |
Syllabus by the Court
1. "In a case involving the interpretation of an insurance policy, made in one state to be performed in another, the law of the state of the formation of the contract shall govern, unless another state has a more significant relationship to the transaction and the parties, or the law of the other state is contrary to the public policy of this state." Syllabus, Liberty Mutual Insurance Company v. Triangle Industries, Inc., 182 W.Va. 580, 390 S.E.2d 562 (1990).
2. The public policy of the State of West Virginia is that the law of the State should be administered in such a way as to insure that corporations which seek to do business in West Virginia act in a manner consistent with their studied, unambiguous, official, affirmative representations to the State, its subdivisions, or its regulatory bodies.
John H. Shott, J.W. Montgomery, III, Michael H. Ginsberg, Curt Vazquez, Nancy L. Heilman, Cohen & Grigsby, Bluefield, for appellant.
James M. Brown, Lee H. Glickenhaus, Martha J. Koster, Pittsburgh, Pa., for appellee.
This is an appeal by Joy Technologies, Inc., 1 from an order entered by the Circuit Court of Mercer County on June 26, 1990. That order granted Liberty Mutual Insurance Company 2 partial summary judgment in an action brought by Joy Technologies for indemnification for certain pollution claims which had been paid by Joy Technologies. Liberty Mutual had issued commercial general liability policies to Joy Technologies which had obligated it to defend and indemnify Joy for liability claims for personal injury and property damage. It, however, refused to indemnify Joy on the pollution claims involved in the present case on the ground that an exclusion clause contained in certain of its policies excluded coverage for such claims. The circuit court, in granting Liberty Mutual summary judgment, in essence, found that the exclusion clause precluded coverage for pollution damage unless the pollution was "sudden and accidental." In reaching that conclusion, it appears that the circuit court, relying upon the holding of this Court in Liberty Mutual Insurance Company v. Triangle Industries, Inc., 182 W.Va. 580, 390 S.E.2d 562 (1990), applied the law of Pennsylvania, which indicates that the exclusion clause in question relieves an insurer of liability unless the pollution was "sudden and accidental."
On appeal, Joy Technologies claims that West Virginia had a more significant relationship with the parties in this case than Pennsylvania and that, under the circumstances, and under the holding in Liberty Mutual Insurance Company v. Triangle Industries, Inc., Id., the law of West Virginia rather than the law of Pennsylvania should have been applied in resolving the issues raised. It also claims that under West Virginia law the exclusion clause should be construed to preclude liability of the insurer only when pollution damage was expected or intended by the insured.
After reviewing the questions presented and the record, this Court agrees with Joy Technologies' assertions. Accordingly, the judgment of the Circuit Court of Mercer County is reversed.
The facts in this case show that Joy Technologies, Inc., is a successor of Joy Manufacturing Company. Joy Manufacturing Company was a Pennsylvania corporation with executive offices in Pennsylvania and with a facility in West Virginia.
In 1968, Joy Technologies, Inc., purchased a manufacturing plant in Bluefield, West Virginia. Joy utilized the facility for cleaning and rebuilding mining machinery. Joy sold the plant in 1980 and moved its operations to Bluefield, Virginia. Joy continues to employ a number of West Virginia residents in its Bluefield, Virginia, operations.
In cleaning and repairing mining machinery at its West Virginia facility, Joy utilized oil containing polychlorinated biphenyls or "PCBs." The same type of oil had been utilized at the facility before Joy purchased it.
In the 1970's, concerns arose over the potential environmental hazards of PCBs, and in the mid-1970's the United States Environmental Protection Agency advised Joy Technologies, Inc., of the concerns. Subsequently, Joy adopted measures to prevent pollution from the PCBs. In spite of its efforts, in 1985 Joy discovered PCB contamination at the Bluefield, West Virginia, site and on neighboring property. Joy notified the Environmental Protection Agency and negotiated an order with the Agency to remediate the contamination. Pursuant to the order, Joy eliminated the pollution at a cost of over $6,000,000.
Additionally, after the pollution was discovered, owners of property adjoining the Bluefield site filed suit against Joy for property damage, and the individual who had purchased the Bluefield site from Joy, Elwin Aliff, brought an action claiming that the PCB contamination had diminished the value of the property. Personal injury claims were also asserted by employees, former employees, and their spouses who alleged that they had suffered bodily injuries as a result of exposure to PCBs and other substances.
From 1944 until January 1, 1978, Liberty Mutual Insurance Company, a Massachusetts corporation with its principal place of business in Massachusetts, issued commercial general liability policies to Joy. The policies obligated Liberty Mutual to defend and indemnify Joy for liability claims based on personal injury or property damage arising out of an "occurrence." The policies defined "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured."
The policies which Liberty Mutual issued to Joy Technologies beginning in 1972 contained an exclusion clause. The exclusion clause provided that coverage did not extend:
[T]o 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 or other irritants, contaminants or pollutants 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. 3
After the various claims mentioned above arose against Joy Technologies as a result of the pollution of the Bluefield, West Virginia, facility, Liberty Mutual Insurance Company, taking the position that the exclusion clause contained in the policies issued after 1971 relieved it of liability, refused to indemnify and defend Joy as was generally required on the policies which it had issued to Joy. Joy, therefore, instituted this action for breach of contract and for a declaratory judgment that it is entitled to defense and indemnity for personal injury and property liability arising out of the pollution at the Bluefield facility.
After the filing of Joy's complaint, Liberty Mutual moved for summary judgment on the claims arising after 1971 at the Bluefield, West Virginia, facility on the basis of the exclusion clause contained in the policies issued to Joy after 1971. Liberty Mutual took the position that since the pollution was not "sudden and accidental," the exclusion clause barred it of liability for the years that its policies contained the clause. In support of the motion, Liberty Mutual introduced depositions taken in an underlying personal injury and property damage case brought against Joy Technologies, Inc. The evidence from that case showed that Joy rebuilt motors used in mining equipment at the Bluefield, West Virginia, facility. The rebuilding of the motors required the emptying of PCB contaminated oil. In emptying the motors, the oil was drained into five-gallon buckets. From 1968 until 1972 or 1973, Joy's employees regularly disposed of the oil by dumping it down a storm drain outside the AC motor room at the facility, by dumping it onto a gravel parking lot, or by dumping it on a hill or bank at the site. There was also evidence that PCB-contaminated oil was routinely spattered inside the building where the motors were rebuilt, that the oil was everywhere, and that there were puddles of it on the floor. At times, buckets of the oil were knocked over by forklifts and spilled. The testimony also indicated that spills occurred on a regular basis. Liberty Mutual essentially argued that this evidence showed that the pollution was not "sudden and accidental" and that coverage for it was excluded by the exclusion clause.
At the submission of briefs and oral arguments, the Circuit Court of Mercer County granted Liberty Mutual's motion for summary judgment. In so doing, the Court apparently concluded that under Liberty Mutual Insurance Company v. Triangle Industries, Inc., Id., Pennsylvania law governed the interpretation of the exclusion clause in the policies issued by Liberty Mutual in 1972 and the following years. Further, under Pennsylvania law the exclusion clause precluded coverage for claims arising out of pollution at the Bluefield facility for the period Liberty Mutual's policies contained the clause. On June 26, 1990, the circuit court issued a written order formally embodying its conclusions. It is from that order that Joy Technologies, Inc., now appeals.
On appeal, Joy Technologies first asserts that West Virginia had a more significant relationship with the parties in the case than Pennsylvania and that, under the circumstances, the circuit court should have applied the law of West Virginia rather than the law of Pennsylvania in resolving the issues presented.
The question of whether West Virginia law or Pennsylvania law applies...
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