Key Tronic Corp., Inc. v. Aetna (CIGNA) Fire Underwriters Ins. Co.
| Decision Date | 09 September 1994 |
| Docket Number | No. 59616-6,59616-6 |
| Parties | , 39 ERC 1591 KEY TRONIC CORPORATION, INC., a Washington Corporation, Appellant, v. AETNA (CIGNA) FIRE UNDERWRITERS INSURANCE COMPANY, a foreign corporation; Transamerica Insurance Group, a foreign corporation; Insurance Company of North America, a foreign corporation; St. Paul Fire and Marine Insurance Company, a foreign corporation; Central National Insurance Company of Omaha, a foreign corporation; Century Indemnity Company, a foreign corporation; Highlands Insurance Company, a foreign corporation; Safeco Insurance Company, a Washington corporation; Unigard Insurance Company; a Washington corporation; Unigard Mutual Insurance Company; a Washington corporation; and Safety Mutual Casualty Corporation, a foreign corporation, Respondents. |
| Court | Washington Supreme Court |
Stoel, Rives, Boley, Jones & Grey, Stevan D. Phillips, Deborah A. Elvins, Maureen A. Howard, Ann M. Holmes, Seattle, for appellant.
Lee, Smart, Cook, Martin & Patterson, Michael J. Bond, Richard C. Robinson, Simburg, Ketter, Sheppard & Purdy, Melvyn J. Simburg, Jonathan I. Feil, Seattle, Wilmer, Cutler & Pickering, Dennis M. Flannery, Lynn Bregman, John J. Kim, W. Scott Blackmer, Washington, DC, for respondents.
The trial court granted summary judgment in favor of six insurers, holding that as a matter of law pollution exclusions in their insurance policies preclude coverage for damage due to groundwater contamination resulting from leachates from toxic wastes disposed of at a Spokane County sanitary landfill by Key Tronic Corporation.
We reverse the trial court, and remand in light of our analysis herein and in Queen City Farms, Inc. v. Central Nat'l Ins. Co. of Omaha, 124 Wash.2d 536, 882 P.2d 703 (1994). Plaintiff Key Tronic Corporation, Inc. (Key Tronic), is a Washington corporation which manufactures computer keyboards in Spokane. As part of the manufacturing process, Key Tronic used a number of chemicals, including 1,1,1 Trichloromethane (1,1,1 TCA) and methylene chloride. These chemicals would become saturated with residue materials in the process, and become unusable. From about 1973 to 1975 Key Tronic hauled these wastes in 55-gallon drums to the Mica landfill in Spokane.
In 1975, Spokane County directed Key Tronic to deliver the liquid waste to a licensed sanitary landfill at Colbert rather than to the Mica site. The Colbert site was established in 1968. The Spokane County Health Department issued the operating permit for the Colbert site, while Spokane County owned and operated the landfill. Key Tronic hauled the wastes in barrels to the Colbert landfill and dumped the contents into the landfill. Key Tronic was instructed to open the barrels and drain them into the landfill.
During the period from 1975 to 1980 Key Tronic averaged one trip every 6 weeks to the landfill, annually disposing of thousands of gallons of liquid waste containing 1,1,1 TCA and methylene chloride. 1,1,1 TCA is an extremely hazardous waste.
In the fall of 1980, the Washington State Department of Ecology tested wells around the landfill and found that 1,1,1 TCA was present in higher than acceptable quantities. Numerous third party suits were brought against Key Tronic for personal injury and property damage resulting from groundwater contamination due to leaching of the waste chemicals from the landfill. One group of plaintiffs obtained a jury verdict which was upheld in Wilson v. Key Tronic Corp., 40 Wash.App. 802, 701 P.2d 518 (1985).
In August 1983, Colbert was designated as a national priority list site under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9601 et seq. (1980). In 1986, Key Tronic was notified it was a potentially responsible party under CERCLA, and in 1988 Key Tronic entered into a consent decree with the Department of Ecology and the United States Environmental Protection Agency under which it was obliged to pay $4.2 million to clean up the groundwater in and around Colbert.
Key Tronic was insured by several companies during the relevant period. On November 17, 1987, Key Tronic brought a declaratory judgment action against 11 of its primary and excess liability insurers, requesting clarification of the insurers' obligations to indemnify Key Tronic for damages and clean-up costs due to the groundwater contamination resulting from disposal of the wastes at the Colbert landfill. Six of the insurers remain in the action.
The six insurers moved for summary judgment, arguing that the policies issued to Key Tronic did not provide coverage for liability resulting from Key Tronic's intentional discharge of chemical wastes into the Colbert landfill. Although there are some variations in language in the policies, the trial court held, and there is no dispute about that holding, that the pertinent sections of the policies are "for all practical purposes ... identical." Clerk's Papers vol. 12, at 1837. Thus, for purposes of this appeal, the policies provide:
The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... bodily injury or ... property damage to which this insurance applies, caused by an occurrence....
Clerk's Papers vol. 5, at 688 (Aetna (CIGNA) Fire policy). An occurrence "means 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." Clerk's Papers vol. 5, at 693.
The insurers conceded for the purposes of the summary judgment motion that there were disputed issues of fact as to whether coverage was provided under the occurrence clauses of the policies. They argued, however, that coverage was excluded as a matter of law under the pollution exclusion clauses in the policies.
The policies exclude 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 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....
Clerk's Papers vol. 5, at 688 (Aetna (CIGNA) Fire policy). This exclusion is known as the "qualified pollution exclusion" and is found (first as an endorsement and then in the body of the policy) in standard comprehensive general liability (CGL) policies from 1970 to 1986. The last clause of the exclusion is an exception, which reinstates coverage if the "discharge, dispersal, release or escape" of the pollutants is "sudden and accidental."
The trial court granted the insurers' summary judgment motion. The trial court held that discharging the waste on the ground at the Colbert landfill was a "purposeful, planned and intentional act" which was performed repeatedly over 5 years; thus, the discharge was not accidental and therefore was not "sudden and accidental" within the meaning of the exception to the exclusion. The trial court held the pollution exclusions in the insurers' policies preclude coverage as a matter of law.
Key Tronic appeals the summary judgment. Certification was accepted from Division Three of the Court of Appeals.
The issues raised by the parties in this case mirror, for the most part, the issues in Queen City Farms, filed this day. We will not repeat the extensive analysis contained in that decision here, but will instead briefly summarize the holdings there which apply here. The parties are directed to the published opinion in Queen City Farms for further explication of the issues. We also address here certain arguments not made in Queen City Farms.
In reviewing the propriety of a summary judgment, the appellate court engages in the same inquiry as the trial court. Our Lady of Lourdes Hosp. v. Franklin Cy., 120 Wash.2d 439, 451, 842 P.2d 956 (1993). Summary judgment is proper if
the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Facts and the reasonable inferences therefrom are considered in favor of the nonmoving party, and summary judgment should be granted in favor of the moving party only if reasonable minds could reach but one conclusion from all the evidence.
Our Lady of Lourdes, at 452, 842 P.2d 956; Wilson v. Steinbach, 98 Wash.2d 434, 437, 656 P.2d 1030 (1982).
Key Tronic argues that the insurers concede that the groundwater contamination was unexpected and unintended and therefore was an occurrence. Key Tronic further maintains that the pollution exclusion essentially restates the occurrence definition. Key Tronic contends that there is no guidance as to whether the "sudden and accidental" exception includes authorized disposal of wastes at a sanitary landfill, but that, assuming it does, there is more than one "discharge, dispersal, release or escape" involved here, i.e., the initial depositing of the wastes in the landfill and the later escape of toxic material from the landfill to the groundwater. Because the exclusion is drafted in the disjunctive ("discharge, dispersal, release or escape"), Key Tronic reasons, and the escape which contaminated the groundwater was concededly unexpected and unintended, the exclusion should not apply. In any case, Key Tronic maintains the use of the term "or" injects ambiguity into the exception, and argues that it ultimately means that every phase of dispersal is nonaccidental if any phase is nonaccidental.
In contrast, the insurers primarily argue that summary judgment should be affirmed because it is undisputed that Key Tronic...
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