Lindsay Mfg. Co. v. Hartford Acc. & Indem. Co.

• Decision Date: 13 December 1995
• Docket Number: CV 90-0-610.
• Citation: 911 F. Supp. 1249
• Parties: LINDSAY MANUFACTURING CO., Plaintiff, v. HARTFORD ACCIDENT & INDEMNITY COMPANY, and Hartford Insurance Company of Illinois, Defendants and Counterclaimants.
• Court: U.S. District Court — District of Nebraska

911 F. Supp. 1249

LINDSAY MANUFACTURING CO., Plaintiff, v. HARTFORD ACCIDENT & INDEMNITY COMPANY, and Hartford Insurance Company of Illinois, Defendants and Counterclaimants.

CV 90-0-610.

United States District Court, D. Nebraska.

December 13, 1995.

William J. Brennan, Jr., Gerald L. Friedrichsen, William J. Riley, Fitzgerald, Schorr Law Firm, Omaha, NE, William H. Grant, Grant, Rogers Law Firm, Columbus, NE, for Lindsay Manufacturing Company.

William M. Lamson, Jr., Lyman L. Larsen, Kennedy, Holland Law Firm, Omaha, NE, James R. Murray, Robert S. Soderstrom, Tressler, Soderstrom Law Firm, Chicago, IL, for Hartford Accident & Indemnity Company, and Hartford Insurance Company.

MEMORANDUM AND ORDER

SHANAHAN, District Judge.

Before the court are: (1) filing no. 388, the "Plaintiff's Motion for Partial Summary Judgment and Alternative Motion to Certify Questions to the Nebraska Supreme Court" filed by the plaintiff, Lindsay Manufacturing Co. ("Lindsay"); and (2) filing no. 391, the "Defendants' Supplemental Motion for Summary Judgment," filed by the defendants and counterclaimants, Hartford Accident and Indemnity Company and Hartford Insurance Company of Illinois (collectively "Hartford").

Lindsay operates a manufacturing plant in Lindsay, Nebraska which manufactures, among other items, irrigation equipment. During Lindsay's manufacturing process, steel parts of the irrigation equipment are galvanized (zinc coated). Prior to galvanization, the steel is cleaned or "pickled" by immersion in a bath of sulfuric acid which is referred to as "pickle liquor." When pickle liquor is no longer effective, it is called "spent pickle liquor" ("SPL"). SPL contains substances such as sulfuric acid, lead, chromium and zinc. From the commencement of its galvanizing operations in 1972 through the end of 1982, Lindsay disposed of SPL by pumping it into an open, unlined, earthen waste pit.

SPL is a hazardous waste. In 1980, the United States Environmental Protection Agency ("EPA") determined that Lindsay was a potential handler of hazardous waste and notified Lindsay accordingly. Lindsay then began to develop a plan for remediation and subsequently entered into stipulations with the Nebraska Department of Environmental Control ("NDEC") which was working in conjunction with EPA.

A "Stipulation and Agreement," dated January 5, 1989 by and between the NDEC and Lindsay, recites that a release of hazardous substances and pollutants at Lindsay's facility in Lindsay, Platte County, Nebraska, had resulted in contamination of the soil and groundwater. The "Stipulation and Agreement" states that Lindsay was cooperating with NDEC by conducting site assessment and remedial activities to address the cleanup of the contamination or pollution. More specifically, at § II, ¶ 5, the "Stipulation and Agreement" states:

Lindsay and NDEC entered into a Stipulation on April 19, 1983 in which Lindsay agreed to assess the extent of contamination, propose a remedial action plan, submit a groundwater monitoring schedule, submit a closure plan for the acid disposal pit, obtain a National Pollutant Discharge Elimination System (NPDES) permit, and complete construction of a wastewater treatment facility. This Stipulation was subsequently amended on August 10, 1983 and March 7, 1984. Lindsay submitted to NDEC a closure plan for the disposal pit and remedial action plan for the cleanup of contamination which were approved by NDEC on September 1, 1983 with certain additions. The waste disposal pit was certified as closed pursuant to RCRA and 40 C.F.R. Part 265 on October 27, 1983. The March 7, 1984 Second Amended Stipulation requires Lindsay to continue monthly monitoring of the aquifer and long-term remedial action as necessary to restore the aquifer to background condition as determined by NDEC.

The "Stipulation and Agreement" acknowledges that hazardous substances, pollutants or contaminants, as defined or characterized in the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), have been discharged by Lindsay at its Nebraska plant site. In the "Stipulation and Agreement," Lindsay agrees to perform remedial work in compliance with CERCLA, as amended by the Superfund Amendments and Reauthorization Act ("SARA"), as well as in compliance with the Nebraska Environmental Protection Act ("NEPA").

After Lindsay received notice from the EPA in May 1980 that it was a potential handler of hazardous waste, Lindsay employed Terry A. Bonham as an environmental consultant. In a "Report on Plant Environmental Program" dated November 18, 1980, Bonham advised that Lindsay's "galvanizing plant waste" constitutes a hazardous waste under the Resource Conservation and Recovery Act ("RCRA"). Additionally, Lindsay agrees that the waste pit was certified as closed in 1983 pursuant to RCRA.

Until October 12, 1988, Lindsay was a wholly-owned corporate subsidiary of DEKALB Ag Research, Inc., now known as DEKALB Energy Company ("DEKALB"). Pursuant to stock offerings in 1988 and 1989, Lindsay became a separate, publicly-owned corporation. (See "Prospectus" dated October 12, 1988.)

This litigation concerns two standard policies of comprehensive general liability ("CGL") insurance which Hartford issued to DEKALB and which include Lindsay as a "named insured." Specifically, Hartford Accident & Indemnity Company issued a primary policy, no. 83 CLR P10722E, for the period from January 1, 1982 to January 1, 1983. Hartford Insurance Company of Illinois issued an umbrella liability policy, no. 83 HU 603857, for coverage in excess of the primary policy during the same period.

Notwithstanding that Lindsay began its investigation of the contamination sometime in 1980 and entered into stipulations with NDEC for remedial action early in 1983, it was not until October 1985 that Hartford received notice of the contamination, investigation, remedial action plan and cleanup activity. In a letter of October 4, 1985, Lindsay notified Hartford concerning the contamination and referred to the primary policy, "Policy No. 83 CLRP 10722E." In that letter, Lindsay also stated: "We are filing this claim under the policy noted above for this loss."

Although Hartford did make some payments to Lindsay regarding remedial activities involving the contamination, Hartford subsequently refused to make any additional payments. In response to Hartford's refusal, Lindsay filed its action in a state court, but Hartford removed that action to this court.

In its Petition filed in the state court, Lindsay alleges that NDEC and EPA have "asserted claims against Lindsay seeking to compel Lindsay to clean up the aquifer underlying and in the vicinity of Lindsay's plant." Lindsay seeks a recovery based on a separate agreement with Hartford "to reimburse Lindsay for all the expenses incurred by virtue of the claims made by NDEC and EPA;" ("First Theory of Recovery"); estoppel of Hartford to deny coverage ("Second Theory of Recovery"); Hartford's breach of its policies issued to Lindsay ("Third Theory of Recovery"); and "Equitable Relief requiring Hartford to continue paying under the insurance contracts and agreement with Lindsay," that is, a "temporary and permanent injunction requiring Hartford to pay on a quarterly basis the expenses incurred by Lindsay" ("Fourth Theory of Recovery"). Hartford denied liability to Lindsay and counterclaimed, seeking to recover back the payments made regarding Lindsay's efforts to remedy the contamination.

MOTIONS FOR SUMMARY JUDGMENT

Lindsay's Motion.

In its motion for summary judgment, Lindsay requests the determinations that "(a) the laws of the State of Illinois govern the substantive issues in this litigation; (b) Hartford's counterclaim, whether based upon theories of fraud, misrepresentation or mutual mistake of fact, are barred; (c) Hartford waived any violation of the notice provisions of its policies as a basis to deny coverage; (d) Hartford's payments were not made under a reservation of rights; (e) Hartford did not issue a reservation of rights under its umbrella policy; and (f) Hartford agreed to pay the ongoing expenses for cleaning the aquifer subject only to an audit of the expenses." (Filing no. 388).

"By its motion for summary judgment, Lindsay seeks a summary judgment finding Hartford's counterclaim is barred as a matter of law. Lindsay also seeks a court order directing Hartford to indemnify Lindsay for the costs it has incurred and will incur to comply with the actions required by the EPA and the NDEC to clean the aquifer." (Lindsay's brief at 2; submitted February 10, 1995).

Hartford's Motion.

In its motion for summary judgment, Hartford seeks judgment that there is no coverage afforded Lindsay under Hartford's CGL policies involved in this action. Also, Hartford seeks judgment for restitution of the payments to Lindsay for reimbursement of cleanup costs regarding the waste pit at Lindsay's plant.

SUMMARY JUDGMENT

With respect to each of the pending motions for summary judgment (filing nos. 388 and 391), the court must examine the record in the light most favorable to the nonmoving party. Get Away Club, Inc. v. Coleman, 969 F.2d 664, 666 (8th Cir.1992). However, summary judgment is "properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986).

The proponent of a motion for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323, 106 S.Ct. at 2553. The proponent need not, however,...