Monarch Greenback, LLC v. Monticello Ins. Co.

• Decision Date: 29 November 1999
• Docket Number: No. CV98-320-S-EJL.,CV98-320-S-EJL.
• Citation: 118 F.Supp.2d 1068
• Parties: MONARCH GREENBACK, LLC, an Idaho limited liability company, Plaintiff, v. MONTICELLO INSURANCE COMPANY, a Delaware corporation, Defendant.
• Court: U.S. District Court — District of Idaho

118 F.Supp.2d 1068

MONARCH GREENBACK, LLC, an Idaho limited liability company, Plaintiff, v. MONTICELLO INSURANCE COMPANY, a Delaware corporation, Defendant.

No. CV98-320-S-EJL.

United States District Court, D. Idaho.

November 29, 1999.

Gary D Babbitt, Albert P Barker, Richard Burleigh, Hawley Troxell Ennis & Hawley, Boise, ID.

Donald J. Farley, Jenny B. Carey, Hall Farley Oberrecht & Blanton, Boise, ID.

Randall E. Phillips, Donald Parthum, Donald Parthum Jr., Provizer & Phillips, Southfield, MI.

MEMORANDUM DECISION AND ORDER

LODGE, District Judge.

Pending before the Court in the above entitled matter are the Plaintiff's Motion for Partial Summary Judgment (Docket No. 18), Defendant's Motion for Summary Judgment (Docket No. 23), and Plaintiff's Motion for Extension of Time Pursuant to Rule 56(f) (Docket No. 33). Having fully reviewed the record, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, this matter shall be decided on the record before this Court without oral argument. D. Id. L. Civ. R. 7.1.

I. FACTUAL BACKGROUND

Plaintiff, Monarch Greenback, LLC ("Monarch"), owns approximately 110 acres near Atlanta, Idaho ("the Atlanta site"). Mining and milling operations occurred at the site from roughly the 1930s until the 1950s. Tailings¹ from the mining and milling operations were deposited into two main impoundments located on the site: the upper tailings impoundment and the lower tailings impoundment.

In 1996, Monarch purchased from Monticello Insurance Company ("Monticello") an insurance policy providing certain general liability insurance for the Atlanta site ("the policy"). The policy was renewed to provide coverage effective for the period of March 16, 1997 to March 16, 1998 and the record indicates that Monarch made the requisite premium payments under the policy. The policy provided coverage, subject to its terms, conditions and exclusions, for "property damage" ("Coverage A") occurring on the Atlanta site and within the policy period, and for "personal injury" ("Coverage B") arising out of Monarch's business if the offense occurs on the Atlanta site and within the policy period. The policy also provides that Monticello had the right and duty to defend any "suit" seeking damages covered under either Coverages A or B.

On May 15, 1997, a structural failure occurred in the upper tailings impoundment resulting in the release of a large volume of tailings into and over the lower tailings impoundment ("the 1997 occurrence"). The tailings flowed downhill onto land owned by the United States Forest Service ("USFS"), Green Tree, Inc. ("Green Tree"), and into Montezuma Creek and the Middle Fork of the Boise River, which is owned by the State of Idaho.

The 1997 occurrence prompted Terracon Consultants Western, Inc. ("Terracon")², the USFS, the Idaho Division of Environmental Quality ("DEQ"), the Idaho Department of Water Resources, the United States Environmental Protection Agency ("EPA"), and the Army Corp of Engineers to begin investigating the effects of the released tailings on the environment. Water and soil samples collected during the investigation indicated the existence of several contaminants of concern.³ Of these, arsenic is the contaminant of primary concern.

On May 28, 1997, Green Tree sent a letter to Monarch demanding that Monarch cover all costs and expenses incurred by Green Tree to return its land back to the condition it was in prior to the 1997 occurrence. Green Tree also stated that it expected to be compensated for damages to its property and the potential economic gains it was expecting with development of the property.

On or about June 4, 1997, Monarch notified its insurance agent, Christensen and Associates, of the 1997 occurrence in order to tender the insurance company's defense as to Green Tree's claims and as to any future claims asserted by the United States and/or the State of Idaho. Christensen and Associates subsequently notified Monticello. On July 11, 1997, Monticello acknowledged receipt of Monarch's claim, identified a number of coverage issues, and stated that it intended to investigate the matter under a full reservation of policy rights.

Monarch entered into a Consent Order with the DEQ on July 11, 1997. The order laid out the obligations and responsibilities of Monarch with respect to investigating and interim and final remediation at the site.

On or about July 21, 1997 Monticello requested information, documents or records from Monarch to assist with Monticello's investigation. On August 11, 1997 Monarch provided several documents and written responses.

On August 6, 1997, the EPA issued an Administrative Order pursuant to Section 104(e) of the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. § 9604(e), as amended ("CERCLA"). The Order provided employees and representatives of the EPA and the State of Idaho with access to the site in order to effectuate response actions under CERCLA.

Monarch agreed to an Administrative Order of Consent for a Removal Action with the USFS on October 16, 1997. The Order was given in coordination with and consistent to the Consent Order Monarch entered into with the State of Idaho on July 11, 1997. The Order further provided that the USFS be reimbursed for certain costs.

On or about October 20, 1997 Monticello denied coverage claiming that it did not have any obligation to defend or indemnify Monarch for the claims by Green Tree and the Government. Monticello's denial was based on two assertions: (1) that Monarch's claims failed to fall within the policy's definition of "suit;" and (2) that the policy's pollution exclusion applied to all Monarch's claims.

In response to Monticello's letter, by written correspondence dated December 12, 1997, Monarch explained its disagreement with Monticello's decision and again demanded that Monticello provide the necessary funds to cover the defense of the claims against Monarch. On March 4, 1998, Monticello reconfirmed its decision to deny coverage to Monarch.

On June 18, 1998, the EPA issued a Unilateral Administrative Order for Removal Response Activities pursuant to Section 106(a) of CERCLA. The Order directed Monarch to undertake and complete removal actions described within it to abate the endangerment to public health and the environment as a result of the 1997 occurrence. Monarch forwarded the Order to Monticello on the following day and again requested a defense and indemnification for the claims asserted against them. On June 30, 1998, Monarch also forwarded a second Green Tree letter demanding remedies for alleged property damages. Monarch again requested Monticello's aid in defending the numerous claims.

On July 6, 1998, this action was filed in the District Court of the Fourth Judicial District for the County of Elmore, State of Idaho. On August 6, 1998, Monticello removed the matter to this Court pursuant to 28 U.S.C. § 1441.

On or about July 30, 1998, the U.S. Department of Justice ("DOJ"), at the request of the EPA, notified Monarch of its intent to bring a federal court action against Monarch for violations of sections 301 and 309 of the Clean Water Act, 33 U.S.C. § 1311 et. seq. The DOJ stated that the complaint would allege that Monarch did violate and continues to violate the Clean Water Act by discharging pollutants from a point source without a permit. The DOJ also warned that the complaint would seek injunctive relief and civil penalties. However, before filing the complaint, the DOJ extended Monarch the opportunity to discuss settlement of the violations. On August 5, 1998, Monarch informed Monticello of the DOJ's threat and requested Monticello's assistance. Monticello again denied assistance for the same reasons it denied coverage previously.

On September 22, 1998, Monarch filed suit against Doe Run Resource Corp.⁴ ("Doe Run") and Green Tree in the United States District Court, District of Idaho, for contribution to offset Monarch's damages in the federal and state actions. Monarch Greenback, LLC v. Doe Run Resource Corp; Green Tree, Inc., CIV-98-0354-S-MHW. Both Doe Run and Green Tree responded to Monarch's suit by filing counterclaims for CERCLA damages. Monarch forwarded the counterclaims to Monticello and tendered its defense as to both of them. On November 17, 1998, Monticello refused to defend Monarch against the Doe Run and Green Tree claims.

Finally, on February 4, 1999, Monarch entered into an Administrative Order of Consent with the EPA concerning CERCLA damages caused by the 1997 occurrence.

II. STANDARD OF REVIEW

III. Motions for summary judgment are governed by Rule 56 of the Federal Rules of Civil Procedure. Rule 56 provides, in pertinent part, that judgment "shall be rendered forthwith 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." Fed.R.Civ.P. 56(c). When applying this standard, the evidence must be viewed in the light most favorable to the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Hughes v. U.S., 953 F.2d 531, 541 (9th Cir.1992).

The Supreme Court has made it clear that under Rule 56, the moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets that burden, summary judgment will be mandated if the non-moving party fails to make a showing sufficient to establish the existence of an element which is essential to the non-moving party's case and upon which the...