Nautilus Ins. Co. v. Hawk Transp. Serv. Llc

Decision Date20 June 2011
Docket NumberCV. No. 10–00605 DAE–RLP.
Citation792 F.Supp.2d 1123
CourtU.S. District Court — District of Hawaii


Hiroyuki Shayne Takei, Esq., J. Patrick Gallagher, Esq., Henderson Gallagher & Kane, Honolulu, HI, for Plaintiff.Patrick K. Shea, Esq., Shea & Kamiya LLC, Honolulu, HI, for Defendant.


DAVID ALAN EZRA, District Judge.

On June 14, 2011, the Court heard Nautilus Insurance Company's Motion for Summary Judgment (Motion). Hiroyuki Shayne Takei, Esq., and J. Patrick Gallagher, Esq., appeared at the hearing on behalf of Plaintiff Nautilus Insurance Company (Nautilus) and Patrick K. Shea, Esq., appeared on behalf of Defendant Hawk Transport Services, LLC (Hawk). After reviewing the motion and the supporting memoranda, the Court GRANTS Nautilus's Motion for Summary Judgment (Doc. # 18).

I. Underlying Suit

This Declaratory Judgment action stems from an underlying suit filed on March 15, 2010 and currently pending in the United States District Court for the District of Hawaii before United States District Judge J. Michael Seabright. See Teruya v. Shaw, Cv. No. 10–00282 (“Underlying Suit”). (“PCSF,” P.'s Separate and Concise Statement of Facts, Doc. # 19 ¶ 1.)

The Underlying Suit relates to hazardous solid waste discovered on property located at 87–1161 Hakimo Road, Waianae, Hawaii (the “Property.”) ( Id. at ¶ 2.) Underlying Plaintiff Peter Teruya (“Teruya”) alleges he purchased the Property on October 10, 2004, which currently consists of ten acres of agricultural land. ( See “Underlying Compl.,” Doc. # 1–1, ¶¶ 36, 18.) Teruya alleges that Underlying Defendant Pricilla D. Shaw (“Shaw”) acquired a twenty year lease in the Property (the “Lease”). ( Id. ¶ 37.) The Lease, according to Teruya, states that [t]he Property shall be used only for the purposes of planting, growing and harvesting ... crops.” ( Id. ¶ 39.) Shaw, however, allegedly used the Property “for various operations in violation ... of the Lease, including but not limited to recycling food, glass and metal, burning waste, and as a junkyard.” ( Id. ¶ 40.) Teruya also claims the lease prohibits subleasing, but that Shaw sublet portions of the Property to Defendant Ivory Transport and Equipment Rentals, LLC (“Ivory Transport”) among others. ( Id. ¶¶ 41–44.)

On or around June 12, 2008, Hawk and/or Frank Coluccio Construction Company (“Coluccio”) subcontracted Ivory Transport to transport solid and/or hazardous waste to the Property from Kapiolani Boulevard. ( Id. ¶ 49.) Teruya alleges Ivory Transport, Hawk, and/or Coluccio, with permission from Shaw, transported the solid and/or hazardous waste to the Property on or around the same day. ( Id. ¶ 50.)

On May 13, 2008, the United States Environmental Protection Agency (“EPA”) and the State of Hawaii Department of Health (“DOH”) began a joint site inspection of the Property. ( Id. ¶ 62.) During the inspection Teruya alleges that the EPA and DOH found: numerous containers of waste oil, paints, solvents and greases; lead acid batteries and associated wastes; open burn pits; five-gallon buckets and drums; a graded and filled area that appeared to have been used for industrial activities; used sand blast grit on the graded and filed area; piles of ash and burnt metal debris; fill material which appeared to have been filed with a mixture of construction and demolition debris' and a metal scrapping and salvaging operation. (PCSF ¶ 10.) Teruya alleges the EPA collected and analyzed over 1200 soil samples from the Property which documented the presence of hazardous substances. ( Id. ¶ 11.)

In February and March 2009, the EPA took control of the Property for its removal action. (Underlying Compl. ¶ 76.) Teruya alleges that the EPA moved more than 1,000 tons of solid and hazardous wastes, lead acid batteries and contaminated soil from the property. ( Id. ¶ 72; PCSF ¶ 12.) The EPA allegedly incurred total site costs of $650,667.87 as of July 31, 2009. (Underlying Compl. ¶ 78.) On June 16, 2009, the EPA perfected a lien on the Property per Section 107( l ) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. § 9601 et seq. (“CERCLA”).1

On May 12, 2010, Teruya filed the Underlying Complaint which alleges sixteen causes of action against a number of Defendants including Hawk. ( See Underlying Compl. at 1, 17–32.) Specifically, Teruya asserts only the following causes of action against Hawk:

• Count I: Violation of CERCLA. ( Id. ¶¶ 85–96.)

• Count II: Declaratory Relief under CERCLA. ( Id. ¶¶ 97–99.)

• Count III: Reimbursement and Cost Recovery under CERCLA. ( Id. ¶¶ 100–01.)

• Count IV: Contribution under CERCLA. ( Id. ¶¶ 102–03.)

Count V: Violation of Hawaii Environmental Response Law, HRS § 128D–1 et seq. (“HERL”). ( Id. ¶¶ 104–14.)

• Count VI: Indemnity and Contribution under HERL. ( Id. ¶¶ 115–16.)

• Count VII: Declaratory Relief under HERL. ( Id. ¶¶ 117–18.)

• Count X: Voluntary Waste. ( Id. ¶¶ 127–36.)

• Count: XI: Permissive Waste. ( Id. ¶¶ 137–45.)

• Count XIII: Trespass. ( Id. ¶¶ 146–54.)

• Count XIV: Nuisance. ( Id. ¶¶ 162–67.)

With respect to Counts I–IV, Teruya alleges that Hawk accepted hazardous substances for transport to a disposal site on the Property from which there was a release of hazardous substances which caused the incurrence of response costs. ( Id. ¶ 87.) Teruya alleges that Hawk willfully, knowingly or recklessly failed to comply with CERCLA. ( Id. ¶ 90.) Accordingly, Teruya claims he is entitled to relief in the form of declaratory judgment, reimbursement, cost recovery, civil penalties, contribution and other remedies. ( Id. ¶¶ 96–103.)

Counts V–VII allege that in violation of HERL, Hawk accepted hazardous substances for transport to a disposal site on the Property from which there was a release of hazardous substances which caused the incurrence of response costs. ( Id. ¶ 106.) As with the CERCLA Counts, Teruya alleges that Hawk willfully, knowingly or recklessly failed to comply with HERL. ( Id. ¶ 109.) Teruya alleges he sustained damages for which Hawk is jointly and severally liable to him for the following: costs of removal and remedial actions; costs of any health assessment or health effects; injury to, destruction or loss of natural resources, including the reasonable costs of assessing such injury, destruction or loss resulting from such releases; any health assessments or health effects study; and any other necessary costs of response incurred. ( Id. ¶¶ 110–14.) Teruya also seeks reimbursement, indemnity, declaratory and injunctive relief pursuant to HERL. ( Id. ¶¶ 115–18.)

In Count X, Voluntary Waste, Teruya alleges Hawk transferred to, disposed of and released substances on the Property that were harmful, hazardous, injurious to persons or property and controlled and/or regulated (“Harmful Substances”). ( Id. ¶ 128.) Teruya further alleges that the use of Harmful Substances on the Property wrongfully destroyed, altered, misused, damaged and/or neglected the Property. ( Id. ¶ 129.) Teruya claims Hawk did not exercise reasonable care and did not comply with applicable rules in its use and disposal of Harmful Substances. ( Id. ¶¶ 130–31.) Teruya claims this conduct has diminished the value of the Property, and caused him to incur attorney fees and other expenses. ( Id. ¶ 135.)

Count XI alleges Permissive Waste. In this Count Teruya alleges Hawk by its conduct neglected, omitted, or permitted actions to be taken on the property that damaged or constituted waste and that such conduct was wrongful. ( Id. ¶ 138.) Teruya alleges Hawk did not exercise ordinary and reasonable care for the preservation and protection of the Property and failed to comply with applicable laws with respect to Harmful Substances. ( Id. ¶¶ 139–40.) Teruya claims this conduct has diminished the value of the Property, and caused him to incur attorney fees and other expenses. ( Id. ¶ 144.)

Finally in Counts XII and XIV, Teruya alleges trespass and nuisance arising from the continuing presence of solid and/or hazardous waste on the Property that Hawk has not removed. Teruya alleges that he sustained damages and seeks punitive damages, claiming that Hawk's conduct was malicious, intentional and in conscious disregard of Teruya's rights. ( Id. ¶¶ 160–61, 166–67.)

II. The Policy

Hawk is the named insured on the Nautilus Policy, policy number NC754658 (the “Policy”), for a policy period from February 8, 2008 to February 9, 2009. ( See “Policy,” Doc. # 19–3, at 2.) Relevant for instant purposes, the Policy provides coverage as follows:

[Nautilus] will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. We may, at our discretion, investigate any “occurrence” and settle any claim or “suit that may result....

This insurance applies to “bodily injury” and “property damage” only if ... [t]he bodily injury or property is caused by an occurrence that takes place in the coverage territory.

( Id. at 9.) The Policy also contains three relevant exclusions. The first, the Total Pollution Exclusion, provides as follows: This insurance does not apply to ...

f. Pollution

(1) “Bodily injury” or “property damage” arising out of the actual alleged or threatened discharge, dispersal seepage, migration, release or escape of “pollutants” at any time.

(2) Any loss, cost or expense arising out of any:

(a) Request, demand, order or statutory regulatory requirement that any insured or others test for, monitor, cleanup, remove, contain, treat, detoxify or...

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