New Castle County v. Hartford Acc. and Indem. Co.
Decision Date | 31 March 1988 |
Docket Number | Civ. A. No. 85-436-JLL. |
Citation | 685 F. Supp. 1321 |
Parties | NEW CASTLE COUNTY, Plaintiff, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, et al., Defendants. |
Court | U.S. District Court — District of Delaware |
Susan C. Del Pesco and Catherine J. Sponseller of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., for plaintiff New Castle County.
John G. Mulford and Brian A. Sullivan of Theisen, Lank, Mulford & Goldberg, P.A., Wilmington, Del., for defendant Continental Cas. Co. Edmund D. Lyons, Jr., of Aerenson, Ferrara & Lyons, Wilmington, Del., Dennis M. Flannery, A. Stephen Hut, Jr., and Alan S. Tenenbaum of Wilmer, Cutler & Pickering, Washington, D.C., and Clifford B. Hendler and Sean M. Fitzpatrick of Colton and Boykin, Washington, D.C., of counsel, for defendant Ins. Co. of North America.
Gary W. Aber of Heiman and Aber, Wilmington, Del., James E. Rocap III, Thomas B. Carr, and Stephen L. Nightingale of Miller, Cassidy, Larroca & Lewin, Washington, D.C., of counsel, for defendant Aetna Cas. and Sur. Co.
William J. Cattie III and Roger D. Landon of Heckler & Cattie, Wilmington, Del., for defendant U.S. Fire Ins. Co.
New Castle County (the "County") filed this action requesting a declaratory judgment against twelve insurance companies which had issued comprehensive general liability policies to the County. The County seeks a declaration that the insurance companies must defend and indemnify the County for claims relating to groundwater pollution emanating from two landfills utilized by the County. The insurers answered by denying coverage for the claims and asserting affirmative defenses. (D.I. 6, 7, 10-14, 25, 28, 40.) Several insurers also filed counterclaims and crossclaims. The County has settled its claims against seven of the insurers.1 (D.I. 45, 124, 148, 245, 355, 362, 373.)
The insurers filed motions for summary judgment, asserting that they had no duty to defend or indemnify the County for claims for pollution emanating from the landfills. Two of the issues raised in the motions for summary judgment, the scope of the policies' pollution exclusion clause and the scope of the provision limiting coverage to "damages," were argued to the Court on October 8, 1987. The Court denied the insurers' motions for summary judgment on those two issues.2 New Castle County v. Hartford Accident & Indemnity Co., 673 F.Supp. 1359 (D.Del.1987).
Presently before the Court are all the remaining grounds for summary judgment. Defendant Aetna Casualty and Surety Company ("Aetna") seeks summary judgment on three grounds: (a) that the County failed to disclose material facts regarding Llangollen landfill leachate contamination when it purchased Aetna's policies, (b) that the pollution at issue did not result from an "occurrence" as defined by the policy, and (c) that the County failed to give proper notice to Aetna of the alleged occurrence and resulting claims against the County. (D.I. 109, 336.) New Castle County, in a cross-motion for summary judgment against Aetna, asserts that Aetna waived its right to charge that the County misrepresented material facts when it applied for insurance. (D.I. 232.) The Insurance Company of North America ("INA") and United States Fire Insurance Company ("U.S. Fire") seek summary judgment on the basis of the occurrence issue, the notice issue, and on the grounds that the County failed to take appropriate steps to mitigate its losses. (D.I. 338, 340.) Finally, Continental Casualty Company ("CNA") requests summary judgment on the occurrence and notice issues.3 (D.I. 227.) For reasons set out below, the Court will grant partial summary judgment to Aetna, INA, U.S. Fire, and CNA, and will deny the County's motion for partial summary judgment.
The Llangollen landfill site opened in the Fall of 1960 and was used as the primary municipal solid waste disposal site in New Castle County. The site covered sixty-five acres of land rented by the County. (D.I. 392A at 671-91.) The County subsequently purchased the land in September, 1962. (Id. at 739-41.) The landfill was operated first by Landfill, Inc., and later by Material Transit, Inc., until the landfill closed in 1968. (Id. at 671-91.)
The parties paint contrasting pictures as to the amount of diligence used in operating the landfill. The record reflects that the operation of the landfill prompted occasional protests from local citizens and public officials. (D.I. 339A at 11-14.) Chief among the complaints was that refuse was not properly covered with dirt, leading to problems with odors, rodents and smoldering fires. (Id.) In addition, refuse was dumped into standing water. (Id. at 21.) Local residents filed for a preliminary injunction to prevent the continued operation of the landfill. While finding that there was evidence of garbage being left uncovered and trash being dumped into water, the Delaware Chancery Court found that on the whole the operation of the landfill was "satisfactory in most respects and in accordance with established sanitary landfill practices." Pruett v. Dayton, 168 A.2d 543, 546 (Del.Ch.1961). As the site began to reach capacity, excavation was performed which removed part of the layer of clay beneath the landfill. (D.I. 339A at 21.) This created problems because the layer of clay was what would normally prevent the leachate generated by the landfill from penetrating into the underlying groundwater. (Id.) However, the County asserts that the owner performed all the excavation and that the leachate would not have been drawn into the underlying aquifer had it not been for an increase in pumping of water out of the aquifer by a nearby water company and a neighboring industry. (D.I. 392 at 44.)
On May 18, 1972, more than three years after the landfill closed, the County received a letter from the State Department of Natural Resources and Environmental Control ("DNREC") stating that Mrs. Reni's well, which was near the Llangollen landfill, was contaminated. (D.I. 109A at 66-67.) DNREC said that its investigation revealed that leachate from the Llangollen landfill was the most likely source of the contamination. (Id. at 66.) The letter further stressed that the "matter of contamination of an underground aquifer by a landfill is a most serious one." (Id.) (Emphasis in original.) DNREC required the County to take four remedial actions, such as digging test wells and constructing a ditch around the landfill to intercept the leachate. (Id.)
The County retained a consultant, Roy F. Weston, Inc., to investigate the landfill and the State's accusations. (D.I. 392A at 802-08, 811.) The County met or corresponded with State officials repeatedly concerning the alleged contamination. A County employee's memo to the file after a meeting with State officials on June 12, 1972, reported that the water sampling done on the Reni well showed that the landfill was the probable cause. (D.I. 109B at 130, 131.) The County realized as early as May 25, 1972, that the cost of resolving the groundwater problems created by Llangollen landfill could easily run over $1,000,000. (Id. at 125-26.)
In September, 1972, the County's consultant informed the County that the Llangollen landfill was in fact a source of the Reni well contamination. (D.I. 392B at 1299-1300.) The County then began to work with its consultant to resolve the leachate contamination problem. Wells were constructed to monitor the situation and pump pollutants from the aquifer. (D.I. 392B at 1178; 339A at 74, 81; 392A at 825.) One County official reported that the landfill was regraded and a basin was installed to collect rainwater. (D.I. 392B at 1451-53.) A trench was dug and a large pipe inserted to drain off the water that collected. (Id.) The County met from time to time with the State and two neighboring companies, Artesian Water Company and Amoco, to discuss the situation. (D.I. 392A at 823-24; 392B at 1201, 1206.) However, the State on at least three occasions voiced its concern that the County was not making a sufficient effort to remedy the contamination problem. (D.I. 339A at 74-78.) Ultimately, the Artesian Water Company filed two lawsuits against the County as a result of alleged groundwater contamination. In a state court action, Artesian Water Co. v. New Castle County, C.A. No. 5106 (Del. Ch.Ct. filed June 9, 1976) ("Artesian I"), Artesian alleged that leachate from the Llangollen landfill had contaminated the aquifer that Artesian used to supply drinking water for a large part of New Castle County. (D.I. 109A at 173-77.) Artesian also filed an action in federal court seeking reimbursement under Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9607, for costs incurred by Artesian in responding to the release of hazardous substances from Llangollen. Artesian Water Co. v. New Castle Co., C.A. No. 83-854 (D.Del. filed Dec. 8, 1983) ("Artesian II"). (D.I. 109A at 273-81.)
When Llangollen reached capacity in late 1968, the County rented land for a new landfill at Tybouts Corner. (D.I. 233A at 147.) The Tybouts Corner landfill opened in January, 1969. The County rented the property from Mr. and Mrs. Ward, who also operated the landfill. (Id.) However, there is evidence that County employees worked at the Tybouts Corner landfill and that the County's contract with the Wards for the operation of the landfill gave the County ultimate authority over several areas of the site's operations. (D.I. 233A at 147-63, 523; 339A at 105-111.)
The chief question concerning the operation of Tybouts Corner is whether chemical wastes were accepted. The State Certificate of Approval for the landfill prohibited the dumping of chemical and/or toxic materials. (D.I. 339A at 89-91.) There is substantial dispute as to the degree to which the County complied with this...
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