New Hampshire Ball Bearings v. Aetna Cas.

• Citation: 848 F. Supp. 1082
• Decision Date: 01 April 1994
• Docket Number: No. C-87-457-L.,C-87-457-L.
• Parties: NEW HAMPSHIRE BALL BEARINGS v. AETNA CASUALTY, et al.
• Court: U.S. District Court — District of New Hampshire

848 F. Supp. 1082

NEW HAMPSHIRE BALL BEARINGS v. AETNA CASUALTY, et al.

No. C-87-457-L.

United States District Court, D. New Hampshire.

April 1, 1994.

Paul F. Ware, Jr., Goodwin, Procter & Hoar, Boston, MA, for intervenor Eastern Mt.

Michael C. Harvell, Sheehan, Phinney, Bass & Green, P.A., Portsmouth, NH, for plaintiff.

Stephen H. Roberts, Ouellette, Hallisey, Dibble & Tanguay, Dover, NH, Susan Kennedy, Drinker, Biddle & Reath, Washington, DC, Richard C. Nelson, Nelson, Kinder, Mosseau & Gordon, PC, Manchester, NH, for defendants.

ORDER

LOUGHLIN, Senior District Judge.

This is a suit for declaratory judgment and indemnification under several comprehensive general liability policies which were issued by the two insurance company defendants, Aetna Life & Casualty and American Motorists Insurance Company, from about 1971 through 1983 to recover the costs of cleaning up hazardous waste contamination at the New Hampshire Ball Bearings Peterborough site.

BACKGROUND

New Hampshire Ball Bearings ("NHBB") is under orders from the Environmental Protection Agency ("EPA") and is also being supervised by the New Hampshire State Department of Environmental Services in cleaning up the hazardous waste contamination, and it has been determined that NHBB is the responsible party. Other potentially responsible parties have not been found.

NHBB was formed in 1946 by Arthur Daniels who had previously entered the miniature ball bearing business in the late nineteen thirties in Lebanon and Keene, New Hampshire. After service in the United States Navy during the second World War, Mr. Daniels started NHBB in Peterborough. After ten years in various small plants in downtown Peterborough, NHBB bought a 27-acre farm property on the westerly side of Route 202, Peterborough, New Hampshire.

The principal business of NHBB was the manufacture of miniature precision ball bearings for use in the aerospace industry and in a number of other occupations but principally the aerospace industry.

American Motorists Insurance Company policies ("AMICO") were extant from the year 1972 to 1980. The AMICO umbrella liability policy number 4SB002033 effective from February 21, 1974 to February 21, 1977, contains a standard pollution exclusion clause which excludes coverage for property damage caused by pollution except where the property damage is caused by a "sudden and accidental" discharge of pollutants. See plaintiff's exhibit 270.

Subsequent to the issuance of the binder, AMICO issued umbrella liability policy 7SB002033, effective from March 31, 1977 to March 31, 1978, which contained the same terms and conditions as policy 4SB002033. The evidence shows that the AMICO umbrella policies from February 21, 1974 through February 20, 1979 all contained the standard pollution exclusion clause. That clause excepts from coverage all pollution related property damage except when the discharge causing the pollution condition was both "sudden and accidental."

Aetna Insurance policies were extant from July, 1980 through July 1, 1983. Aetna issued NHBB a series of primary and excess liability policies during the policy period.

The primary issue in this case is whether the Aetna and AMICO so-called "form policies" provide coverage to NHBB for the costs of cleaning up hazardous wastes contamination caused by the insured. Both policies are based on either the 1966 Standard Form Comprehensive General Liability ("CGL") policy or the 1973 Standard Form CGL policy.

Another disputed issue is whether the claims of NHBB arose out of the contamination of its own property and are thereby excluded from coverage. Contiguous areas and the pollution of the south well by its discharge of hazardous industrial wastes are covered. All policies at issue contained the following exclusions:

Exclusion "a", which excludes from coverage any liability assumed by the insured under any contract or agreement.

Exclusion "k", which excludes any claim based on "property damage" to premises owned, occupied, rented or used by the insured.

Exclusion "c" the pollution exclusion, which excludes any claim based on:

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.

There are other issues which the court will address if they are apposite and if the court deems these issues should be reached in deciding this case.

NHBB was successful and expanded throughout the 1960's and seventies. There were additions built in 1956, 1960, 1966, 1978, and 1980. The Peterborough facility reached a high of about 700 employees in the early nineteen eighties.

It appears that awareness of the contamination of the South Well of the Town of Peterborough occurred in October of 1982 after investigation by the State of New Hampshire. A routine sample of the South Well taken by the State of New Hampshire resulted in the discovery of concentrations of Volatile Organic Compounds ("VOC"). The VOC's were identified as 1, 1, 1 tricholoroethane ("TCA") and trichloroethylene ("TCE"). This discovery led to an investigation of NHBB to ascertain whether or not it was the source. The NHBB plant is approximately one quarter mile west of the South Well.

Solvents are critical to the manufacturing process; solvent use is essentially for the purpose of removing oil that had adhered to the surface of the parts during the turning or grinding operations as well as the heat treat operation.

The evidence disclosed that cleaning ball bearings is very important; the rings are washed with solvents which dissolve traces of oil. The spent solvents have to be disposed of. Floors have to be washed frequently because they become oily from accidental discharges and quite slippery. In its manufacturing process, NHBB uses degreasing agents or products to dissolve cutting oils used for lubrication. NHBB used VOCs such as TCA and TCE as degreasing agents.

In the manufacturing process, the following would happen. The raw materials were placed in the steel storage area. They would move to the screw machine area where there was a degreasing operation and then on to the heat treat area where there was a TCA washer, a vapor degreaser, then on to the face-lap grind area where there was a parts washer or degreaser located on the grinding floor; then on to the centerless grind which used the same washer as the face-lap. From the centerless grind it would move on to the bore grind to the inner track grind to the tumble area, to the finish track grind to the passivation area, to the finish parts area to the gaging and washing area to the assembly area and final bearing inspection. There were some degreasing and washing activities in the assembly and final bearing inspection areas. When full, industrial wastes and solvents would flow through a discharge pipe into a brook located on the north side of the NHBB building. Its flow was in an easterly direction towards Route 202. Also discharged into the tumble sump were solvents from the barrel storage room.

Degreasing agents were used in bulk, such as in a vapor degreaser; parts in quantity were inserted for degreasing. Degreasing agents were also used by machine operators to remove oils in order to measure the parts.

NHBB began recycling solvent with distillation processes in 1969. The reason why NHBB began to recycle solvent was to save money on solvent purchases. There were at least two solvent distilling units in operation at NHBB in or around 1971.

The tumble area sump operated from 1968 to the present. Waste solvents in free phase and dissolved form travelled into the tumble sump as a result of various spills on to the plant floor and by the pouring of floor washing water into the tumble sump. Waste solvents collected in free phase at the bottom of the tumble sump and leached through cracks and pores in the concrete into the soil and groundwater under the tumble sump and caused or contributed to the cause of dense non-aqueous phase liquids ("DNAPL") in groundwater at the site.

Outfall 001 was in existence from 1957 to the present time, i.e., 1994 and through it polychlorinated biphenyls (PCB) and polycyclic aromatic hydrocarbons (PAH) were discharged to the ground at the site during that time period.

Outfall 002 was in existence from 1966 to the present time, i.e., 1994 and solvents, including TCE, and TCA, as well as PAH's were discharged through it to the ground at the site throughout that time period.

Outfall 003 was used from 1968 to 1974 and solvents, including TCE and TCA, were discharged to the ground at the site throughout that time period.

Outfall 003A was used from 1960 to approximately 1966 and solvents were discharged through it to the ground at the site throughout that time period. The leach field operated from 1957 through 1972, when the facility was connected to the town of Peterborough sewer system.

The plaintiff alleges that 2,000 gallons of pollutants went into the groundwater. Defendants state that there were tens of thousands of gallons of pollutants going into the groundwater. The plume is fifteen hundred to two thousand feet in length. At the time of trial remedial costs were approximately $20,000,000.00.

The court prior to trial took a view of the premises and contiguous areas. The view was all encompassing. The court and counsel observed the manufacturing process that NHBB is involved in. Areas where solvents had been discharged were shown to the court. The premises adjacent to the building were also observed such as the sump area, maintenance shed, area of GZ 4 and other wells, the wetlands, brook and the land down to Route 202. The court also observed where the municipal well was located; the...