Newmont U.S. Ltd. v. Am. Home Assurance Co.

• Decision Date: 13 June 2011
• Docket Number: No. CV–09–033–JLQ.,CV–09–033–JLQ.
• Citation: 795 F.Supp.2d 1150
• Parties: NEWMONT USA LIMITED and Dawn Mining Co., Plaintiff,v.AMERICAN HOME ASSURANCE CO., et al., Defendants.
• Court: U.S. District Court — District of Washington

795 F.Supp.2d 1150

NEWMONT USA LIMITED and Dawn Mining Co., Plaintiff,

v.AMERICAN HOME ASSURANCE CO., et al., Defendants.

No. CV–09–033–JLQ.

United States District Court, E.D. Washington.

June 13, 2011.

James Earl Reed, Winston & Cashatt, Spokane, WA, Sarah Block Wallace, Andrew J. Petrie, Courtney A. Levkulich, Bruce A. Featherstone, Featherstone Petrie Desisto LLP, Denver, CO, for Plaintiff.Cathy Spicer, David R. Voyles, Katie Smith Matison, Lane Powell PC, Michael P. Hooks, Martin Joseph Pujolar, Forsberg & Umlauf PS, Megan Kathleen Kirk, Benjamin J. Stone, Thomas Martin Jones, Cozen O'Connor, Misty A. Edmundson, Pamela A. Lang, Soha & Lang, Peter J. Mintzer, Chamberlin Keaster & Brockman LLP, Lawrence Gottlieb, Betts Patterson & Mines PS, Thomas S. James, Jr., Donald S. Kunze, Opus Law Group, Michael Edward Ricketts, Gordon Thomas Honeywell LLP, Seattle, WA, Jonathan Kranz, Neal Glazer, D'Amato & Lynch LLP, Andre E. Harlfinger, Lawrence D. Mason, Segal McCambridge Singer & Mahoney Ltd., New York, NY, Michael J. Baughman, Cohn Baughman & Martin, Chicago, IL, Bradley Edward Smith, Ewing Anderson PS, Spokane, WA, Cynthia Ruggerio, Elaine Whitman Klinger, John C. Falls, Ralph J. Luongo, Bradley J. Mortensen, Lallie M. Banks, Susan B. Thauer, Christie Pabarue Mortensen & Young, Philadelphia, PA, for Defendants.

MEMORANDUM OPINION ON SUMMARY JUDGMENT MOTIONS

JUSTIN L. QUACKENBUSH, Senior District Judge.

A summary judgment motion hearing was held in the above-entitled matter on May 19, 2011. Attorneys participating on behalf of Plaintiffs were: James Reed and Andrew Petrie. Appearing on behalf of Defendant Travelers were: Thomas James and Don Kunze. Bradley Smith, Ralph Luongo, and John Falls appeared on behalf of Defendants OneBeacon and Stonewall. This Memorandum Opinion is intended to memorialize and supplement the oral and written rulings in the Amended Order Re: May 19, 2011 Hearing on Summary Judgment Motions (ECF No. 822).

I. Introduction

Plaintiffs' First Amended Complaint seeks a declaration of insurance coverage from numerous insurance carriers for costs and liabilities relating to environmental cleanup of the Midnite Mine uranium mine near Ford, Washington. Newmont and Dawn were held liable for certain response costs at issue in United States of America v. Newmont USA and Dawn Mining Company, LLC, Cause No. CV–05–020–JLQ, 2008 WL 4621566 (E.D.Wash. Oct. 17, 2008) (“Underlying Liability” or “underlying CERCLA action”). In addition, Plaintiffs seek a judicial declaration of Defendants' liability for response costs incurred since December 31, 2004, damages for bad faith claims handling, and attorney fees. The court has stayed the cross-claims amongst insurers and ordered that Plaintiffs' case be tried first.

Plaintiffs have settled their claims with all but three excess liability insurance carriers: OneBeacon, Stonewall, and Travelers. Plaintiffs and each remaining Defendant have filed (or joined) in a number of summary judgment motions. Due to the number of motions pending and the voluminous filings and counter-filings, the undisputed material facts necessary to rule are not set forth separately, but are included in the pertinent analysis of each issue below.

II. Procedural History

The court has in previous orders detailed the procedural history of this case. In short, simultaneous to this coverage action involving all parties involved in this dispute, the Defendants have pursued a separate declaratory judgment action in New York state court against Newmont only. Justice Ramos, who presided over the action in the New York trial court, dismissed Dawn for lack of jurisdiction, rejected Newmont's motion to dismiss based on forum non-conveniens, and proceeded to enter judgments in favor of the carriers on the issue of coverage. Appeals of Justice Ramos' decisions were filed, and on March 17, 2011 (after dispositive motions were filed in this case), the New York Supreme Court, Appellate Division, First Department, issued an order dismissing the carriers' claims against Newmont. ECF No. 701 at 10. The First Department held that the trial court had “improvidently exercised its discretion in retaining jurisdiction [over Newmont], since Newmont established that New York is an inconvenient forum.” ECF No. 701 at 12–13.

Given the dismissal of the New York case, Newmont's coverage claims are not barred by the doctrine of res judicata because one of the elements—a valid final judgment upon the merits—is lacking, and neither would “full faith and credit” or equity be served by applying the doctrine under these circumstances. Accordingly, the court has denied the carriers earlier filed motions for summary judgment based upon the application of res judicata and lifted the stay of Newmont's coverage claims. See ECF No. 822.

As the parties filed response briefing to the motions for summary judgment after the court stayed Newmont's coverage claims, the parties appropriately respected the stay and proceeded with the argument pertaining to Dawn. The court has now lifted that stay. ECF No. 820 [May 23, 2011 Order]. Whereas Newmont and Dawn have admitted that their positions as to coverage are fully aligned, these rulings shall apply to the claims of both Newmont and Dawn where appropriate.

III. Motions Relying Upon Res Judicata

Traveler's Motion for Partial Summary Judgment Against Dawn Mining Company [ECF No. 596] and a portion of One Beacon and Stonewall's Motion for Partial Summary Judgment Against Dawn Mining Based on Privity/Pollution Exclusions [ECF No. 632] are based upon an assumption by the movants that res judicata would apply to bar Newmont's coverage claims. Based upon this assumption, the Defendants moved for summary judgment contending that Dawn is in privity with Newmont. Now that the court has determined res judicata does not apply, the question of privity is irrelevant. Accordingly, these motions have been denied by the court.

One Beacon and Stonewall have also filed a Motion For Summary Judgment on the issue of scope of coverage/allocation (ECF No. 618). “Scope of coverage” or “allocation” refer to the amount an insurer must pay to satisfy its obligation to indemnify, or the distribution of liability. This motion asks the court to find the parties bound by the choice of law decision made by the New York court on the issue of allocation. Again, this motion is based upon the insurer movants' assumption this court would enter a final ruling in accordance with its July 27, 2010 preliminary order regarding res judicata. Res judicata does not apply, and therefore the Motion is Denied.

In any case, the issue of choice of law on the issue of allocation of damages with respect to these parties has never been decided by any court. The insurer movants urge the court to decide their motion (on res judicata grounds) in order to “provide guidance to the parties with respect to the type and scope of evidence to be submitted at trial.” ECF 619 at 2–3. Yet in Reply, the insurers oppose the Plaintiffs' request that the court analyze the issue of choice of law and argument that Washington law should apply. Defendants oppose the request arguing that the Plaintiffs did not pursue it in their own separate summary judgment motion. The court agrees that the choice of law issue should have been raised in a separate motion and without complete briefing, the court does not determine the matter at this time.

However, the scope of the upcoming trial must be defined. The insurers' motion poses a legitimate question as to whether allocation is a “coverage issue” or a “carrier issue” and whether it will be part of the upcoming trial or part of the second phase of this bifurcated case involving the cross-claims and third-party claims filed by all the insurers against one another. Plaintiffs assert they have proceeded in discovery presuming allocation issues would be part of the second phase of this case.

Allocating damages from ongoing losses over multiple liability policies and multiple policy periods is a “nettlesome problem” for courts. See e.g., Comment, Allocating Progressive Injury Liability Among Successive Insurance Policies, 64 U. Chi. L.Rev. 257, 257–258 (1997) (“it is both scientifically and administratively impossible to allocate to each policy the liability for injuries occurring only within its policy period.”); See 15 G. Couch, Insurance § 220:25, at 220–26 (3d ed.2005) (with respect to “environmental damage and toxic exposure cases ... it is virtually impossible to allocate to each policy the liability for injuries occurring only within its policy period”). The parties are also aware that there is a split among states on approaches to allocation. Washington has adopted a form of the joint and several allocation approach. American Nat'l Fire Ins. Co. v. B & L Trucking & Constr. Co., 134 Wash.2d 413, 428–429, 951 P.2d 250 (1998) (“We hold that once a policy is triggered, the policy language requires insurer to pay all sums for which the insured becomes legally obligated, up to the policy limits. Once coverage is triggered for one or more policy periods, those policies provide full coverage for all continuing damages, without any allocation between insurer and insured”); See also Villella v. Public Employees Mut. Ins. Co., 106 Wash.2d 806, 812, 725 P.2d 957 (1986) (distinguishing factually, but not disagreeing with, a California case that had held “that a first insurer, who had been ‘on the risk’ when the negligent act was committed and the initial damage suffered, was responsible not only for that damage but also for the damages that accrued after its policy expired”). On the other hand a number of states, including New York, have adopted the pro rata allocation method, which allocates portions of the total loss to each triggered policy using a variety of different formulas, such as “time on the risk”. Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208, 224–225, 746 N.Y.S.2d 622, 774...