Olin Corp. v. Am. Home Assurance Co., Docket No. 11–4055–cv.

CourtU.S. Court of Appeals — Second Circuit
Writing for the CourtDRONEY
Citation704 F.3d 89
PartiesOLIN CORPORATION, Plaintiff–Appellant, v. AMERICAN HOME ASSURANCE COMPANY, Defendant–Appellee, Olin–Hunt Specialty Products Inc., Third–Party–Defendant, OneBeacon American Insurance Company, referred to in this litigation as Commercial Union Insurance Company, Cross–Defendant, Insurance Company of North America, Hanover Insurance Company, as successor to Massachusetts Bonding and Insurance Company, American Re–Insurance Company, Certain Underwriters at Lloyd's London and London Market Insurance Companies, London Market Insurance Companies, Commercial Union Insurance Company, as successor to Employers Liability Assurance Corporation Ltd. and Employers Commercial Union Insurance Company America, Continental Casualty Company, Employers Insurance of Wausau, C.E. Health Compensation & Liability Insurance Co., as successor to Falcon Insurance Company, successor to Employers Surplus Lines Insurance Company, Federal Insurance Company, Fireman's Fund Insurance Company, Great American Insurance Company, Lexington Insurance Company, London & Edinburgh Insurance Company Limited, Capital Markets Assurance Corp., as successor to National American Insurance Company of New York, successor to Stuyvesant Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, North River Insurance Company, Allstate Insurance Company a/s/o Marco Del Gado, as successor to Northbrook Excess and Surplus Insurance Company, Employers Insurance Company of Wausau, OneBeacon America Insurance Company, formerly referred to in this litigation as Commercial Union Insurance Company, Aetna Casualty & Surety Company, General Reinsurance Corporation, Government Employees Insurance Company, Granite State Insurance Company, Home Insurance Company, Indemnity Insurance Company of North America, Integrity Insurance Company, Greenwich Insurance Company, as successor to Harbor Insurance Company, National Casualty Company, Transit Casualty Company, AIU Insurance Company, Continental Corporation, Government Employees Insurance Company, Granite State Insurance Company, Harbor Insurance Company, National American Insurance Company of California, as successor to Stuyvesant Insurance Company, National Casualty Company, New York Property/Casualty Insurance Security Fund, Century Indemnity Company, as successor to Insurance Company of North America, Defendants.
Docket NumberDocket No. 11–4055–cv.
Decision Date19 December 2012

704 F.3d 89

OLIN CORPORATION, Plaintiff–Appellant,
v.
AMERICAN HOME ASSURANCE COMPANY, Defendant–Appellee,
Olin–Hunt Specialty Products Inc., Third–Party–Defendant,
OneBeacon American Insurance Company, referred to in this litigation as Commercial Union Insurance Company, Cross–Defendant,
Insurance Company of North America, Hanover Insurance Company, as successor to Massachusetts Bonding and Insurance Company, American Re–Insurance Company, Certain Underwriters at Lloyd's London and London Market Insurance Companies, London Market Insurance Companies, Commercial Union Insurance Company, as successor to Employers Liability Assurance Corporation Ltd. and Employers Commercial Union Insurance Company America, Continental Casualty Company, Employers Insurance of Wausau, C.E. Health Compensation & Liability Insurance Co., as successor to Falcon Insurance Company, successor to Employers Surplus Lines Insurance Company, Federal Insurance Company, Fireman's Fund Insurance Company, Great American Insurance Company, Lexington Insurance Company, London & Edinburgh Insurance Company Limited, Capital Markets Assurance Corp., as successor to National American Insurance Company of New York, successor to Stuyvesant Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, North River Insurance Company, Allstate Insurance Company a/s/o Marco Del Gado, as successor to Northbrook Excess and Surplus Insurance Company, Employers Insurance Company of Wausau, OneBeacon America Insurance Company, formerly referred to in this litigation as Commercial Union Insurance Company, Aetna Casualty & Surety Company, General Reinsurance Corporation, Government Employees Insurance Company, Granite State Insurance Company, Home Insurance Company, Indemnity Insurance Company of North America, Integrity Insurance Company, Greenwich Insurance Company, as successor to Harbor Insurance Company, National Casualty Company, Transit Casualty Company, AIU Insurance Company, Continental Corporation, Government Employees Insurance Company, Granite State Insurance Company, Harbor Insurance Company, National American Insurance Company of California, as successor to Stuyvesant Insurance Company, National Casualty Company, New York Property/Casualty Insurance Security Fund, Century Indemnity Company, as successor to Insurance Company of North America, Defendants.

Docket No. 11–4055–cv.

United States Court of Appeals,
Second Circuit.

Argued: Sept. 28, 2012.
Decided: Dec. 19, 2012.


[704 F.3d 92]


Craig C. Martin, Jenner & Block LLP, Chicago, IL, for Plaintiff–Appellant.

Michael H. Cohen, Saiber LLC, Florham Park, NJ, for Defendant–Appellee.


Mary Beth Forshaw, Bryce L. Friedman, Simpson Thacher & Bartlett LLP, New York, NY, for OneBeacon American Insurance Company as amicus curiae in support of Defendant–Appellee.

Before: CHIN, LOHIER, and DRONEY, Circuit Judges.

DRONEY, Circuit Judge:

Plaintiff–Appellant Olin Corporation (“Olin”) appeals from a grant of summary judgment in favor of Defendant–Appellee American Home Assurance Company (“American Home”) in the United States District Court for the Southern District of New York (Griesa, J.). Olin brought this action against its insurers, including American Home, regarding environmental contamination at Olin sites in the United States. This appeal arises from proceedings related to Olin's Morgan Hill, California, manufacturing site. At issue is whether the $30.3 million attachment point for American Home's excess policies for the years 1966–69 and 1969–72 could be reached by the alleged property damage at Morgan Hill.

For the reasons that follow, we vacate and remand.

BACKGROUND

This case began in 1984 when Olin brought a diversity action against its insurers seeking indemnification for environmental damage at Olin manufacturing sites throughout the United States.1 Because each site raised its own factual and legal issues, the district court has addressed coverage on a site-by-site basis. This appeal arises out of the most recent of these site-specific proceedings, concerning contamination at Olin's manufacturing site at Morgan Hill, California, between 1957 and

[704 F.3d 93]

1987. In the course of this proceeding, the district court granted summary judgment to American Home, which issued two excess policies during this period, on the ground that the attachment point for these excess policies could not be met. That ruling is the basis of the present appeal.

I. Olin's Morgan Hill Site

Olin began manufacturing signal flares at Morgan Hill, California, in 1956. 2 Olin used the chemical potassium perchlorate (“perchlorate”) in the manufacturing process. As part of this process, perchlorate was combined with other chemicals by various means including the use of cement mixers. This produced a large volume of perchlorate dust, which was dispersed throughout the site by wind and foot traffic. Perchlorate powder on the ground was then dissolved by rainfall and carried via run-off into dry wells at the site, where it seeped into the ground, contaminating the water table below the site. Changes in Olin's manufacturing process in the 1970s decreased the volume of perchlorate spilled, but regular spillage appears to have continued in some quantity until at least 1986.

Throughout this period, the concentration of perchlorate in the water table below the site increased, generating an underground plume of perchlorate that gradually spread down the valley. This underground plume reached equilibrium in 1987, meaning that the contamination of additional soil or groundwater ceased. By then, the plume extended approximately ten miles from the site. Olin estimated that it would incur costs of more than $102 million to fully remedy the damage caused by the underground perchlorate plume.3

II. The American Home Policies

Olin had an insurance program consisting of general commercial liability insurance and layered excess policies. Two excess policies provided by American Home are at issue here: policy number CE351099 and policy number CE355541.4 The first of these covers the period of January 1, 1966, to January 1, 1969. The second covers the period of January 1, 1969, to January 1, 1972. Each policy covers ten percent of up to $10 million in damages in excess of $30.3 million for the three-year policy period.5 Thus American Home has no coverage obligation unless the damages attributable to one of the policies exceed this $30.3 million attachment point.6 Each policy also “follows

[704 F.3d 94]

form” to lower-level excess policies, which means that it adopts their terms and conditions.

The 1969–72 American Home policy follows form to a policy issued by Underwriters at Lloyd's (“Lloyd's”). According to the terms of the Lloyd's policy, American Home is obligated

to indemnify the Assured for all sums which the Assured shall be obligated to pay by reason of the liability ... imposed upon the Assured by law ... for damages, direct or consequential and expenses ... on account of ... Property Damage ... caused by or arising out of each occurrence happening anywhere in the World.

The Lloyd's policy defines “property damage” as “loss of or direct damage to or destruction of tangible property (other than property owned by the Named Assured).” The policy defines “occurrence” as “an accident or a happening or event or a continuous or repeated exposure to conditions which unexpectedly and unintentionally result in personal injury, property damage or advertising liability during the policy period” and further specifies that “[a]ll such exposure to substantially the same general conditions existing at or emanating from one premises location shall be deemed one occurrence.”


The Lloyd's policy also contains a Condition C: “Prior Insurance and Non–Cumulation of Liability.” This provision, the principal subject of this appeal, states the following:

It is agreed that if any loss covered hereunder is also covered in whole or in part under any other excess policy issued to the Assured prior to the inception date hereof, the limit of liability hereon ... shall be reduced by any amounts due to the Assured on account of such loss under such prior insurance.

Subject to the foregoing paragraph and to all the other terms and conditions of this Policy, in the event that personal injury or property damage arising out of an occurrence covered hereunder is continuing at the time of termination of this Policy, Underwriters will continue to protect the Assured for Liability in respect of such personal injury or property damage without payment of additional premium.

The 1966–69 American Home policy follows form to a policy issued by the Home Insurance Company, which in turn mostly follows form to a policy issued by Lloyd's. That Lloyd's policy appears to be identical to the policy underlying the 1969–72 American Home policy in nearly all relevant respects, employing the same definitions of “occurrence” and “property damage” and including an identical Condition C. The difference between the two American Home policies is that the Home Insurance Company policy underlying the 1966–69 American Home policy specifies that it only provides coverage for “accidents or occurrences ... taking place during the period of the Policy.” No such language applies to the 1969–72 American Home policy.7

III. Proceedings Related to the Morgan Hill Site

On June 14, 2010, Olin filed a third amended complaint seeking indemnity related

[704 F.3d 95]

to the Morgan Hill site. Olin sought coverage from American Home under its policies. American Home moved for summary judgment, arguing that the $30.3 million attachment point was not reached for either policy. American Home relied on our decision in Olin Corp. v. Insurance Co. of North America, 221 F.3d 307 (2d Cir.2000) (“Olin I ”), discussed further below, which provides for pro rata allocation of damage in cases of progressive environmental injury. Under this approach, the total $102 million in damages from the cleanup of the Morgan Hill site should...

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197 practice notes
  • Those Certain Underwriters at Lloyd's v. DVO, Inc., Case No. 1:19-cv-00252
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • July 17, 2020
    ...York, "insurance policies are interpreted according to general rules of contract interpretation." Olin Corp. v. Am. Home Assurance Co. , 704 F.3d 89, 98 (2d Cir. 2012) (footnote omitted). "[I]f the wording on the duty to defend is clear and unambiguous, it will be enforced according to its ......
  • N.Y. Wheel Owner LLC v. Mammoet Holding B.V., 17-CV-4026 (JMF)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 21, 2020
    ...the contract itself, and concerning which there is no reasonable basis for a difference of opinion.’ " Olin Corp. v. Am. Home Assur. Co. , 704 F.3d 89, 99 (2d Cir. 2012) (quoting Hunt Ltd. v. Lifschultz Fast Freight, Inc. , 889 F.2d 1274, 1277 (2d Cir. 1989) ). When a contract's language is......
  • Chesapeake Energy Corp. v. Bank of N.Y. Mellon Trust Co., No. 13 Civ. 1582(PAE).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 8, 2013
    ...and the contract should be construed so as to give full meaning and effect to all of its provisions.’ ” Olin Corp. v. Am. Home Assur. Co., 704 F.3d 89, 99 (2d Cir.2012) (second alteration in original) (quoting LaSalle Bank Nat'l Ass'n v. Nomura Asset Capital Corp., 424 F.3d 195, 206 (2d Cir......
  • Crescent Beach Club LLC v. Indian Harbor Ins. Co., 18-CV-5951(SJF)(AKT)
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • June 22, 2020
    ...Ins. Co. v. Liberty Mut. Ins. Co. , 710 F. App'x 3, 6 (2d Cir. 2017) (summary order); see also Olin Corp. v. American Home Assur. Co. , 704 F.3d 89, 98-99 (2d Cir. 2012) ("Under New York law, insurance policies are interpreted according to general rules of contract interpretation.... [T]he ......
  • Request a trial to view additional results
197 cases
  • Those Certain Underwriters at Lloyd's v. DVO, Inc., Case No. 1:19-cv-00252
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • July 17, 2020
    ...York, "insurance policies are interpreted according to general rules of contract interpretation." Olin Corp. v. Am. Home Assurance Co. , 704 F.3d 89, 98 (2d Cir. 2012) (footnote omitted). "[I]f the wording on the duty to defend is clear and unambiguous, it will be enforced according to its ......
  • N.Y. Wheel Owner LLC v. Mammoet Holding B.V., 17-CV-4026 (JMF)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 21, 2020
    ...the contract itself, and concerning which there is no reasonable basis for a difference of opinion.’ " Olin Corp. v. Am. Home Assur. Co. , 704 F.3d 89, 99 (2d Cir. 2012) (quoting Hunt Ltd. v. Lifschultz Fast Freight, Inc. , 889 F.2d 1274, 1277 (2d Cir. 1989) ). When a contract's language is......
  • Chesapeake Energy Corp. v. Bank of N.Y. Mellon Trust Co., No. 13 Civ. 1582(PAE).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 8, 2013
    ...and the contract should be construed so as to give full meaning and effect to all of its provisions.’ ” Olin Corp. v. Am. Home Assur. Co., 704 F.3d 89, 99 (2d Cir.2012) (second alteration in original) (quoting LaSalle Bank Nat'l Ass'n v. Nomura Asset Capital Corp., 424 F.3d 195, 206 (2d Cir......
  • Crescent Beach Club LLC v. Indian Harbor Ins. Co., 18-CV-5951(SJF)(AKT)
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • June 22, 2020
    ...Ins. Co. v. Liberty Mut. Ins. Co. , 710 F. App'x 3, 6 (2d Cir. 2017) (summary order); see also Olin Corp. v. American Home Assur. Co. , 704 F.3d 89, 98-99 (2d Cir. 2012) ("Under New York law, insurance policies are interpreted according to general rules of contract interpretation.... [T]he ......
  • Request a trial to view additional results

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