Olin Corp. v. Ins. Co. of North America

• Decision Date: 01 August 1999
• Docket Number: RE-INSURANCE,Docket Nos. 98-7687
• Citation: 221 F.3d 307
• Parties: (2nd Cir. 2000) OLIN CORPORATION, Plaintiff-Appellant-Cross-Appellee, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee-Cross-Appellant, THE HANOVER INSURANCE COMPANY, (as successor to Massachusetts Bonding and Insurance Company), AIU INSURANCE COMPANY; ALLSTATE INSURANCE COMPANY (as successor to Northbrook Excess and Surplus Insurance Company); AMERICAN HOME ASSURANCE COMPANY; AMERICANCOMPANY; CERTAIN UNDERWRITERS AT LLOYD'S, LONDON and LONDON MARKET INSURANCE COMPANIES; COMMERCIAL UNION INSURANCE COMPANY, (as successor to Employers' Liability Assurance Corporation, Ltd., Employers' Commercial Union Insurance Company of America, and Employers' Surplus Lines Insurance Company), CONTINENTAL CASUALTY COMPANY; THE CONTINENTAL CORPORATION; FEDERAL INSURANCE COMPANY; FIREMAN'S FUND INSURANCE COMPANY; GOVERNMENT EMPLOYEES INSURANCE COMPANY; GRANITE STATE INSURANCE COMPANY; HARBOR INSURANCE COMPANY; THE HOME INSURANCE COMPANY; INDEMNITY INSURANCE COMPANY OF NORTH AMERICA; LEXINGTON INSURANCE COMPANY; LONDON & EDINBURGH INSURANCE COMPANY LIMITED; NATIONAL AMERICAN INSURANCE COMPANY OF CALIFORNIA (as successor to Stuyvesant Insurance Company); NATIONAL CASUALTY COMPANY; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH; NORTH RIVER INSURANCE COMPANY; NEW YORK PROPERTY CASUALTY/INSURANCE SECURITY FUND, Defendants-Appellees, GREAT AMERICAN INSURANCE COMPANY, EMPLOYERS INSURANCE OF WAUSAU, Defendants, GENERAL REINSURANCE CORPORATION, Third-Party-Defendant-Claimant-Appellee. (L), 98-7753(XAP)
• Court: U.S. Court of Appeals — Second Circuit

Page 307

221 F.3d 307 (2nd Cir. 2000)

OLIN CORPORATION, Plaintiff-Appellant-Cross-Appellee, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee-Cross-Appellant,

THE HANOVER INSURANCE COMPANY, (as successor to Massachusetts Bonding and Insurance Company), AIU INSURANCE COMPANY; ALLSTATE INSURANCE COMPANY (as successor to Northbrook Excess and Surplus Insurance Company); AMERICAN HOME ASSURANCE COMPANY; AMERICAN RE-INSURANCE COMPANY; CERTAIN UNDERWRITERS AT LLOYD'S, LONDON and LONDON MARKET INSURANCE COMPANIES; COMMERCIAL UNION INSURANCE COMPANY, (as successor to Employers' Liability Assurance Corporation, Ltd., Employers' Commercial Union Insurance Company of America, and Employers' Surplus Lines Insurance Company), CONTINENTAL CASUALTY COMPANY; THE CONTINENTAL

CORPORATION; FEDERAL INSURANCE COMPANY; FIREMAN'S FUND INSURANCE COMPANY; GOVERNMENT EMPLOYEES INSURANCE COMPANY; GRANITE STATE INSURANCE COMPANY; HARBOR INSURANCE COMPANY; THE HOME INSURANCE COMPANY; INDEMNITY INSURANCE COMPANY OF NORTH AMERICA; LEXINGTON INSURANCE COMPANY; LONDON & EDINBURGH INSURANCE COMPANY LIMITED; NATIONAL AMERICAN INSURANCE COMPANY OF CALIFORNIA (as successor to Stuyvesant Insurance Company); NATIONAL CASUALTY COMPANY; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH; NORTH RIVER INSURANCE COMPANY; NEW YORK PROPERTY CASUALTY/INSURANCE SECURITY FUND, Defendants-Appellees,

GREAT AMERICAN INSURANCE COMPANY, EMPLOYERS INSURANCE OF WAUSAU, Defendants,

GENERAL REINSURANCE CORPORATION, Third-Party-Defendant-Claimant-Appellee.

Docket Nos. 98-7687(L), 98-7753(XAP)

August Term, 1999

UNITED STATES COURT OF APPEALS SECOND CIRCUIT

Argued Sep. 17, 1999

Decided Aug. 17, 2000

Appeal and cross-appeal from a judgment of the United States District Court for the Southern District of New York (Thomas P. Griesa, then-Chief Judge) entered following a jury and a bench trial. The district court concluded that the term "accident" in applicable insurance policies did not reach only sudden or abrupt events; that coverage of costs for groundwater remediation at a contaminated site did not include coverage of costs for soil cleanup; that cleanup costs should be apportioned pro-rata over all the years in which there was injury to property; that the full policy deductible applied in each triggered policy year; and that Insurance Company of North America had not waived its right to notice of claims by the plaintiff.

Affirmed.

[Copyrighted Material Omitted]

STEPHEN A. DVORKIN, Dickstein Shapiro Morin & Oshinsky LLP (Robert W. Pommer, III and Mary S. Santamarina, of counsel), New York, NY, for Plaintiff-Appellant-Cross-Appellee.

PAUL R. KOEPFF, O'Melveny & Myers LLP (John L. Altieri, Jr., Charles W. Fournier and Ralph P. DeSanto, of counsel), New York, NY, for Defendant-Appellee-Cross-Appellant.

Patrick T. Walsh and Andrea C. Kenealey, Blatt, Hammesfahr & Eaton, Chicago, IL, for Defendants-Appellees Certain Underwriters at Lloyd's, London and London Market Insurance Companies and London and Edinburgh Insurance Company.

James P. Schaller and M. Elizabeth Medaglia, Jackson & Campbell, P.C., Washington, DC, for Defendants-Appellees American Home Assurance Company, Granite State Insurance Company, Lexington Insurance Company, AIU Insurance Company, and National Union Fire Insurance Company of Pittsburgh.

Dale C. Christensen, Jr. and John J. Galban, Seward & Kissel, New York, NY, for Defendant-Appellee The Hanover Insurance Company.

Daniel A. Bartoldus, Rivkin, Radler & Kremer, Uniondale, NY, for Defendant-Appellee Allstate Insurance Company.

Robert W. Muilenburg, McElroy, Deuthsch & Mulvaney, Morristown, NJ, for Defendant-Appellee North River Insurance Company.

Rocco Covino and Jennifer S. Huber, LeBoeuf, Lamb, Greene & MacRae LLP, Washington, DC, for Defendant-Appellee Government Employees Insurance Company.

James Stapleton and Stefan Underhill, Day, Berry & Howard LLP, Stamford, CT, for Third-Party Defendant-Claimant-Appellee. David M. Raim, Chadbourne & Parke LLP, Washington, DC, for Defendant-Appellee National American Insurance Company of California.

Brian R. Ade and Alexander H. Gillespie, Gilberg & Kiernan, New York, NY, for Defendant-Appellee Fireman's Fund Insurance Company.

Jonathan Gardner, Goodkind, Labaton, Rudoff & Sucharow LLP, New York, NY, for Defendants-Appellees American Re Insurance Company, Continental Casualty Company, and Harbor Insurance Company.

James W. Greene, Thompson, O'Donnell, Markham, Norton & Hannon, Washington, DC, for Defendants-Appellees American Re-Insurance Company, Continental Casualty Company, and Harbor Insurance Company.

Richard H. Gimer, Semmes, Bowen & Semmes, Washington, DC, for Defendant-Appellee Commercial Union Insurance Company.

Virginia L. White-Mahaffey, Steptoe & Johnson LLP, Washington, DC, for Defendants-Appellees Federal Insurance Company and The Home Insurance Company.

Joseph DeDonato, Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski, New York, NY, for Defendants-Appellees Federal Insurance Company and The Home Insurance Company.

Laura A. Foggan, Daniel E. Troy, and John C. Yang, Wiley, Rein & Fielding, Washington, DC, for Amicus Curiae Insurance Environmental Litigation Association.

Before: OAKES, McLAUGHLIN and SACK, Circuit Judges.

SACK, Circuit Judge:

Plaintiff-Appellant-Cross-Appellee Olin Corporation ("Olin") instituted this action seeking a judgment that its insurers are liable to indemnify it for cleanup costs it incurred at various contaminated properties. The United States District Court for the Southern District of New York (Thomas P. Griesa, then-Chief Judge) conducted both a jury and a bench trial to determine the liability of one insurer, Defendant-Appellee-Cross-Appellant Insurance Company of North America ("INA"), with respect to one of the Olin sites, which culminated in the entry of a final judgment pursuant to Federal Rule of Civil Procedure 54(b). In two separate opinions, Olin Corp. v. Insurance Co. of N. Am., 972 F. Supp. 189 (S.D.N.Y. 1997) ("Olin I"), and Olin Corp. v. Insurance Co. of North America, 986 F. Supp. 841 (S.D.N.Y. 1997) ("Olin II"), the district court concluded that the costs incurred by Olin to remediate soil at the site were the result of its liability for damages resulting from injury to soil, not groundwater; that the liability incurred by Olin should be prorated over all the years in which the jury found that property injury had been sustained, not any subset thereof; that the $100,000 per occurrence insurance deductible applied to each year of triggered coverage and should not be prorated over the period of coverage; and that INA had not waived its right to notice of claims. Olin appeals each of these determinations. INA cross-appeals, claiming that the district court misinterpreted the term "accident" as used in the applicable insurance policies. We affirm on each issue.

BACKGROUND

The Contamination and Cleanup

In 1950, Olin acquired a fertilizer plant located in Williamston, North Carolina, along the Roanoke River (the "Williamston property" or the "Williamston site"). Olin initially produced dry pesticides at the site. In 1952 it began to manufacture liquid pesticides there too. During the production processes, Olin regularly deposited and released dry and liquid pesticide components onto the soil.

Olin maintained its facilities and operations at the Williamston property for more than sixteen years, until November 1967. The property was then leased for one year to an entity referred to in the record as "Columbia Nitrogen." In 1968, Olin sold the property to Kerr-McGee Corporation. Neither Columbia Nitrogen nor Kerr-McGee manufactured or otherwise dealt with pesticides on the property.

Early in the 1980's, Kerr-McGee sold the Williamston property to one Odis Whitaker. From 1983 to 1985, Whitaker operated "The Big O's Jamboree," a weekend country-music dance hall, in the old pesticide production warehouse on the property. After an evening of dancing in June 1985, one of Big O's patrons contacted the U.S. Environmental Protection Agency (the "EPA") to complain about strong odors at the Big O site. It was the State of North Carolina, however, that began an investigation by taking soil samples at the Williamston property in late July 1985. The tests showed high concentrations of pesticides. The State therefore requested the assistance of the EPA in designing and implementing remedial action at the site.

In September 1986, the EPA issued an order pursuant to Section 106(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. § 9606(a), describing the actions to be taken at the Williamston site. The EPA concluded that "[i]n order to protect human health and welfare and the environment, it is necessary that action be taken to contain and terminate the release or threat of release of hazardous substance[s] from the site into the environment." The order required Olin to remove contaminated soil from the site and to "[i]nstall and sample monitoring wells in appropriate locations to identify the extent of groundwater contamination and to assure that the contamination is not migrating from the property."

In August 1987, the EPA issued another order that again included a requirement that Olin remove the contaminated soil at the site. The order also required testing of groundwater. In September 1987, a new monitoring well was installed between the site of Olin's former pesticide operations and a proposed town well. The monitoring well did not produce any evidence that pesticide-contaminated groundwater from the Williamston site was moving toward the proposed well.

In response to the August 1987 order, Olin began soil removal operations at the site in 1988. There were three main areas of removal: the one and one-half acres where the former pesticide plant and warehouse were located; a smaller area where metal drums had been buried in connection with Olin's pesticide operation; and...