Olin Corp. v. Insurance Co. of North America
| Decision Date | 01 June 1992 |
| Docket Number | D,No. JB,No. 1119,JB,1119 |
| Parties | 22 Envtl. L. Rep. 20,940 OLIN CORPORATION, Plaintiff-Appellant, v. INSURANCE COMPANY OF NORTH AMERICA; American Home Assurance Company; American Reinsurance Company; Certain Underwriters at Lloyd's of London, England, Subscribing to Jewelers Block Policy7904131 089; Commercial Union Insurance Company; Continental Casualty Company; Employers Insurance of Wausau a Mutual Company; Falcon Insurance Company (as successor to Employers' Surplus Lines Insurance Company); Federal Insurance Company; Fireman's Fund Insurance Company; Great American Insurance Company; The Home Insurance Company; Lexington Insurance Company; London & Edinburgh Insurance Company Limited; National American Insurance Company of New York (as successor to Stuyvesant Insurance Company); National Union Fire Insurance Company of Pittsburgh; North River Insurance Company; Northbrook Excess and Surplus Insurance Company; Transit Casualty Company, Defendants, The Hanover Insurance Company (as successor to Massachusetts Bonding and Insurance Company), Defendant-Appellee. ocket 91-9155. |
| Court | U.S. Court of Appeals — Second Circuit |
James J. Harrington, New York City (Stephen A. Dvorkin, Michael L. Gioia, James J. Harrington & Associates, New York City, E. McIntosh Cover, Olin Corp., Stamford, Conn., of counsel), for plaintiff-appellant.
Dale C. Christensen, Jr., New York City (R. Scott Garley, Joseph E. Field, Seward & Kissel, of counsel), for defendant-appellee.
Before: FEINBERG, WINTER and ALTIMARI, Circuit Judges.
Olin Corporation ("Olin") brought this action against its primary and excess insurance companies. Olin seeks the costs of its defense and indemnification for its losses in lawsuits that alleged that the chemical dichloro-diphenyl-trichloroethane ("DDT") was released from Olin's Huntsville, Alabama facility, causing various bodily injuries, as well as economic and property damage.
This appeal arises from Olin's action against the Hanover Insurance Company ("Hanover"), one of its primary insurers, based on comprehensive general liability ("CGL") policies issued by Hanover. Judge Sand entered partial summary judgment against Olin on the ground that Olin failed to provide timely notice to Hanover of the DDT-related occurrence as required by its Hanover policies. Olin Corp. v. Insurance Co. of North America, 762 F.Supp. 548, 565-66 (S.D.N.Y.1991). Judge Sand having entered a proper certification under Fed.R.Civ.P. 54(b), Olin appeals and we affirm.
The facts are exhaustively recounted in Judge Sand's decision, with which we will assume familiarity. See Olin Corp., 762 F.Supp. at 550-55. We need provide only a brief synopsis of the facts pertinent to the issue on this appeal.
In 1954, Olin purchased Calabama Chemical Company ("Calabama"), which manufactured DDT in a plant near Huntsville, Alabama. The land on which the plant was located was owned by the United States Army and was in an area known as the Redstone Arsenal. The record indicates that there was widespread knowledge, even before Olin bought Calabama, that DDT was leaking from the plant.
For example, as early as 1948, the manager of Calabama, Benton Wilcoxin, who remained as manager when Calabama was sold to Olin, discovered DDT settling out of the plant's waste water ditches. In 1952, the Army became concerned about chemical leakage from the Huntsville plant and therefore set maximum levels of DDT for its effluent. It also established a zero permissible level of DDT in the nearby Huntsville Spring Branch, into which the plant's drainage flowed. In the 1960s, Army testing of the site and of the Huntsville Spring Branch increased as a scientific consensus that DDT was dangerous to both humans and the environment emerged. In 1963, the Public Health Service also investigated the Huntsville situation. It released a series of reports documenting that the effluent from Olin's Huntsville plant contained toxic concentrations of DDT and that fish in the Huntsville Spring Branch, which was also polluted, were dying after exposure to the chemical.
Efforts by Olin to reduce the amount of DDT escaping from the Huntsville Plant failed. Testings of both the Olin effluent and the water in Huntsville Spring Branch continued to show DDT levels exceeding those set by the Army. The Army initiated procedures to shut down the Olin plant in August 1969 on the ground that Olin had violated its lease by causing DDT and other chemical pollution. After Olin made a final unsuccessful effort to correct the problem with a new filtering and settling system, the Huntsville plant finally closed on June 30, 1970. By the end of that year, the government had banned all DDT use except in specified emergencies.
In late 1978, the Tennessee Valley Authority released a study documenting high levels of DDT contamination in fish downstream from the old Olin plant. The next year the Center for Disease Control ("CDC") reported that residents of Triana, Alabama, a town situated downstream from the Olin facility, had high concentrations of DDT in their blood serum.
On July 9, 1979, thirty-two people from the commercial fishing industry filed suit against Olin and the Army, alleging that A more comprehensive CDC study was released in January 1980. It found unusually high DDT concentrations in Triana residents due to the nearby DDT manufactured by Olin. Soon after these results were published, two other suits were filed against Olin by Triana residents. See Freeman v. Olin Corp., No. CV80 M 5057NE (N.D.Ala. filed March 14, 1980); Parcus v. Olin Corp., No. CV80 M 5098NE (N.D.Ala. filed March 17, 1980). At this time, Olin notified two of its primary insurers, Insurance Company of North America ("INA") and Employers Insurance of Wausau ("Wausau"). The INA policies covered Olin from June 1, 1955 to January 1, 1974, and the Wausau policies covered Olin from January 1, 1974 to March 1, 1977. Olin claims that at the time it notified INA and Wausau, it was unaware of the existence of the Hanover policies.
the DDT pollution from the Huntsville plant had caused them both personal injuries and property damage. See James v. Olin Corp., No. CA79 PT 5128NE (N.D.Ala. filed July 9, 1979). A few months later, the State of Alabama also filed suit against Olin. See Alabama v. Olin Corp., No. CA79 G 5174NE (N.D.Ala. filed Sept. 10, 1979)
In the following months, two more actions were filed against Olin. See United States v. Olin Corp., No. CV80 PT 5300NE (N.D.Ala. filed Dec. 4, 1980); Charest v. Olin Corp., No. CV 81 434P (Ala.Cir.Ct. filed Oct. 5, 1981). The James, Freeman, Parcus and Charest lawsuits were brought together on behalf of 1,200 people residing downstream from the Huntsville plant. They alleged that the plaintiffs had eaten fish and other wildlife and had drunk water contaminated with DDT from the Olin plant. Compensation was sought for economic loss and emotional and physical injuries.
On November 16, 1981, Olin gave Hanover notice of the DDT-related occurrence. In December 1982, Olin settled most of the lawsuits described above--styled by Olin the "first-wave" actions--agreeing to a $24 million payment to the plaintiffs over five years. As for the lawsuits brought by the State of Alabama and the federal government, Olin agreed to undertake remedial action at the Huntsville Spring Branch. In January 1983, these settlements were publicly announced.
After the $24 million settlement was announced, Olin was sued by numerous other plaintiffs--styled by Olin the "second-wave" actions--representing over 10,000 people who lived in areas more distant from Huntsville Spring Branch than the plaintiffs in the first-wave actions. Olin notified Hanover, along with its other primary insurers, of these DDT-related actions. After three years of discovery, these suits were also settled, at a cost to Olin of $15 million.
Olin filed the instant action in 1983 against three of its four primary insurance companies and a number of its excess insurance companies, from whom it (and its predecessor companies) had purchased liability insurance covering the period January 1, 1950 through March 1, 1977. Olin sought, inter alia, indemnity for the settlement from all the insurers and its costs of defense from the primary insurers, such as Hanover.
There were two CGL policies written by Hanover to cover Olin. The first was for the period from January 1, 1954 to January 1, 1955 and the second for January 1, 1955 to June 1, 1955 ("1954 and 1955 Hanover CGL policies"). Both policies contain the following conditions of coverage:
8. Notice of [Occurrence]. 1 When an [occurrence] occurs written notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable. Such notice shall contain particulars sufficient to identify the insured and also reasonably obtainable information respecting the time, place and circumstances of the [occurrence], the names and addresses of the injured and of available witnesses.
9. Notice of Claim or Suit. If claim is made or suit is brought against the insured Endorsement No. 4 to the 1954 and 1955 Hanover CGL policies defines an "occurrence" for bodily injury as follows:
the insured shall immediately forward to the company every demand, notice, summons of other process received by him or his representatives.
'Occurrence' means an event or continuous or repeated exposure to conditions, which unexpectedly causes injury during the policy period. All such exposure to substantially the same general conditions existing at or emanating from each premises location shall be deemed one occurrence. 2
Olin thus owed Hanover two distinct notice obligations: (i) to provide notice of an occurrence as defined by the policies, and (ii) to provide notice of claims or suits filed.
The district court granted Hanover's motion for partial summary judgment...
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