Owens-Illinois, Inc. v. Aetna Cas. & Sur. Co.

• Decision Date: 01 March 1993
• Docket Number: OWENS-ILLINOI,Nos. 91-4164,91-4189,INC,s. 91-4164
• Citation: 990 F.2d 865
• Parties: , Plaintiff-Appellant, Cross-Appellee, v. AETNA CASUALTY & SURETY COMPANY, Defendant-Appellee, Cross-Appellant, Lehigh Valley Industries, Inc.; Lehigh Castings, Inc.; Hilfinger Corporation; American Smelting & Refining Company, Defendants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 865

990 F.2d 865

OWENS-ILLINOIS, INC., Plaintiff-Appellant, Cross-Appellee, v. AETNA CASUALTY & SURETY COMPANY, Defendant-Appellee, Cross-Appellant Lehigh Valley Industries, Inc.; Lehigh Castings, Inc. Hilfinger Corporation; American Smelting &amp Refining Company, Defendants.

Nos. 91-4164, 91-4189.

United States Court of Appeals Sixth Circuit.

March 1, 1993.

Decided April 13, 1993.

Reginald S. Jackson, Jr. (briefed), Steven R. Smith (argued), Thomas G. Mackin, Connelly, Soutar & Jackson, Toledo, OH, for plaintiff-appellant cross-appellee.

Dennis P. Zapka (briefed), D. John Travis (argued), Gary L. Nicholson (briefed), Gallagher, Sharp, Fulton & Norman, Cleveland, OH, for defendant-appellee cross-appellant.

Before: JONES and NELSON, Circuit Judges, and LIVELY, Senior Circuit Judge.

NATHANIEL R. JONES, Circuit Judge.

Plaintiff-Appellant/Cross-Appellee Owens-Illinois, Inc. ("Owens") appeals and Defendant-Appellee/Cross-Appellant Aetna Casualty & Surety Co. ("Aetna") cross-appeals the final judgment in this action for reimbursement of the costs of responding to the presence of toxic materials on real property. We affirm.

I

From the early 1940s to November 20, 1970, the Hilfinger Corp. ("Hilfinger") operated a manufacturing plant at 1800 Westwood Avenue in Toledo, Ohio. During this time, zinc die casting and plating, including chrome plating, was conducted on the premises. Hilfinger owned the property until the American Smelting and Refinery Co. ("ASARCO") bought it in 1963. Hilfinger reacquired title in 1971, and transferred ownership to Owens on June 2, 1971, pursuant to the terms of a purchase agreement dated December 8, 1970. Owens used the premises solely for warehousing and storage until the buildings on the premises were demolished in 1983.

In December 1983, greenish snow and water were discovered on the property. It was subsequently determined that hexavalent chromium, a hazardous substance, had been deposited in the soil. After examining several alternatives to dealing with this problem, Owens decided to "cap" the contaminated area with an impermeable surface. The Ohio Environmental Protection Agency approved this method of remedial action in July 1987.

On August 20, 1985, to recover the significant costs of remediation, Owens filed a complaint in the United States District Court for the Northern District of Ohio. The complaint was initially brought against Lehigh Valley Industries, Inc., "the sole shareholder of and successor in interest to Hilfinger." J.A. at 14 (Complaint at 2). Owens sought a declaratory judgment that Lehigh Valley Industries, Inc. was liable for all costs incurred by Owens relating to the response to the chromium contamination under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 (1988 & Supp. II 1990). Owens also sought, inter alia, $2,000,000 for breach of contract; $2,000,000 for compensatory damages as a result of "fraudulent misrepresentation"; and $5,000,000 in punitive damages. J.A. at 19 (Complaint at 7).

On December 5, 1985, Owens amended its complaint to include Hilfinger and Lehigh Castings, Inc. ("the parent company of Hilfinger and a subsidiary of Lehigh Valley [Industries, Inc.]," Owens' Br. at 1) as Defendants. On August 24, 1987, ASARCO was also added as a Defendant. On May 9, 1988, Owens reached a settlement with Lehigh Valley Industries, Inc., Lehigh Castings, Inc., ASARCO, and their insurers.

On April 28, 1988, Aetna was notified of Owens' action, and was requested to defend and indemnify Hilfinger with respect to Owens' claims. On October 6, 1988, Aetna responded that it would not defend and would deny coverage.

A trial was held to assess Hilfinger's liability to Owens. On January 13, 1989, the district court found that the chromium "was introduced into the soil on the Property by a continuous or repeated wetting over a period of several years," J.A. at 105 (Findings of Fact p 15) (Jan. 1989), "[d]uring the time Hilfinger Corporation was an owner and operator of the Property," id. at 109 (Conclusions of Law p 5) (Jan. 1989), and that this chromium posed a health threat to humans. Finding Owens' response to be reasonable, necessary and consistent with the National Contingency Plan, the court awarded Owens $1,469,322.20, plus interest and costs.

On July 18, 1989, Owens filed a supplemental petition with the district court, claiming that $769,322.20 of the judgment, plus interest and costs, remained unsatisfied after thirty days from the date of judgment. Proceeding under Section 3929.06 of the Ohio Revised Code Annotated (Baldwin 1989), it sought to recover this amount from Aetna, Hilfinger's erstwhile insurer.

On November 26, 1990, a trial commenced to determine Aetna's insurance responsibilities relating to Owens' response costs. Of chief concern for purposes of this appeal was the evidence (or lack thereof) relating to how and when the chromium got into the soil, and the scope of Aetna's coverage.

On the issue of how and when the chromium got into the soil, counsel for Owens set the stage, stating:

The testimony in the underlying case was that the chromium was put into the ground over a long period of time. It did not occur as a result of a single instance, but was a continuous progressive wetting. There will be no evidence as to how the chromium got into the ground. We don't know.

J.A. at 927.

Howard W. Hilfinger III, general manager of Hilfinger for eight to ten years, testified for Owens concerning Hilfinger's manufacturing operations at the Westwood Avenue premises. He agreed that there was "[n]o question that Hilfinger knew chromium was going into the sewer system, in connection with [its] operation" and that "[t]hat is the way the system was designed in the normal course of its operation...." Id. at 961. He testified that spills and leaks of chromium onto the plant floor occurred. When the spills occurred, "[the whole area] was probably diked with four or six inch square wooden members that surrounded the area, and one area at one part of that surrounded area would have been this outlet to the drain." Id. at 959. Mr. Hilfinger maintained, however, that it was never Hilfinger's intention, nor did the company expect to contaminate its premises with chromium.

Stephen F. Ahern, former counsel for Lehigh Valley Industries, Inc., Lehigh Castings, Inc., and Hilfinger, testified that, at the time Owens purchased the Hilfinger plant, Owens knew of the existence of "cracks in the cement in the area where plating operations were undertaken." Id. at 969.

James Mack, who supervised the investigation of the chromium contamination at the Westwood Avenue premises, gave testimony on behalf of Owens. He opined:

... [T]he chromium [on the Hilfinger site] originated due to prolonged period of exposure, probably certain amount of wetting taking place over a period of time, possibly twenty years. This [sic] came to this conclusion because of the depth of penetration in the fairly high concentrations of chromium in the soil. The soil are [sic] decided low permeable soil, and we found chromium in elevated [sic] as deep as 18 feet.

....

... [O]ne of the actions undertaken at [the Hilfinger manufacturing facility] was plating of parts with chromium. It was my opinion that the plating operations, through some mechanism, are the origins of the chromium in the soil.

Id. at 990-91. When asked to give an opinion as to the time frame of contamination, he responded:

... I believe, again, it took place over a prolonged period of time, its timeframes are difficult to pin down because of the nature of the chromium migration within the soil profile. I believe, possibly, it could have taken place over a twenty year period. As to the exact time period of the specific events, I don't, really, have an opinion to that effect.

Id. at 991. On direct examination, he concluded that "one single event probably did not provide this level of or degree of contamination within the soil." Id. at 992. On cross-examination, he admitted that intentional spilling or dumping, or the pouring of vat solutions into a sewer could explain the contamination.

Owens also introduced the deposition testimony of Thomas Gene Naymik, a geology expert, who had reviewed materials relating to the chromium contamination at the Westwood Avenue premises. He admitted that he could not explain to a reasonable degree of certainty how the chromium got into the soil. He stated that "one event could have occurred, you know, 34 years ago [i.e., approximately 1951] or further into the past to give the distribution of chromium that we see today." Id. at 513. He maintained that it is impossible to prove or disprove that chromium discharge occurred between 1963 and 1971.

Joint Exhibit 9 was also admitted into evidence. This exhibit consisted of several articles from the Toledo Blade which stated that, on at least two separate occasions in 1962, Hilfinger released large quantities of a chrome substance into the Ottawa River.

On the issue of the scope of Aetna's insurance coverage, Owens produced Jack W. Galliers, an insurance agent for Hilfinger. Galliers testified that Aetna insured Hilfinger from 1957 to 1964 ¹ with, inter alia, comprehensive general liability ("CGL") coverage. Based on "check[ing] prior policies for information, that were in what we called our archives," id. at 936, Galliers suggested that Aetna's coverage began before 1957, perhaps back to 1954. These policies were for three-year periods, and each had an aggregate limit of $100,000 for property damage for the three-year period. Galliers' testimony was based on his recollections and on a letter of coverage he wrote to ASARCO at the request of Hilfinger on August 21, 1963. The letter of coverage stated, in pertinent part:

We also provide Public Liability coverage in the Aetna Casualty and Surety Company with limits of $300,000 each person, $500,000 each accident Bodily Injury...