P.R. Mallory v. American Cas. Co.

• Decision Date: 29 January 2010
• Docket Number: No. 54A01-0903-CV-142.,54A01-0903-CV-142.
• Citation: 920 N.E.2d 736
• Parties: P.R. MALLORY & COMPANY, INC., including Radio Materials Corporation, Kraft Foods Global, Inc., a Delaware Corporation, formerly known as Kraft Foods North America, Inc., Kraft Foods, Inc., Kraft General Foods, Inc., and Dart & Kraft, Inc., composed of Kraft, Inc. and Dart Industries, Inc., suing herein on its own behalf and on behalf of Radio Materials Corporation, Appellant-Plaintiffs, v. AMERICAN CASUALTY COMPANY OF READING, PA., a Pennsylvania Corporation; Continental Casualty Company, an Illinois Corporation; and Does Insurance Companies 1-10, Appellees-Defendants.
• Court: Indiana Appellate Court

920 N.E.2d 736

P.R. MALLORY & COMPANY, INC., including Radio Materials Corporation, Kraft Foods Global, Inc., a Delaware Corporation, formerly known as Kraft Foods North America, Inc., Kraft Foods, Inc., Kraft General Foods, Inc., and Dart & Kraft, Inc., composed of Kraft, Inc. and Dart Industries, Inc., suing herein on its own behalf and on behalf of Radio Materials Corporation, Appellant-Plaintiffs, v. AMERICAN CASUALTY COMPANY OF READING, PA., a Pennsylvania Corporation; Continental Casualty Company, an Illinois Corporation; and Does Insurance Companies 1-10, Appellees-Defendants.

No. 54A01-0903-CV-142.

Court of Appeals of Indiana.

January 29, 2010.

John S. Capper IV, Capper Tulley & Reimondo, Crawfordsville, IN, Michael J. Miguel, Morgan, Lewis & Bockius LLP, Los Angeles, CA, Paul A. Zevnik, Morgan, Lewis & Bockius LLP Washington, D.C., Attorneys for Appellants.

Tammy J. Meyer, MillerMeyer LLP, Indianapolis, IN, Scott E. Turner, Lisa C. Ellison, Troutman Sanders LLP, Chicago, IL, John R. Gerstein, Patrick F. Hofer, Troutman Sanders LLP, Washington, D.C., Attorneys for Appellees.

OPINION

BROWN, Judge.

P.R. Mallory & Company, Inc., including Radio Materials Corporation, Kraft Foods Global, Inc., and Dart & Kraft Inc. (collectively, the "Plaintiffs") appeal the trial court's grant of summary judgment to American Casualty Company of Reading, PA, ("ACC") and Continental Casualty Company ("CCC"). The Plaintiffs raise four issues, which we consolidate and restate as whether the trial court erred by granting ACC and CCC's motion for summary judgment.¹ We affirm.²

The relevant facts follow.³ Radio Materials Corporation, an Illinois corporation, was founded in 1947 in Chicago, Illinois, to manufacture picture tubes and ceramic capacitors for the television industry. In 1948, Radio Materials Corporation opened a plant in Attica, Indiana. In 1957, P.R. Mallory & Company, Inc. purchased the stock of Radio Materials Corporation. 1978, P.R. Mallory & Company, Inc. sold its assets to Radio Materials Corporation, a Nevada corporation. At some point, Kraft Foods Corporation became the successor to the P.R. Mallory Company. At some point, Kraft Foods Global, Inc., and Dart & Kraft Inc. became involved.⁴

From approximately 1950 to 1963, wastes including "chlorinated solvents (PCE and TCE), acetone, alcohol, waxes, paints[,] phenolic resins, and ceramics" were disposed in an open unlined pit known as Site A, which was located at the plant site in Attica, Indiana. Appellants' Appendix at 1442. From 1963 to 1980, Radio Materials Corporation operated another open unlined waste disposal pit known as Site B and disposed of "waste ceramic, phenolic resin, acetone, alcohol, PCE and TCE." Id. at 1442.

In May 1969, the Indiana State Board of Health sent a letter to the general manager of Radio Materials Company,⁵ which stated that an inspection at the Attica facility revealed that "overflow from the settling pit contained a considerable amount of Barium Titanate in suspension," and that "[t]his material was later settling out in the roadside ditch...." Id. at 1487. In 1972, the Indiana State Board of Health sent a letter to Radio Materials Company which stated that during an inspection, "a situation was discovered which must be corrected." Id. at 1489. Specifically, the letter stated that "the 5-gallon buckets used to collect fuel oil leaking from the engine do get accidentally spilled into the pit, resulting in pollution of the creek in Ravine Park." Id.

CCC issued a commercial casualty policy to Radio Materials Corporation with a policy period from December 29, 1980 to December 29, 1981. ACC issued three commercial casualty policies to Radio Materials Corporation, which covered the following periods: December 29, 1981 to December 29, 1982; December 29, 1982 to December 29, 1983; and December 29, 1983 to December 29, 1984. The policies provided coverage for "all sums which the insured shall become legally obligated to pay as damages because of A. bodily injury or B. property damage." Id. at 1176, 1193, 1215, 1237. Each of the four policies contained the following:

In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable.

Id. at 1173, 1190, 1212, 1234.⁶ The policies each defined an "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured." Id. at 1172, 1189, 1211, 1233. The policies also provided that "[f]or the purpose of determining the limit of the company's liability, all bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence." Id. at 1177, 1194, 1216, 1238.

On August 14, 1980, Radio Materials Corporation notified the United States Environmental Protection Agency (the "EPA") of its hazardous waste activity and identified itself as a generator of hazardous waste and an owner/operator of a treatment, storage, and/or disposal facility for hazardous waste. In 1986, Radio Materials Corporation completed a Certification Regarding Potential Releases from Solid Waste Management Units, which revealed that pits at the Attica site contained waste products of ceramic capacitor manufacturing processes. Specifically, one pit known as Site A, which was opened in 1950 and closed in 1963, contained "trichloroethylene, acetone, isopropyl alcohol, and phenolic resins." Id. at 1435. A pit known as Site B, which was opened in 1963 and closed in 1980, contained "trichloroethylene, perchlorethylene, acetone, isopropyl alcohol, barium titanate and calcium tatanate ceramic sludges and phenolic resins." Id.

From 1981 to "1988-1990," Radio Materials Corporation operated an outdoor drum storage area in which wastes were stored in fifty-five gallon drums, which were placed on the bare ground, prior to being shipped off-site for disposal. Id. at 1442. "Spills of waste material ... were reported in 1986 and 1989." Id. at 1442-1443.

In 1989, the board of directors of Radio Materials Corporation held a meeting, and the minutes for the meeting reveal that one of the directors "said we should notify Dart & Kraft of their potential liability for clean up of hazardous wastes generated and buried underground here during the Mallory years." Id. at 1497. That same year, Joseph F. Riley, Jr., the president of Radio Materials Corporation, sent a letter to the general counsel of Kraft Foods Corporation, which stated that "potential environmental pollution problems exist at the plant site in Attica, Indiana." Id. at 1516. The letter also stated:

Specific areas of concern include two widely separated landfill sites and numerous underground storage tanks located on land now owned by Radio Materials Corporation and Helen L. Riley and the Joseph F. Riley Estate near Attica, in Fountain County, Indiana. These landfills and underground storage tanks were installed and operated by Radio Materials Company, Div., P.R. Mallory & Co., Inc. between June 1957 and December 1978 while the Company was a wholly owned subsidiary of P.R. Mallory & Co., Inc. All potential environmental problems at the site will include those mentioned above; however, they may not be limited to them. Those mentioned comprise the extent of knowledge of any such potential problems which may exist at this point in time.

This letter is intended only as a notice to you of a potential liability for environmental clean-up costs. It is not to be interpreted as a notice of any action which may now be going on or as intent on the part of Radio Materials Corporation to sue in court for recovery of all or part of any environmental clean-up costs.

Id.

In 1991, the board of directors of Radio Materials Corporation held another meeting at which "Mr. Riley ... discuss[ed] the issue of potential environmental liability and its possible effects on the Company and the Riley family," and that attorneys would be contacted for legal advice. Id. at 1509.

In 1992, Joseph F. Riley, Jr., the president of Radio Materials Corporation, sent a letter to Ron Brenda of Metcalf & Eddy regarding an investigation by Metcalf & Eddy, which stated, in part, that contents of the closed dump site "are assumed to be waste ceramic, phenolic resin, acetone/alcohol and possibly perchlorethylene and trichloroethylene." Id. at 1285. The letter also stated:

Documented spills and releases:

1. When the area M was being cleaned for closure in 1989, we discovered that there were several areas where a mixture of solder dross and oil had leaked from the drums it was stored in. With IDEM approval, 6" of soil was excavated from these areas, packed into drums and manifested off site to the S.E.Side Landfill, Indianapolis, IN. as special waste.

2. In 1986 we discovered that 2/3 of a barrel of plating waste had leaked on to the ground in area M. We transferred the remaining material to a good drum, then excavated the surrounding soil filling 2½ drums. This material was later manifested off site.

Over the years there have been numerous small spills or leaks of mostly oil and/or oil-water which have been scooped up, accumulated and later manifested off site.

Id. at 1288-1289.

In 1995, Radio Materials Corporation hired CSI Environmental, Inc. to perform an investigation and site characterization. A 1995 report prepared by The Scientific Edge, Inc. and Indiana Engineering & Geological Services Group, Inc. for Radio Materials Corporation and CSI Environmental of Indiana, Inc. indicated that one of the subsurface soil samples "EXCEED[ED] the residential and the...