PCS Phosphate Co. v. Am. Home Assurance Co.
| Decision Date | 29 March 2016 |
| Docket Number | No. 5:14-CV-99-D,5:14-CV-99-D |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | PCS PHOSPHATE COMPANY, INC., Plaintiff, v. AMERICAN HOME ASSURANCE COMPANY, Defendant. |
On February 20, 2014, PCS Phosphate Company, Inc. ("PCS"), filed a complaint against American Home Assurance Company ("American Home") [D.E. 1]. PCS seeks a declaratory judgment that American Home owes PCS a duty to defend and a duty to indemnify in two underlying actions concerning alleged environmental contamination. See PCS Compl. [D.E. 1] ¶¶ 26-32.
On November 14, 2014, American Home filed a third-party complaint against Zurich American Insurance Company ("Zurich American") and Federal Insurance Company ("Federal") [D.E. 31]. American Home seeks a declaratory judgment that Zurich American and Federal owe duties to defend and indemnify PCS in the underlying environmental contamination actions and therefore must either indemnify American Home for its costs in defending PCS or, alternatively, contribute costs of defending and indemnifying PCS. See AHAC Compl. [D.E. 31]. Zurich American answered the complaint, and Federal moved to dismiss it. See [D.E. 56, 46]. On June 15, 2015, this court granted in part and denied in part, without prejudice, Federal's motion to dismiss. [D.E. 61]. On July 20, 2015, American Home filed an amended third-party complaint against both Federal and Zurich American [D.E. 66], and, on August 21, 2015, Zurich American answered [D.E. 70].
On August 26, 2015, Zurich American moved for partial judgment on the pleadings and filed a supporting memorandum. [D.E. 72, 73]. On September 21, 2015, American Home responded in opposition [D.E. 75], and, on October 7, 2015, Zurich American replied [D.E. 76]. As explained below, the court grants Zurich American's motion for partial judgment on the pleadings.
From 1965 to 2006, Ward Transformer Company, Inc., and Ward Transformer Sales and Service, Inc., (collectively "Ward") built, repaired, reconditioned, and sold transformers in Raleigh, North Carolina. PCS Compl. ¶ 1. Between 1978 and 2002, PCS and its local predecessor, Texasgulf, Inc. ("Texasgulf"), sent transformers to Ward for repair and refurbishment. Id. ¶ 3. During the transformer repairs, polychlorinated biphenyls ("PCBs") were released, causing environmental contamination at the Ward facility ("Ward Site"). Id. ¶ 4.
The Environmental Protection Agency ("EPA") conducted a remedial investigation of the Ward Site and, in September 2005, entered into a settlement agreement with Consolidation Coal Company ("Consol") and Carolina Power & Light Company ("CP&L") to remove contamination at the Ward Site and to reimburse the EPA for its costs. Id. ¶¶ 5-6. On April 18, 2008, PCS notified American Home that PCS had been identified as a potentially responsible party for the Ward Site contamination and demanded that American Home defend and indemnify PCS in any resulting lawsuits. See id. ¶ 7. On April 30, 2009, Consol and CP&L each filed an action against PCS seeking contribution for past and future costs associated with the settlement agreement. Id. ¶¶ 8, 10. On July 15, 2009, PCS notified American Home of the two lawsuits and again stated its demand for defense and indemnification. Id. ¶ 13. Subject to a reservation of rights, American Home agreed to defend PCS in the Consol and CP&L actions. See AHAC Am. Compl. [D.E. 66] ¶ 13.
Zurich American issued a series of Commercial General Liability policies ("the Zurich Policies") to Texas Gulf, Inc., Texas Gulf Western, Inc., Societe National, Elf Aquitane, Inc., Potash Corporation of Saskatchewan Inc., M&T Chemicals, Inc., and their subsidiaries. Id. ¶ 15; see ZurichAmerican's Mem. Supp. Exs. A-F [D.E. 73-2-73-7]. The policies cumulatively provide insurance coverage from January 1, 1981, to January 1, 1986, and from June 30, 2005, to June 30, 2008. AHAC Am. Compl. ¶ 15. PCS is an insured under the policies. Id. ¶ 19. In each policy, Zurich American agrees to pay "all sums which the Insured shall become legally obligated to pay as damages because of . . . property damage to which this insurance applies caused by an occurrence" and to "defend any suit against the insured seeking damages on account of such . . . property damage, even if any of the allegations of the suit are groundless, false or fraudulent." [D.E. 73-2] 7; [D.E. 73-3] 6; [D.E. 73-4] 10; [D.E. 73-5] 35; [D.E. 73-6] 5; see [D.E. 73-7] 4-5 (limiting the duty to defend to "civil action[s]"). In its amended third-party complaint, American Home seeks a declaratory judgment that these policies oblige Zurich American to defend and to indemnify PCS in the Consol and CP&L actions and for "liability for cleanup associated with the Ward Site" (collectively, the "underlying actions"). AHAC Am. Compl. 9, ¶ 9. American Home also seeks a declaratory judgment that Zurich American must indemnify American Home for its costs or, alternatively, contribute defense and indemnification costs. Id. 9.
On August 26, 2015, Zurich American moved for partial judgment on the pleadings pursuant to Rule 12(c). [D.E. 72, 73]; see Fed. R. Civ. P. 12(c). Zurich American argues that pollution exclusion clauses in each of the Zurich policies preclude any duty to defend or indemnify PCS in the underlying actions and, consequently, preclude any duties to indemnify American Home or to contribute to PCS's defense. [D.E. 72] 2.
Federal Rule of Civil Procedure 12(c) permits a party to move for judgment on the pleadings "[a]fter the pleadings are closed—but early enough not to delay trial." Fed. R. Civ. P. 12(c). A motion for judgment on the pleadings should be granted if "the moving party has clearly established that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter of law." Park Univ. Enters. v. Am. Cas. Co. of Reading, 442 F.3d 1239, 1244 (10th Cir. 2006)(quotation omitted), abrogation on other grounds recognized by Magnus, Inc. v. Diamond State Ins. Co., 545 F. App'x 750 (10th Cir. 2013) (unpublished); see Mayfield v. Nat'l Ass'n for Stock Car Auto Racing, Inc., 674 F.3d 369, 375 (4th Cir. 2012); Burbach Broad. Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 405-06 (4th Cir. 2002).
A court ruling on a Rule 12(c) motion for judgment on the pleadings applies the same standard as in a Rule 12(b)(6) motion to dismiss. See, e.g., Mayfield, 674 F.3d at 375; Burbach Broad. Co. of Del., 278 F.3d at 405-06. A motion under either rule tests the legal and factual sufficiency of the claim. See Ashcroft v. Iqbal, 556 U.S. 662, 677-80, 684 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554-63 (2007); Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). To withstand a Rule 12(c) motion, a pleading "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 678 (quotation omitted); see Twombly, 550 U.S. at 570; Giarratano, 521 F.3d at 302. In considering the motion, the court must construe the facts and reasonable inferences "in the light most favorable to the [nonmoving party]." Massev v. Ojaniit, 759 F.3d 343, 347, 352-53 (4th Cir. 2014) (quotation omitted); see Clatterbuck v. City of Charlottesville, 708 F.3d 549, 557 (4th Cir. 2013); Burbach Broad. Co. of Del., 278 F.3d at 406. A court need not accept a pleading's legal conclusions. Iqbal, 556 U.S. at 678-79; Giarratano, 521 F.3d at 302. Nor must it "accept as true unwarranted inferences, unreasonable conclusions, or arguments." Giarratano, 521 F.3d at 302 (quotation omitted). Rather, plaintiffs' allegations must "nudge[] their claims," Twombly, 550 U.S. at 570, beyond the realm of "mere possibility" into "plausib[ility]." Iqbal, 556 U.S. at 678-79.
When evaluating a Rule 12 motion, a court considers the pleadings and any materials "attached or incorporated into the complaint." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011); see Fed. R. Civ. P. 10(c); Thompson v. Greene, 427 F.3d 263, 268 (4th Cir. 2005); Fayetteville Inv'rs v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991). A court also may take judicial notice of public records such as court documents. See, e.g.,Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009). Here, American Home's amended complaint expressly incorporates PCS's complaint [D.E. 1], the complaints of Consol and CP&L in the underlying actions [D.E. 66-1-66-2], and the Zurich policies [D.E. 73-2-73-7]. The court also considers the Texasgulf business records that American Home attached to the amended complaint as Exhibit 3 [D.E. 66-3]. The parties have attached copies of each of these documents to their submissions, and there is no dispute as to their authenticity. See AHAC Am. Compl. [D.E. 66] ¶¶ 8-12, 15, 21.1 Thus, the court may consider them in ruling on Zurich American's motion for judgment on the pleadings.
A federal court sitting in diversity applies the choice-of-law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); DiFederico v. Marriott Int'l, Inc., 714 F.3d 796, 807 (4th Cir. 2013): Fed. Ins. Co. v. S. Lithoplate, Inc., 7 F. Supp. 3d 579, 583 (E.D.N.C. 2014). Here, American Home seeks declaratory judgment as to Zurich American's obligations under a series of insurance contracts. See AHAC Am. Compl. ¶¶ 15-21, 29-35, 41-44, 46. Under North Carolina law, the "substantive law of the state where the last act to make a binding contract occurred, usually delivery of the policy, controls the interpretation of the contract." Fortune Ins. Co. v. Owens, 351 N.C. 424, 428, 526 S.E.2d 463, 466 (2000).
The six insurance policies at issue in this litigation were delivered in two jurisdictions. Policies GA8955272, GA8070205, CGL 3278693-01, CGL 3251966-01, CGL3251966-00 (the "1981-1986 policies") were delivered in Stamford, Connecticut. [D.E. 73]...
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