Production Stamping Corp. v. Maryland Cas. Co.

• Decision Date: 04 December 1995
• Docket Number: No. 95-1452,95-1452
• Citation: 199 Wis.2d 322,544 N.W.2d 584
• Parties: PRODUCTION STAMPING CORPORATION, Plaintiff-Appellant, d v. MARYLAND CASUALTY COMPANY and Northbrook Property and Casualty Insurance Company, Defendants-Respondents. . Oral Argument
• Court: Wisconsin Court of Appeals

Page 584

544 N.W.2d 584

199 Wis.2d 322

PRODUCTION STAMPING CORPORATION, Plaintiff-Appellant,^d v. MARYLAND CASUALTY COMPANY and Northbrook Property and Casualty Insurance Company, Defendants-Respondents.

No. 95-1452.

Court of Appeals of Wisconsin.

Oral Argument Dec. 4, 1995.

Opinion Released Jan. 9, 1996.

Opinion Filed Jan. 9, 1996.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Patrick M. Ouimet and Steven C. Wolf of Wolf & Ouimet of Chicago; and Michael Burton and Shepard A. Davis of Burton & Davis of Milwaukee. There was oral argument by Patrick M. Ouimet.

On behalf of the defendant-respondent Maryland Casualty Company, the cause was submitted on the briefs of Stephen E. Marshall of Goodell, DeVries, Leech & Gray of Baltimore; and Christopher D. Wolske of Fellows, Piper & Schmidt of Milwaukee. There was oral argument by Stephen E. Marshall.

On behalf of the defendant-respondent Northbrook Property and Casualty Insurance Company, the cause was submitted on the briefs of Mary E. McPherson, Patricia M. Kelly and Judith Fournie Helms of Tressler, Soderstrom, Maloney & Priess of Chicago. There was oral argument by Michael W. Morrison.

Appeal from a judgment of the circuit court for Milwaukee County: Laurence C. Gram, Jr., Judge. Affirmed in part, reversed in part, and cause remanded.

Before WEDEMEYER, P.J., and FINE and SCHUDSON, JJ.

FINE, Judge.

This insurance-coverage action stems from a federal-court suit brought against Production Stamping Corporation by the owner of property bordering Production Stamping's facility, claiming environmental contamination resulting from Production Stamping's disposal practices. The contamination was discovered in October of 1990. Production Stamping tendered defense of the federal-court action to both Maryland Casualty Company and Northbrook Property and Casualty Insurance Company. Maryland Casualty provided comprehensive general liability and umbrella insurance to Production Stamping from November 24, 1980, to January 1, 1986; Northbrook Property and Casualty provided business package insurance to Production Stamping from January 1, 1986, to January 1, 1992. Both insurers rejected the tender. Production Stamping ultimately settled the federal-court suit, and seeks recovery from both Maryland Casualty and Northbrook Property and Casualty for the cost of its defense of the federal-court action as well as the amount for which that action was settled. ¹ The trial court granted summary judgment to the insurance companies dismissing Production Stamping's complaint. We affirm in part, and reverse in part.

Our review of a trial court's grant of summary judgment is de novo. See Green Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816, 820 (1987). We must first determine whether the complaint states a claim. Ibid. If the complaint states a claim, we must then determine whether "there is no genuine issue as to any material fact" so that a party is entitled to "judgment as a matter of law." See RULE 802.08(2), STATS.; Green Spring Farms, 136 Wis.2d at 315, 401 N.W.2d at 820.

The sole issue in connection with each of the insurance companies is whether they had a duty to defend Production Stamping in the federal-court action; if they did have a duty to defend, they may not contest coverage now because they did not seek a preliminary court ruling on the coverage issue. See Grube v. Daun, 173 Wis.2d 30, 74-75, 496 N.W.2d 106, 123 (Ct.App.1992). An insurance company's duty to defend an insured sued by a third party is determined solely by the allegations in that third party's complaint. Kenefick v. Hitchcock, 187 Wis.2d 218, 231-232, 522 N.W.2d 261, 266 (Ct.App.1994). Any doubt as to whether or not the insurance company has a duty to defend is " 'resolved in favor of the insured.' " Id., 187 Wis.2d at 232, 522 N.W.2d at 266 (citation omitted). Although an insurance company that "declines to defend does so at [its] peril," Grieb v. Citizens Casualty Co., 33 Wis.2d 552, 558, 148 N.W.2d 103, 106 (1967), it is not liable to its insured unless there is, in fact, coverage under the policy, id., 33 Wis.2d at 558-559, 148 N.W.2d at 106-107, or coverage is determined to be "fairly debatable," United States Fire Ins. Co. v. Good Humor Corp., 173 Wis.2d 804, 830, 496 N.W.2d 730, 739 (Ct.App.1993). We discuss each of the insurance companies in turn.

1. Maryland Casualty.

In granting summary judgment to Maryland Casualty, the trial court explained that the policies provided coverage for "damages arising from 'property damage' or 'personal injury' that occurred during the policy periods," and that "[t]here is no allegation in the [federal court] complaint from which it can reasonably be inferred that the damage or injury [to the land adjoining Production Stamping's facility] occurred prior to January 1, 1989." As we have seen, the Maryland Casualty's policies expired on January 1, 1986.

The trial court read the federal-court complaint against Production Stamping too narrowly. First, the federal-court complaint alleges that Production Stamping or its predecessor corporation owned the property from which the contamination was alleged to have come "since approximately 1960 through the present." Second, the federal-court complaint alleges that Production Stamping "has used in its operations" chemicals that the complaint contends caused the contamination. Finally, although the federal-court complaint alleges that the contamination was discovered in October of 1990, it alleges both that "the contamination on the Production Stamping Property" "existed for ... a long time" and that the release of the hazardous chemicals "occurred during [Production Stamping]'s ownership, operation, possession and control of the Production Stamping Property." Giving Production Stamping the benefit of the doubt, as we must, see Kenefick, 187 Wis.2d at 232, 522 N.W.2d at 266, these allegations are sufficient to allege that Production Stamping's discharge of the chemicals contaminated the adjoining landowner's property prior to January 1, 1986, see Wisconsin Elec. Power Co. v. California Union Ins. Co., 142 Wis.2d 673, 680-681, 419 N.W.2d 255, 258 (Ct.App.1987) (policy providing coverage for an "occurrence" encompasses the period from the event causing damages to the time when the damages manifest themselves); Hlavinka v. Blunt, Ellis & Loewi, Inc., 174 Wis.2d 381, 403, 497 N.W.2d 756, 765 (Ct.App.1993) (allegations of fact in a complaint "and all reasonable inferences that can be drawn from those facts" must be accepted as true). Furthermore, Maryland Casualty was not relieved of its duty to defend Production Stamping in the federal-court action by the clause in the policy requiring as a predicate for liability that the discharge, release, or escape of pollutants be "sudden and accidental"; Just v. Land Reclamation, Ltd., 155 Wis.2d 737, 456 N.W.2d 570 (1990), has defined that phrase to require nothing more than that the resulting damages be "unexpected and unintended," id., 155 Wis.2d at 741-742, 746, 760, 456 N.W.2d at 570, 571-572. ² Accordingly, Maryland Casualty was obligated to defend Production Stamping in the federal-court action brought by the adjoining landowner, and is responsible for Production Stamping's reasonable expenses in defending that action as well as the amount paid by Production Stamping in settlement. Maryland Casualty is not, however, liable for Production Stamping's costs in remediating its own property. See City of Edgerton v. General Casualty Co., 184 Wis.2d 750, 782-786, 517 N.W.2d 463, 477-479 (1994), cert. denied,514 U.S. 1017, 115 S.Ct. 1360, 131 L.Ed.2d 217 (1995) (costs of remediation not "damages"). We reverse the judgment dismissing the complaint against Maryland Casualty.

2. Northbrook Property and Casualty.

Unlike the Maryland Casualty policy, the policies issued to Production Stamping by Northbrook Property and Casualty contained exclusions for all damages caused by pollution--characterized by the trial court and counsel for both Production Stamping and Northbrook Property and Casualty as "absolute" pollution exclusions; unlike the Maryland Casualty policy, the Northbrook policies did not provide coverage for the "sudden and accidental" discharge, release, or escape of pollutants. Nevertheless, Production Stamping argues that the "PERSONAL INJURY AND ADVERTISING INJURY LIABILITY INSURANCE" coverage in one of the Northbrook Property and Casualty policies, namely the following definition of "Personal Injury": "wrongful entry or eviction or other invasion of the right of private occupancy" created a duty to defend. (Uppercasing in original; bolding omitted.) Production Stamping relies on the court of...