Rsr Corp. v. Int'l Ins. Co.

• Decision Date: 26 July 2010
• Docket Number: No. 09-10405.,09-10405.
• Citation: 612 F.3d 851
• Parties: RSR CORPORATION, Quemetco, Inc., Quemetco Metals Limited, Inc. f/k/a Murph Metals, Inc., and Quemetco Realty, Inc., Plaintiffs-Appellants,v.INTERNATIONAL INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

612 F.3d 851

RSR CORPORATION, Quemetco, Inc., Quemetco Metals Limited, Inc. f/k/a Murph Metals, Inc., and Quemetco Realty, Inc., Plaintiffs-Appellants,v.INTERNATIONAL INSURANCE COMPANY, Defendant-Appellee.

No. 09-10405.

United States Court of Appeals, Fifth Circuit.

July 26, 2010.

COPYRIGHT MATERIAL OMITTED

William A. Brewer, III, Michael Joseph Collins (argued), Michael Scott Gardner, Bickel & Brewer, Dallas, TX, for Plaintiffs-Appellants.

Richard Brent Cooper (argued), Michelle Elaine Robberson, Gordon Kurt Wright, Cooper & Scully, P.C., Dallas, TX, for Defendant-Appellee.

Laura A. Foggan, Wiley Rein, L.L.P., Washington, DC, for Amicus Curiae.

Appeal from the United States District Court for the Northern District of Texas.

Before GARWOOD, SMITH and CLEMENT, Circuit Judges.

GARWOOD, Circuit Judge:

From 1972 until 1983, Quemetco, Inc. (Quemetco), a subsidiary of RSR Corporation, operated a lead smelter on Harbor Island, near Seattle, Washington. During that time, Harbor Island suffered substantial environmental damage. In December 1982, the Environmental Protection Agency (EPA) announced that it planned to place Harbor Island on its National Priorities List (NPL). ¹ In 1986, the EPA determined that Quemetco was a potentially responsible party for the pollution. On May 22, 2000, the EPA filed an action under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) seeking recovery from RSR Corporation for the costs it had expended in cleaning up Harbor Island, as well as for expected future costs.

Meanwhile, on February 2, 2000, International Insurance Company (International) sued RSR Corporation, Quemetco, Quemetco Metals Limited, Inc., and Quemetco Realty, Inc. (collectively, RSR), seeking a declaratory judgment that International had no obligations to RSR under four Environmental Impairment Liability (Environmental) policies which International's predecessor in interest had sold to RSR in 1981. An initial jury trial was held to resolve certain coverage issues, while other coverage and damages issues were reserved for future resolution. At the conclusion of this initial trial, the district court entered judgment for RSR, holding that International's Environmental policies obligated it to indemnify RSR for remediation costs incurred by the EPA at Harbor Island, to the extent those costs were not excluded by the policies. We affirmed the district court's judgment on September 19, 2005. Int'l Ins. Co. v. RSR Corp., 426 F.3d 281, 286-89 (5th Cir.2005).

RSR and International were realigned on July 12, 2007.² Afterwards, International raised additional defenses which had been unavailable to it at the time of the prior judgment or which had been reserved in the initial jury trial. On October 22, 2008, both parties filed motions for summary judgment. The district court granted International's motion and dismissed RSR's claims, holding that RSR could not recover from International (1) because an “other insurance” clause in International's Environmental policies limited RSR's recovery to sums it had already received from settlement agreements with several other insurance companies and (2) alternatively, because Texas's “one recovery” rule barred RSR from collecting money from International when it had already been fully compensated for its Harbor Island liability through its settlement agreements with other insurance companies.

RSR now appeals the district court's grant of summary judgment. For the following reasons, we affirm.

FACTS AND PROCEEDINGS BELOW

In 1981, the North River Insurance Company (North River) issued four Environmental policies to RSR, which provided successive layers of coverage up to $60 million, with a per claim limit of $30 million, subject to certain terms and conditions. The policies provided coverage for multiple locations, including RSR's facilities on Harbor Island. In 1993, International succeeded the interests of North River in these policies.

Under the Environmental policies, North River agreed to:

“[I]ndemnify the Insured against all sums which the Insured shall be obligated to pay for compensatory but not punitive or exemplary damages by reason of the liability imposed upon the Insured by law on account of:-

(a) Personal Injury, including death at any time resulting therefrom;

(b) Property Damage;

(c) Impairment or diminution of or other interference with any other environmental right or amenity protected by law;

... caused by Environmental Impairment in connection with the Business of the Insured ... and in respect of which a claim has been made against or other due notice has been received by the Insured during the Policy Period.”

The policies defined “Environmental Impairment” as:

“(a) the emission, discharge, dispersal, disposal, seepage, release or escape of any liquid, solid, gaseous or thermal irritant, contaminant or pollutant into or upon land, the atmosphere or any watercourse or body of water;

(b) the generation of smell, noises, vibrations, light, electricity, radiation, changes in temperature or any other sensory phenomena but not fire or explosion

arising out of or in the course of the Insured's operations, installations or premises....”

However, Condition 8 of each policy provided that:

“This Policy shall not be called upon in contribution and no liability shall attach hereunder for any injury, loss, damage, costs or expenses recoverable under any other insurance insuring to the benefit of the Insured except as regards any excess over and above the amounts collectible under such other insurance; provided always that this clause shall not apply to any policy that is specifically arranged by the Insured to cover limits in excess of those stated in this Policy.”

Additionally, each Environmental policy excluded coverage for liability resulting from a “sudden and accidental happening” or a “fire or explosion.”

RSR also purchased Comprehensive General Liability (CGL) insurance policies from many other insurance companies that covered multiple sites, including the Harbor Island site. Some of those CGL policies contained exclusions for environmental claims, with exceptions to the exclusions for “sudden and accidental” events. Other CGL policies excluded environmental claims, but had exceptions to those exclusions for hostile fires. And other CGL policies did not exclude environmental claims, but only covered accidents and occurrences.

In 1993, RSR sued fifty-three of its CGL insurance providers in the 71st District Court for the Judicial District of Harrison County, Texas. In that action, RSR asserted claims against the CGL insurers for refusing to cover environmental cleanup costs and personal injury claims relating to more than twenty-five sites, including the Harbor Island site. In 2001, several CGL insurers made International a cross-claim defendant in the Harrison County action and sought contribution. RSR also asserted claims against International in the Harrison County action for breach of the Environmental policies, violations of the Texas Insurance Code, and recovery of attorney's fees.

In the Harrison County action, RSR asserted that the CGL insurers were obligated to reimburse it for environmental costs because the pollution had been accidental.

RSR argued that accidental pollution satisfied the CGL policies' “sudden and accidental” exception to the exclusion of environmental claims. Although the CGL insurers contested this assertion by arguing that the “sudden and accidental” exception could only be triggered by pollution that was both sudden and accidental, the Harrison County court adopted RSR's reading of the policies in a letter ruling dated March 19, 2003.

Between 1993 and 2005, RSR entered into thirty-six separate settlement agreements with its CGL insurers, from which it received an aggregate payment of $76,006,501.00. It dismissed the rest of its CGL insurers from the Harrison County action. It also dismissed International. Following the execution of the last of the settlements, RSR non-suited the Harrison County action.

In the meantime, International had initiated the present action in federal court in February 2000, seeking a declaratory judgment that it had no obligations to RSR under the Environmental policies in connection with the Harbor Island site or with another site in West Dallas, Texas. In August 2001, RSR and International tried certain coverage issues relating to the Harbor Island claim before a jury, while reserving unripe coverage and damages issues for future resolution. Issues relating to the West Dallas site were severed into a separate trial and were later settled.³ After the jury returned its verdict on the Harbor Island issues, the district court entered judgment for RSR, declaring that International was:

“contractually obligated to indemnify RSR for any remediation costs and expenses that RSR is or becomes obligated to pay to the United States Environmental Protection Agency (‘EPA’) with respect to the EPA's remediation activity at the Harbor Island site ... to the extent such remediation costs and expenses are covered by [the] EIL Policies ... and are not otherwise excluded by the terms of the policies....”

The district court also determined that the EPA had made a claim against RSR, that RSR had not waived its right to coverage with respect to the Harbor Island site, that RSR's Harbor Island lawsuit against International was not barred by the statute of limitations, and that RSR should take nothing on its common law bad faith and Texas Insurance Code claims against International. We affirmed this judgment on September 19, 2005. Int'l Ins. Co., 426 F.3d at 286-89.

In March 2006, RSR moved to reopen the same federal district court case under 28 U.S.C. § 2202. Subsequently, International requested leave to amend its complaint to assert new coverage and damages defenses which had not been ripe at the time of the 2001 trial. In February 2007, the district court granted both motions. International then amended its complaint to...