Sangamo Weston, Inc. v. National Sur. Corp.
| Decision Date | 14 November 1990 |
| Docket Number | No. 23566,23566 |
| Citation | 307 S.C. 143,414 S.E.2d 127 |
| Court | South Carolina Supreme Court |
| Parties | SANGAMO WESTON, INC., Plaintiff, v. NATIONAL SURETY CORPORATION, American Insurance Corporation, Fireman's Fund Insurance Company, The Travelers Indemnity Company, The Globe Indemnity Company, Certain Lloyd's Underwriters and Companies, American Motorists Insurance Company, Puritan Insurance Company, Prudential Reinsurance Company, and United States Fire Insurance Company, Defendants. . Heard |
Lemuel Gray Geddie, Jr., and Mary Lou Hill, of Ogletree, Deakins, Nash, Smoak and Stewart, Greenville, John E. Heintz and Wendy M. Anderson, of Popham, Haik, Schnobrich & Kaufman, Washington, D.C., for plaintiff.
Stuart M. Andrews, Jr., Stephen G. Morrison, and Richard H. Willis, of Nelson, Mullins, Riley & Scarborough, Columbia, Lawrence A. Levy and Gary Centola, of Rivkin, Radler, Dunne and Bayh, New York City, for defendants Nat. Sur. Corp., American Ins. Co. and Fireman's Fund Ins. Co.
John B. McLeod, of Haynsworth, Marion, McKay and Guerard, Greenville, and Mary Kay Vyskocil, of Simpson, Thacher & Bartlett, New York City, for defendant Travelers Indem. Co.
John E. Johnston, Jr. and Robert A. deHoll, of Leatherwood, Walker, Todd & Mann, Greenville for defendant Globe Indem. Co.
Mason A. Goldsmith, of Love, Thornton, Arnold & Thomason, Greenville, and George B. Hall, Jr., and Harry S. Redman, of Phelps, Dunbar, Marks, Claverie & Sims, New Orleans, La., for defendant Certain Lloyd's Underwriters and Companies.
James C. Parham, Jr. and Marshall Winn, of Wyche, Burgess, Freeman & Parham, P.A., Greenville, Timothy C. Russell, Thomas S. Schaufelberger, and M. Joseph Sterner, of Drinker, Biddle & Reath, Washington, D.C., for defendant American Motorist Ins. Co.
Marshall Winn and James C. Parham, Jr., of Wyche, Burgess, Freeman & Parham Paul J. Foster, Jr., of Foster, Gaddy, Foster & Fortson, Greenville, David L. Reiser, Michael R. Gregg, Elizabeth J. Caprini, Suzanne M. Crowley, Steven R. Apel, Jo M. Bonnell, Mary Ann Phillips and Marlene A. Kurilla, of Pretzel & Stouffer, Chartered, Chicago, Ill., for defendant Prudential Reinsurance Co.
P.A., Greenville, Mitchell L. Lathrop, Kimball Ann Lane, and Kathleen Kenny, of Adams, Duque & Hazeltine, New York City, for defendant Puritan Ins. Co.
Wilburn Brewer, Jr. and Marcus A. Manos, of Nexsen, Pruet, Jacobs & Pollard, Columbia, and Stephen H. Cohen and Wendy S. Greengrove, of McElroy, Deutsch & Mulvaney, Morristown, N.J., for defendant U.S. Fire Ins. Co.
John E. Johnston, Jr., of Leatherwood, Walker, Todd and Mann, Greenville, for defendant Royal Ins. Co.
The following questions have been certified to this Court pursuant to Rule 46:
1. What conflict of laws rule would South Carolina's courts apply to ascertain which state's law controls the validity and construction of insurance contracts at issue in this litigation; (a) the rule of lex loci contractus; or (b) the "location of the risk" methodology set forth in Section 193 of the Restatement (Second) of Conflict of Laws?
2. Does South Carolina Code § 38-61-10 apply to the insurance contracts at issue in this litigation, all of which were executed outside of South Carolina between parties not citizens of South Carolina?
From 1955 to 1977, Sangamo Weston, Inc., manufactured capacitors filled with dielectric fluid at its facility located in Pickens County, South Carolina. This fluid contained polychlorinated biphenylis ("PCB") which is a "hazardous substance" under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601, et seq. ("CERCLA"). Sangamo allegedly discharged wastewater containing PCB's into Town Creek and disposed of other waste containing PCB's at various other locations in Pickens County.
As a result, several property owners brought an action contending that the discharge of PCB-laden material caused diminution in the value of their property. This action was entitled Carole M. Whitfield v. Sangamo Weston, Inc. ("the Whitfield claims"). These property damage claims have been settled. The United States Environmental Protection Agency ("EPA") has notified Sangamo that they believe Sangamo is responsible for PCB contamination at ten waste sites in Pickens County, South Carolina. Sangamo may be required to undertake remedial action to clean these sites under the CERCLA.
Sangamo seeks a declaratory judgment that the defendants, all of whom issued primary or excess liability insurance policies to Sangamo, must defend it against any action arising out of the CERCLA claims. Sangamo also seeks indemnification for any response costs incurred in the clean-up as well as for the property damage claims it has already paid in the Whitfield action.
All of the policies at issue provide property damage coverage for "all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property ... caused by the accident." The central question is whether the CERCLA and Whitfield claims constitute claims for "damages" under the applicable policies. However, before this question may be decided, it must first be determined which state's law should be applied in interpreting these insurance contracts. Neither Sangamo nor the insurance companies are South Carolina citizens and the policies were executed outside South Carolina.
1. What conflict of laws rule would South Carolina's courts apply to ascertain which state's law controls the validity and construction of insurance contracts at issue in this litigation; (a) the rule of lex loci contractus; or (b) the "location of the risk" methodology set forth in Section 193 of the Restatement (Second) of Conflict of Laws?
Historically, in insurance coverage disputes, South Carolina courts have followed the doctrine of lex loci contractus, and applied the law of the state where the contract was formed. Jones v. Prudential Ins. Co., 210 S.C. 264, 42 S.E.2d 331 (1947). This rule was modified by a statute enacted in 1947 now codified at § 38-61-10 (1989). Where this statute applies it governs as South Carolina's rule of conflicts. As discussed in question two, based upon the facts presented to us, this statute is applicable and, thus, South Carolina law governs this dispute.
We note, however, even if the statute did not apply or if this statute were found not applicable based on information not presented to us, we would be unable to address the question of whether South Carolina would adopt the more modern view of the Restatement based on facts presented. Under § 193 of the Restatement (Second) of Conflicts of Law (hereinafter "the Restatement"), the law of the place of the insured risk governs unless with respect to the particular issue, some...
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