Seymour Mfg. Co., Inc. v. Commercial Union Ins. Co.

• Decision Date: 17 May 1996
• Docket Number: No. 03S05-9511-CV-01266,03S05-9511-CV-01266
• Citation: 665 N.E.2d 891
• Parties: SEYMOUR MANUFACTURING COMPANY, INC., Appellant, v. COMMERCIAL UNION INSURANCE COMPANY, American Employers' Insurance Company, Indiana Insurance Company and the Employers' Fire Insurance Company, Appellees.
• Court: Indiana Supreme Court

Page 891

665 N.E.2d 891

SEYMOUR MANUFACTURING COMPANY, INC., Appellant, v. COMMERCIAL UNION INSURANCE COMPANY, American Employers' Insurance Company, Indiana Insurance Company and the Employers' Fire Insurance Company, Appellees.

No. 03S05-9511-CV-01266.

Supreme Court of Indiana.

May 17, 1996.

Rehearing Denied Aug. 2, 1996.

Patrick W. Harrison, Beck & Harrison, Columbus, for Appellant.

George M. Plews, Jeffrey D. Featherstun, Plews Shadley Racher & Braun, Indianapolis, and Edward O. Roberts, Indianapolis, Amici Curiae, for Indiana Manufacturers Association.

Thomas J. Belcher, Kelley, Belcher & Brown, Bloomington, and Timothy J. Vrana, Sharpnack, Bigley, David & Rumple, Columbus, for Appellee.

Laura A. Foggan, Daniel E. Troy, Robert A. Goodman, Wiley, Rein & Fielding, Washington, D.C., and Lee B. McTurnan and Steven M. Badger, McTurnan & Turner, Indianapolis, Amici Curiae, for Insurance Environmental Litigation Association.

Edward Zampino, Peter E. Mueller, Victor C. Harwood, III, Harwood Lloyd, Hackensack, New Jersey, and Norman T. Funk and Donald D. Levenhagen, Hill, Fulwider, McDowell, Funk & Matthews, Indianapolis, for Aetna Casualty and Surety Company.

ON PETITION TO TRANSFER

DeBRULER, Justice.

This case comes before this Court on petition to transfer. Ind. Appellate R. 11(B)(2). In this interlocutory appeal, Seymour Manufacturing Company (SMC) appeals the trial court's denial of partial summary judgment on the issue of whether SMC's insurers have a duty to defend SMC against claims arising from SMC's alleged mishandling of waste materials. The Court of Appeals affirmed the trial court. Seymour Manufacturing Company, Inc. v. Commercial Union Ins. Co., 648 N.E.2d 1214 (Ind.Ct.App.1995). We granted transfer to address the claim that the trial court erred in denying partial summary judgment on the issue of whether the insurance policies create a duty under which the insurance companies must defend SMC.

In 1968, SMC entered the business of reclamation and disposal of solid waste at a facility at Freeman Field in Seymour. SMC stored, treated and disposed of waste generated by manufacturers. In 1980, the United States Environmental Protection Agency (EPA) filed suit against SMC under the Resource Conservation and Recovery Act (RCRA) and the Clean Water Act. 42 USC § 6973; 33 USC § 1321. The EPA seeks to recover environmental clean-up and other costs. The EPA alleges that SMC stored multiple barrels of waste at the site and improperly maintained those storage barrels, many of which had deteriorated and were leaking contaminants, and that SMC allowed hazardous materials to spill, leak, or ooze from the containers, causing soil contamination, fumes, fires, and odor problems.

SMC notified the insurance companies of the actions brought against it and demanded defense and indemnity. The insurance companies investigated and determined that the claims were not covered under the policies. The insurers refused to defend SMC. SMC sued the insurers for declaratory judgment. SMC moved for partial summary judgment alleging that the insurers had a duty to defend and that motion was denied. SMC pursued this interlocutory appeal. Ind.Appellate R. 4(B)(6).

Summary Judgment

A grant of summary judgment requires that the evidence show that there exists no issue of material fact and that the moving party is entitled to judgment as a matter of law. Ind.Trial R. 56(C); Wright v. Carter, 622 N.E.2d 170, 171 (Ind.1993). In its motion for summary judgment, SMC claimed that appellees were required to defend SMC from claims brought by third parties for alleged pollution. Appellees responded that summary judgment should be denied because the policy exclusions clearly exclude all coverage and, accordingly, there is no duty to defend. In light of our recent decision in American States Ins. Co. v. Kiger, 662 N.E.2d 945 (Ind.1996), SMC's motion for summary judgment should have been granted.

Interpretation of Contract Language

This Court has recently addressed contract interpretation issues virtually identical to those raised in this case. Kiger, supra. In Kiger, a series of insurance policies excluded coverage for damage caused by pollution, with an exception for damage caused by discharges that were "sudden and accidental." A later series of policies excluded coverage for damage caused by various pollutants. Kiger owned a gasoline station which had leaking storage tanks. The gasoline from those tanks had allegedly damaged the surrounding environment. When the Indiana Department of Environmental Management sought reimbursement for the costs of environmental cleanup, Kiger's insurers refused, citing the contractual exclusion. Id. at 946-47. The trial court disagreed and found coverage for Kiger while granting a motion for summary judgment.

After granting an emergency petition to transfer, this Court found coverage to exist, construing ambiguities in the policies against the insurer that drafted them. Id. at 947. Specifically, this Court held that "sudden and accidental" is special purpose language not requiring a temporal understanding and that "gasoline" is not clearly included in the contractual definition of "pollutant." Id. at 947-49. The phrases "sudden and accidental" and "pollutant" were found to be ambiguous and, accordingly, were construed against the insurer and in favor of coverage. Id.

In this case, there exist similar exclusions. SMC...