State of NY v. Blank

• Citation: 820 F. Supp. 697
• Decision Date: 05 May 1993
• Docket Number: No. 88-CV-163.,88-CV-163.
• Parties: The STATE OF NEW YORK, Plaintiff, v. Walter T. BLANK, Abalene Pest Control Service, Inc., and Orkin Exterminating Company, Inc., Defendants. Walter T. BLANK and Abalene Pest Control Service, Inc., Third-Party Plaintiffs, v. NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, New England Marine Contractors, Inc., Capital Mutual Insurance Co., and National Union Fire Insurance Co. of Pittsburgh, Pa., Third-Party Defendants. CAPITAL MUTUAL INSURANCE CO., Fourth-Party Plaintiff, v. NEW YORK MUTUAL UNDERWRITERS, Commercial Mutual Insurance Co., f/k/a/ the Cooperative Fire Insurance Company of Catskill, New York, Security Mutual Fire Insurance Co., and Sterling Insurance Co., Fourth-Party Defendants.
• Court: U.S. District Court — Northern District of New York

820 F. Supp. 697

The STATE OF NEW YORK, Plaintiff, v. Walter T. BLANK, Abalene Pest Control Service, Inc., and Orkin Exterminating Company, Inc., Defendants.

Walter T. BLANK and Abalene Pest Control Service, Inc., Third-Party Plaintiffs, v. NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, New England Marine Contractors, Inc., Capital Mutual Insurance Co., and National Union Fire Insurance Co. of Pittsburgh, Pa., Third-Party Defendants.

CAPITAL MUTUAL INSURANCE CO., Fourth-Party Plaintiff, v. NEW YORK MUTUAL UNDERWRITERS, Commercial Mutual Insurance Co., f/k/a/ the Cooperative Fire Insurance Company of Catskill, New York, Security Mutual Fire Insurance Co., and Sterling Insurance Co., Fourth-Party Defendants.

No. 88-CV-163.

United States District Court, N.D. New York.

May 5, 1993.

COPYRIGHT MATERIAL OMITTED

Robert Abrams, Atty. Gen. of the State of N.Y., Albany, NY, for plaintiff; Maureen Leary, Dean S. Sommer, Asst. Attys. Gen., of counsel.

King & Spaulding, Atlanta, GA, for defendant Orkin Exterminating Co., Inc.; Charles H. Tisdale, Jr., Patricia T. Barmeyer, of counsel.

Ogletree Deakins Nash Smoak & Stewart, Schenectady, NY, for defendant Orkin Exterminating Co., Inc.; Franklin H. Boldberger, of counsel.

Whiteman Osterman & Hanna, Albany, NY, for defendants & third-party plaintiffs Abalene Pest Control Serv., Inc. and Walter T. Blank; Margaret J. Gillis, Jean Gerbini, Philip H. Gitlen, of counsel.

Sheft Wright & Sweeney, New York City, for third-party defendant National Union Fire Ins. Co. of Pittsburgh, PA; David Holmes, Peter I. Sheft, of counsel.

Smith Sovik Kendrick Schwarzer & Sugnet, Syracuse, NY, for third-party defendant National Union Fire Ins. Co. of Pittsburgh, PA; William Sugnet, of counsel.

Hancock and Estabrook, Syracuse, NY, for third-party defendant and fourth-party plaintiffs Capital Mut. Ins. Co.; Alan J. Pierce, of counsel.

Bouck, Holloway, Kiernan and Casey, Albany, NY, for fourth-party defendant New York Mut. Underwriters; Thomas O'Connor, Michael J. Lonergan, of counsel.

MEMORANDUM-DECISION AND ORDER

McCURN, Senior District Judge.

New York State commenced this action in February, 1988, pursuant to the Comprehensive Environmental Response, Liability and Compensation Act of 1980 ("CERCLA"), various New York State environmental statutes, and state common law. The State alleges in pertinent part that between 1972 and 1986, defendants/third-party plaintiffs Abalene Pest Control Service ("Abalene") and Walter T. Blank illegally caused hazardous contamination of certain land located in Saratoga County, New York. Abalene and Blank impleaded, among others, National Union Insurance Company and Capital Mutual Insurance Company ("Capital Mutual"), their respective insurance carriers, seeking a defense and indemnification from the State's suit. Capital Mutual subsequently commenced a fourth-party action against, among others, New York Mutual Underwriters ("NYMU"), claiming that NYMU also provided Blank with insurance coverage during the periods of contamination and therefore should contribute to Capital Mutual's defense and indemnification. This court has jurisdiction pursuant to 42 U.S.C. § 9613 (CERCLA) and 28 U.S.C. § 1331 (federal question).

During the five years in which this case has been pending, the court has become quite familiar with the parties and their positions. The court has previously issued two lengthy decisions in this case and has adjudicated numerous other disputes, almost all of which related to the extent to which the insurers must defend Abalene and Blank. See New York v. Blank, No. 88-CV-163, 1991 WL 208883, 1991 U.S.Dist. LEXIS 14582 (N.D.N.Y. Oct. 9, 1991) (hereinafter "Blank II"); New York v. Blank, 745 F.Supp. 841 (N.D.N.Y.1990) (hereinafter "Blank I"). Presently before the court are new issues regarding the duty to defend, brought before the court in Capital Mutual's motion for summary judgment against NYMU and NYMU's cross-motion for summary judgment against Capital Mutual. Both motions relate solely to the fourth-party action. The remaining defendants in the fourth-party action are not parties to this motion.

I. BACKGROUND

The court sets forth only those facts that are necessary for consideration of these motions; reference is made to prior decisions issued in this case for a more complete recitation of the facts. On October 10, 1991, this court rejected for the third time Capital Mutual's argument that it has no duty to indemnify or defend Blank in the State's underlying action. Capital Mutual had argued that it should be excused from the case due to the existence of a "pollution exclusion clause" in Blank's policy which excludes from coverage liability arising from occurrences of contamination.¹ This court rejected Capital Mutual's arguments because the incidents alleged by the State rationally may be said to fall within the "sudden and accidental" exception to the pollution exclusion clause, thus invoking Capital Mutual's duty to defend. The court further determined that Capital Mutual's duty to indemnify must be determined at the trial on the merits, not during a summary judgment motion. See generally Blank II, 1991 WL 208883, 1991 U.S.Dist. LEXIS 14582; Blank I, 745 F.Supp. 841.

Shortly after the court rendered its October 10, 1991 decision, Capital Mutual filed (with leave of the court) this fourth-party action against NYMU. Capital Mutual contends that NYMU had provided Blank with comprehensive insurance coverage from 1972 through 1975, time periods during which Blank allegedly contaminated the subject land. In fact, argues Capital Mutual, NYMU's insurance policy provided Blank with coverage which was nearly identical to that provided by Capital Mutual. In light of the apparently concurrent coverage and the fact that Blank had not sought indemnification or defense costs from NYMU, Capital Mutual commenced this fourth-party action, seeking contribution from NYMU for 50% of Capital Mutual's indemnification costs and 50% of the costs that Capital Mutual incurs in defending Blank in the underlying action.

Capital Mutual now moves for summary judgment of the fourth-party action, as asserted against NYMU, on grounds that NYMU can present no evidence to refute Capital Mutual's proof that NYMU issued insurance coverage to Blank during the relevant time periods and that the coverage applies to the State's underlying claims. As mentioned above, none of the other fourth-party defendants are party to this motion. Capital Mutual acknowledges that its motion is made more difficult—if not more intriguing —by both parties' professed inability to locate the NYMU insurance policy that allegedly provided Blank the claimed coverage. NYMU contends that if that such a policy ever existed, then it would have been lost or destroyed pursuant to the company's regular business practice. While acknowledging the absence of the subject policy, Capital Mutual argues that it nonetheless is able to rely upon circumstantial evidence to irrefutably prove the existence and terms of the coverage. Thus, contends Capital Mutual, it is entitled to summary judgment of the fourth-party action. NYMU cross-moves for summary judgment on grounds that the terms of any alleged policy would be such that NYMU would not be required to provide Blank with a defense or indemnification from the State's claim, even if Capital Mutual were able to prove that coverage existed in the first place.

II. DISCUSSION

A. Capital Mutual's motion for summary judgment

Capital Mutual's inability to produce the alleged NYMU insurance policy does not by itself preclude it from prevailing on this motion. It is well settled that a party seeking recovery under an insurance policy need not produce the actual policy to prevail in a suit for coverage. See, e.g., Boyce Thompson Inst. for Plant Research v. Insurance Co. of N. Am., 751 F.Supp. 1137, 1140 (S.D.N.Y. 1990); Burroughs Wellcome Co. v. Commercial Union Ins. Co., 632 F.Supp. 1213, 1222-23 (S.D.N.Y.1986); see also, e.g., Bituminous Cas. Corp. v. Vacuum Tanks, Inc., 975 F.2d 1130, 1132 (5th Cir.1992). In fact, this court has visited the issue of lost or destroyed insurance policies on two previous occasions, and in both cases recognized that an insured can prove the existence and terms of a policy by circumstantial evidence, without ever producing the subject policy. New York v. Union Fork & Hoe Co., No. 90-CV-688, 1992 WL 107363 *4, 1992 U.S.Dist. LEXIS 6749 *11 (N.D.N.Y. May 7, 1992) ("If the insured can circumstantially prove the existence and terms of a valid policy, then it can satisfy the threshold requirement of its prima-facie case"); Colonial Tanning Corp. v. Home Indemnity Co., 780 F.Supp. 906, 922 (N.D.N.Y. 1991) ("under the circumstances, the fact that the insured has not come forth with complete copies of the policies issued to it by the insurer is not a sufficient basis for denying its partial summary judgment motion"). Of course, proving a prima-facie case of the existence and terms of a lost policy is not easy, nor should it be. Capital Mutual's burden is significantly heightened in this summary judgment context because it must establish beyond dispute that a policy existed as well as the terms of the missing policy. See Fed.R.Civ.P. 56(e); see also, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir.1990). If there is any doubt as to the existence and/or terms of the coverage, then the court must deny summary judgment. Union Fork & Hoe Co., No. 90-CV-688, 1992 WL 107363 *4-5, 1992 U.S.Dist. LEXIS 6749 *15 (citing cases).

1. Diligent Search

Even before presenting its circumstantial evidence to prove the terms of a missing policy, however, Capital Mutual must first satisfy the court that it has made a "`diligent but unsuccessful search and inquiry'" for the missing document. Burroughs Wellcome Co., 632 F.Supp. at 1223 (q...