Tenneco Inc. v. Amerisure Mut. Ins. Co.

• Decision Date: 09 September 2008
• Docket Number: Docket No. 275861.
• Citation: 281 Mich. App. 429,761 N.W.2d 846
• Parties: TENNECO INC. v. AMERISURE MUTUAL INSURANCE COMPANY.
• Court: Court of Appeal of Michigan — District of US

761 N.W.2d 846

281 Mich. App. 429

TENNECO INC. v. AMERISURE MUTUAL INSURANCE COMPANY.

Docket No. 275861.

Court of Appeals of Michigan.

Submitted May 13, 2008, at Detorit.

Decided September 9, 2008.

Approved for publication October 30, 2008, at 9:10 a.m.

Barris, Sott, Denn & Driker, P.L.L.C., Detroit (by Michael J. Reynolds), and Jenner & Block, L.L.P., Chicago, IL (by Patricia A. Bronte, Elsa Y. Trujillo, Barry Levenstam, Christopher C. Dickinson, and Jennifer A. Hasch), for the plaintiff.

Kelley, Casey & Moyer, P.C., St. Clair Shores (by Timothy F. Casey, and Nicole E. Wilinski), for the defendant.

Before: BANDSTRA, P.J., and FITZGERALD and MARKEY, JJ.

PER CURIAM.

In this action for declaratory relief and damages for breach of contract, plaintiff, Tenneco Inc., contends that environmental cleanup costs it incurred are covered under general liability and umbrella policies issued by defendant's predecessor, Michigan Mutual Insurance Company (MMIC), to plaintiff's predecessor, the Monroe Auto Equipment Company (Monroe), for periods from July 1, 1956, to July 1, 1978. Defendant Amerisure Mutual Insurance Company appeals by leave granted the trial court's denial of its various motions for summary disposition that were based on the grounds that plaintiff failed to satisfy the policies' notice provisions, that plaintiff forfeited any coverage by entering into settlements and also making "voluntary" payments that defendant had not approved, and that plaintiff's lawsuit was time-barred. Plaintiff filed a cross-motion for summary disposition, asserting that under the policies' definition of "occurrence," an "injury in fact" during the policy period triggered coverage and that the policy language required defendant to pay "all sums" that plaintiff became liable to pay as damages for injury or property damage. We reverse and remand for entry of a judgment for the defendant.

I. SUMMARY OF FACTS AND PROCEEDINGS

Monroe used solvents containing volatile organic compounds, trichloroethylene (TCE) and trichloroethane (TCA), to manufacture auto parts at facilities in Hartwell, Georgia, beginning in 1956; in Paragould, Arkansas, beginning in 1970; and in Cozad, Nebraska, beginning in 1961. Unaware of the danger posed to the environment, Monroe used the solvents through the mid-1980s, disposing of wastewater and sludge containing TCE and TCA at the sites of its manufacturing plants and at nearby landfills in Arkansas (Finch Road), and Nebraska (Sandhills). As a result, TCE and TCA contaminated the groundwater and Monroe incurred substantial environmental cleanup costs in the years since the contamination was discovered. Plaintiff filed this lawsuit in 2003 seeking a declaration that defendant, the corporate successor to MMIC, is liable for all environmental cleanup expenses plaintiff incurred over the years because defendant insured Monroe under general liability and umbrella policies from July 1, 1956, to July 1, 1978.

Defendant filed several motions for summary disposition, contending that the undisputed facts showed that plaintiff had failed to satisfy the policies' notice provisions as a condition precedent to liability, and that plaintiff had forfeited any coverage by making "voluntary" payments and entering into settlements that defendant had not approved. Defendant also contends that this action is barred either by laches or the running of the six-year period of limitations applicable to contract actions. Plaintiff filed a cross-motion for summary disposition, asserting that under the policies' definition of "occurrence,"¹ coverage was "triggered" by an "injury in fact"² during the policy period and that the policy language required defendant to pay "all sums" that plaintiff became liable to pay as damages for injury or property damage.

The policy conditions pertinent to this appeal involve (1) notice of occurrence, (2) notice of claim, (3) voluntary payment, and (4) action against the company. They provide:³

4. Insured's Duties in the Event of Occurrence, Claim or Suit

(a) In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable.

(b) If a claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.

(c) The insured, shall cooperate with the company and, upon the company's request, assist in making settlements, in the conduct of suits and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured because of injury or damage with respect to which insurance is afforded under this policy; and the insured shall attend hearings and trials and assist in securing and giving evidence and obtaining attendance of witnesses. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for first aid to others at the time of accident.

5. Action Against Company[.] No action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company. [Emphasis in original.]

A. EVENTS AT COZAD, NEBRASKA

Monroe wrote a February 15, 1985, letter to MMIC stating:

This is to put you on notice of a potential claim at our plant in Cozad, Nebraska involving sudden and accidental discharge(s) to the environment. The effects of the discharge(s) were first noted in Spring and Summer 1984. Some or all of the discharges may have occurred prior to July 1, 1978.

Samuel Mostkoff, Monroe's legal counsel, sent a "follow-up" letter in October 1985 informing MMIC that, as of July 31, 1985, Monroe's clean-up costs at its Cozad plant were $454,323.00 and that Monroe was continuing to document additional expenses.

Defendant acknowledged receipt of Mostkoff's letter in correspondence dated November 1, 1985, and informed Monroe that its February 1985 letter "appears to have been misplaced." Defendant also requested all available documentation regarding the costs incurred and reserved its rights regarding coverage and compliance with the terms and conditions of the policies.

Mostkoff responded with a November 7, 1985, letter stating that the documentation defendant sought was "quite voluminous." He requested that either defendant's claims examiner "indicate exactly the information you are looking for," or that someone come to Monroe's facility for a meeting. It does not appear that defendant acted on this request.

On November 15, 1985, plaintiff and the state of Nebraska agreed to investigate and remediate groundwater contamination at the Cozad plant.

In a letter dated April 17, 1986, plaintiff informed defendant:

This is to advise you that we have recently performed a review of sources of the groundwater contamination for the State of Nebraska. In connection with this review we have identified that some of the contamination is related to spills which occurred in connection with the delivery of these chemicals to our plant. We are reviewing our records and files, as well as the recollections of our employees, to determine the suppliers of these chemicals and/or the distributors/transporters of these chemicals to our Cozad, Nebraska plant.

Once this information is obtained, it will be forwarded to you for your use in filing claims against these potentially-liable parties for their role in the groundwater contamination.

We continue to accumulate documentation on our expenditures at Cozad in connection with the groundwater clean-up. Through December 1985 we had expended approximately $850,000 in activities related to the clean-up. These records are available for your review at Monroe headquarters.

Defendant asserts that plaintiff never documented any pre-1978 spills, nor did plaintiff demand a defense or seek indemnity. Apparently, there have never been any third-party claims or suits or potentially responsible party (PRP) letters sent to plaintiff regarding its Cozad plant.

On February 3, 1993, plaintiff sent defendant a letter (the 1993 status letter) purporting to enclose "1993 semi-annual status reports" concerning "significant environmental claims" at all five sites (the three manufacturing plants and two landfills). The parties dispute whether the referenced "status" reports were ever actually sent to defendant; however, defendant asserts this 1993 status letter was the last communication it received from plaintiff before it filed this lawsuit in 2003.

B. EVENTS AT THE SANDHILLS LANDFILL, NEBRASKA

The Sandhills landfill is located approximately nine miles north of the city of Cozad. Plaintiff disposed of wastewater and sludge from its Cozad plant at Sandhills from August 1977 to December 1982. As part of its stipulation with the state of Nebraska on November 15, 1985, pertaining to the Cozad plant, plaintiff was precluded from disposing of sludge at the landfill. On August 28, 1987, the Nebraska Department of Justice notified plaintiff that the Sandhills landfill had been referred to it for enforcement action. Subsequently, on September 14, 1987, plaintiff entered into a consent decree with the state of Nebraska. Other than plaintiff's letters stating that it had incurred cleanup expenditures, plaintiff did not notify defendant of any demands or claims asserted against plaintiff, nor did plaintiff demand a defense or seek indemnity.

C. EVENTS AT HARTWELL, GEORGIA

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