Town of Windsor, Vt. v. Hartford Acc. & Indem. Co.

• Decision Date: 28 April 1995
• Docket Number: Civ. A. No. 5:94-CV-209.
• Court: U.S. District Court — District of Vermont
• Parties: TOWN OF WINDSOR, VERMONT v. The HARTFORD ACCIDENT & INDEMNITY COMPANY.

885 F. Supp. 666

TOWN OF WINDSOR, VERMONT v. The HARTFORD ACCIDENT & INDEMNITY COMPANY.

Civ. A. No. 5:94-CV-209.

United States District Court, D. Vermont.

April 28, 1995.

Thomas M. Rounds, Davis & Rounds, P.C., Windsor, VT, for plaintiff.

William H. Quinn, Pierson, Wadhams, Quinn & Yates, Burlington, VT, for defendant.

OPINION AND ORDER

BILLINGS, Senior District Judge.

The following motions bring this matter to the Court's attention:

1. Plaintiff's Motion For Partial Summary Judgment dated October 20, 1994.

2. Plaintiff's Motion For Summary Judgment dated January 26, 1995.

3. Defendant's Motion For Summary Judgment dated January 19, 1995.

4. Plaintiff's Motion to Strike dated December 22, 1994.

5. Defendant's Motion to Strike dated December 15, 1994.

The Court will address each motion seriatim.

I. FACTUAL BACKGROUND

This is a dispute over eleven Comprehensive General Liability Policies ("the CGL policies" or "the policies") that Defendant Hartford Accident and Indemnity company ("the Hartford") issued to Plaintiff the Town of Windsor, Vermont ("the Town" or "Windsor") between July 1, 1976 and April 1, 1987. The Town alleges that the Hartford violated its obligations under the CGL policies when it refused to defend and indemnify the Town against the Vermont Agency of Natural Resources ("ANR") in matters arising out of the disposal of hazardous substances at a Town landfill on Trafton Hoisington Farm in Windsor. The Town seeks both a declaration that the Hartford is obligated to defend and indemnify Windsor under the policies and damages for the Hartford's failure to do so. The Hartford denies that it is required to either defend or indemnify the Town under the policies.

The Town maintained a landfill on 17 acres of the Trafton Hoisington Farm ("the THF Site") from 1949 to 1971. In the early 1980s, the United States Environmental Protection Agency ("EPA") began to take an interest in the THF Site. In 1983 the EPA hired a private contractor, NUS Corporation ("NUS"), to conduct a Preliminary Assessment of the site. This study apparently proved inconclusive. NUS completed its final Site Investigation in 1986, recommending that the Town study the soil contamination further and that it regularly monitor area wells that supplied drinking water.

After the 1983 study was completed, the State of Vermont and the Town exchanged several communications concerning the status of the THF Site. On November 22, 1985, the Vermont Agency of Environmental Conservation (the predecessor of the ANR) notified the Town of the "reported presence of hazardous waste which could potentially pose a threat to human health and the environment." See Defendant's Exhibit E, letter form Ruth Einstein, AEC Hazardous Material Specialist to Ruth H. Carney, Windsor Town Manager. In a letter dated August 15, 1988, the Hazardous Materials Management Division ("HMMD") of the ANR reminded Windsor of the presence of a potential hazardous waste site within the town, and included with the notice a copy of NUS' Preliminary Assessment of the THF Site. The letter explained that the Preliminary Assessment was "the first step in the site assessment process set forth by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund." See Defendant's Exhibit Q, letter from ANR to Gloria Tansey, Windsor Town Clerk.

On June 11, 1993, HMMD notified the Town that it was a potentially responsible party ("PRP") for the pollution at the THF Site.¹ In a July 28, 1993 letter to the Town, HMMD confirmed a meeting of all PRPs in Waterbury, Vermont.² The meeting between HMMD and the PRPs took place as scheduled on August 31, 1993. On May 18, 1994, the Town and Goodyear entered into the Trafton Hoisington Farm Site Cooperation Agreement in which they voluntarily promised to perform the site investigation as required by HMMD and EPA. This investigation is currently in progress.

On November 12, 1993, the Town notified the Hartford that there were problems related to the THF Site and that Windsor had been named as a PRP. The Town asked the Hartford to defend and indemnify it under the terms of the eleven CGL Policies that the Hartford issued to Windsor between July 1, 1976 and April 1, 1987. The Hartford denied coverage in a letter dated April 6, 1994, and this suit followed.

In its Motion for Partial Summary Judgment, the Town contends that the policies require the Hartford to defend Windsor in the matters surrounding the THF Site. Similarly, in its Motion For Summary Judgment, the Town maintains that the Hartford has a duty under the policies to indemnify Windsor for the expenses it incurs as a result of the dispute. The Hartford denies all of these allegations, arguing that it need neither defend nor indemnify the Town under the policies.

II. MOTIONS FOR SUMMARY JUDGMENT

A. SUMMARY JUDGMENT STANDARD OF REVIEW

Summary judgment is appropriate when the Court finds that there is no genuine issue as to any material fact, and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The party opposing summary judgment may not rest on its pleading but must present "significant probative evidence" demonstrating that a genuine dispute of material fact exists, and that the moving party is not entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986). The Court must view these materials in the light most favorable to the non-movant, drawing all reasonable inferences in the non-movant's favor. Id. at 255, 106 S.Ct. at 2513-14.

B. PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON DUTY TO DEFEND

In its Motion For Partial Summary Judgment, the Town seeks a declaratory judgment that the policies require the Hartford to defend Windsor in the THF Site matter. The Town also seeks monetary damages, including interest and attorney's fees, for the costs that it has already incurred as a result of defending itself in the HMMD investigation. The Hartford denies that the policies give rise to a duty to defend the Town in the THF Site controversy.

The parties agree that Vermont law applies to this case. Under Vermont law, an "insurer's duty to defend is independent of and broader than its duty to indemnify." Vermont Gas Sys. v. USF & G, 805 F.Supp. 227, 231 (D.Vt.1992). See also State v. Glens Falls Ins. Co., 132 Vt. 97, 99, 315 A.2d 257 (1974) ("(t)he duty of an insurer to enter and defend a case on behalf of its insured is broader than its obligations to respond in damages"). An insurer has a duty to defend an insured whenever there is a possibility that a claim falls within the coverage of an insurance policy. Vermont Gas, 805 F.Supp. at 231. See also E.B. & A.C. Whiting Co. v. Hartford Fire Ins. Co., 838 F.Supp. 863, 867 (D.Vt.1993); Garneau v. Curtis & Bedell, Inc., 158 Vt. 363, 610 A.2d 132, 134 (1992) ("the insurer has a duty to defend whenever it is clear that the claim with the insured might be of the type covered by the policy") (citations omitted). In order to escape the duty to defend, the burden is on the insurer to show that the claims against the insured are entirely excluded from coverage. Vermont Gas, 805 F.Supp. at 231; Village of Morrisville Water & Light Dep't v. United States Fidelity & Guaranty Co., 775 F.Supp. 718, 733 (D.Vt.1991); City of Burlington v. Glens Falls Ins. Co., 133 Vt. 423, 424, 340 A.2d 89 (1975). Thus, in the present case, the Hartford cannot avoid the duty to defend unless it demonstrates that there is no possibility that Windsor is entitled to coverage under the policies.

The Hartford first argues that Windsor is barred from any coverage because ANR's actions thus far do not constitute a "suit" within the meaning of the policies. Whether official action constitutes a suit within the meaning of a CGL policy such as the one in dispute here depends upon whether the official action is "sufficiently coercive and adversarial in nature." Morrisville, 775 F.Supp. at 725. In Morrisville, this Court held that a letter from the EPA notifying the insured of its status as a potentially responsible party under CERCLA was a "suit" within the meaning of the CGL policy at issue. Id. at 732-33.³

Under Morrisville, it is clear that the communications between ANR and the Town were sufficiently adversarial to constitute a "suit" within the meaning of the CGL policy. As early as 1988, the ANR informed the Town that the EPA had conducted a preliminary assessment of the THF Site which was the first step in the site assessment process under CERCLA. Five years later, on June 11, 1993, HMMD officially notified the Town that it was a PRP.⁴ Given the extremely harsh penalties imposed by CERCLA, ANR's decision to identify Windsor as a PRP presented the Town with "no practical choice other than to voluntarily comply with the ANR's demands." Id. at 733. Consequently, the Morrisville decision controls this issue, and we must find that ANR's communications with the Town were sufficiently coercive and adversarial to constitute a "suit" within the meaning of the CGL policy.

The Hartford next argues that the Town is not entitled to coverage because the Town failed to provide the Hartford with timely notice of the potential hazardous waste problems at the THF Site. It is undisputed that the insurance policy at issue in this case contains a valid notice requirement.⁵ In Vermont, compliance with the notice provision of an insurance contract is a condition precedent to establishing the liability of the insurer under the policy. Nelson v. Travelers Ins. Co., 113 Vt. 86, 98, 30 A.2d 75 (1943) (citing Houran v. Preferred Accid. Ins. Co. of New York, 109 Vt. 258, 273, 195 A. 253 (1938)); Ziman v. Employers Fire Ins. Co., 493 F.2d 196, 199 (2d Cir.1974) (applying Vermont law) (citing Houran, 109 Vt. at 272, 195 A. 253). An insured's...