Trans World Airlines v. Associated Aviation Underwriters

• Decision Date: 14 August 2001
• Docket Number: ED76846
• Parties: Trans World Airlines, Inc., Appellant/Cross-Respondent v. Associated Aviation Underwriters, et al., Respondent/Cross-Appellants. ED76846 Missouri Court of Appeals Eastern District 0
• Court: Missouri Court of Appeals

Trans World Airlines, Inc., Appellant/Cross-Respondent v Associated Aviation Underwriters, et al., Respondent/Cross-Appellants

ED76846

Missouri Court of Appeals Eastern District

08/14/2001

Appeal From: Circuit Court of the City of St. Louis, Hon. Robert H. Dierker

Counsel for Appellant: Sherrie Cranmore Strand, John W. Fried, Lee M. Epstein and Alan Charles Kohn

Counsel for Respondent: Jeffrey L. Cramer, James M. Yeretsky Joe B. Whistler, Brian A. Frankl, Julius A. Rousseau and Gary Westerberg

Opinion Summary:

Trans World Airlines, Inc. appeals from two judgments regarding its claims for insurance coverage. TWA brought an action against various insurance companies, seeking a declaration of insurance coverage and other relief under insurance policies sold by respondents to TWA from 1956 to 1991. Specifically, TWA sought declarations with respect to the duties of its insurance companies to defend and indemnify it for the costs it incurred in connection with certain enforcement actions commenced by environmental agencies. Further TWA sought damages for the insurance companies' breach of policies and vexatious refusals to pay and other relief. In the first judgment being appealed from, the court granted partial summary judgment in favor of the respondent post-1969 insurers, denying TWA's claim for insurance coverage. In the second judgment, after a bench trial, the court entered a judgment in favor of the respondent pre-1970 insurers, imdemnying TWA's claim for insurance coverage. Respondents cross-appeal from the court's grant of partial summary judgment in favor of TWA declaring that environmental response costs might constitute damages for purposes of their policies.

Division Three holds: 1) The court did not err in entering a judgment in favor of pre-1970 respondents, denying TWA's claim for insurance coverage. TWA failed to prove its activities prior to 1970 caused or contributed to the pollution which was subject of the EPA's proceedings in the late 1980s. 2) The court did not err in granting post-1969 respondents' motion for partial summary judgment based on the pollution exclusion provision. 3) The court did not abuse its discretion in denying TWA leave to amend its Second Amended Petition because we do not find its decision to be so arbitrary as to shock our sense of justice, nor any indication that the court did not carefully consider the motion. 4) The court did not commit reversible error when it overruled TWA's request for a jury trial because TWA waived its right to a jury trial. 5) Because we affirm the court's judgments that TWA is not entitled to coverage for either the pre-1970 or post-1969 claims, respondents are not aggrieved by the court's findings with respect to the type of damages covered by the policies in question or the adequacy of TWA's notice of its claims, and the cross-appeals are accordingly dismissed as moot.

Crahan and Draper III., J.J., concur.

Gary M. Gaertner, Sr.

Appellant, Trans World Airlines, Inc. ("TWA"), appeals from two judgments of the Circuit Court of the City of St. Louis regarding its claims for insurance coverage. TWA brought an action against various insurance companies, seeking a declaration of insurance coverage and other relief under insurance policies sold by respondents to TWA from 1956 to 1991. Specifically, TWA sought declarations with respect to the duties of its insurance companies to defend and indemnify it for the costs it incurred in connection with certain enforcement actions commenced by environmental agencies. Further TWA sought damages for the insurance companies' breach of policies and vexatious refusals to pay and other relief. In the first judgment being appealed from, the trial court granted partial summary judgment in favor of respondents, post-1969 insurers,¹ denying TWA's claim for insurance coverage. In the second judgment, after a bench trial, the trial court entered a judgment in favor of respondents, pre-1970 insurers,² denying TWA's claim for insurance coverage. Respondents/cross-appellants³ cross-appeal from the trial court's grant of partial summary judgment in favor of TWA declaring that environmental response costs might constitute damages for purposes of respondents' policies.⁴ We affirm the judgments denying coverage and dismiss the cross-appeals as moot.

I. FACTS

TWA's claims for insurance coverage arose out of the operation of its facility in Kansas City, Missouri, known as the Ground Operations Center or the Mid-Continental International Facility ("MCI"). MCI is leased by TWA and used as a maintenance and repair center for its aircraft. The City of Kansas City owns MCI and TWA operates the site pursuant to a lease in 1954.

MCI is comprised of aircraft maintenance facilities. The first facility was constructed and became operational in 1956. Initially, MCI consisted of Building 1, a large building housing administrative offices, aircraft hangers and several support shops for aircraft frames; the first phase of Building 2, which contained operations related to piston engine overhaul and testing; the original Wastewater Treatment Plant; and the old Fuel Farm. The MCI facility incorporated a wastewater treatment plant and associated basins for holding wastewater and waste oil. This wastewater treatment plant, with its associated sludge drying beds, was located in the northeastern portion of the site, adjacent to Todd Creek.

In 1971, MCI was expanded, with the construction of the Superhangar for wide-body jets, the expansion of Building 2, and the modification of the Wastewater Treatment Plant. In 1975, MCI was again expanded with the construction of the South SPCC pond and the Cooper Road SPCC pond. Also, an additional chemical wastewater treatment plant for plating shop wastes was constructed. As a result of the construction in the 1970s, the sludge drying beds were excavated, and the detritus was transferred to the western edge of the facility. When the Superhangar was constructed, the sludge was again transferred and mainly dumped at a location at the east end of a Kansas City International airport runway. According to TWA, the MCI Claims arose from a proceeding brought by the U.S. Environmental Protection Agency (EPA) under the Resource Conservation Recovery Act of 1976, 42 U.S.C. Section 6928 ("RCRA"), in 1988. RCRA was enacted in 1976 and became effective in 1980. TWA was aware of the implications of RCRA to its operation at MCI. TWA was expected to terminate its hazardous waste operations or apply for a permit under RCRA at that time. TWA notified the EPA of its operations, but ignored the effects of the statute.

On June 25 and 26, 1985, the EPA and the Missouri Department of Natural Resources ("MDNR") conducted a joint inspection at the MCI site. As a result of this joint investigation, the MDNR served TWA with an Order to Abate Violations, dated August 26, 1985. In February 1986, the EPA undertook a further investigation into TWA's waste management practices at the MCI site. On June 2, 1988, the EPA filed a complaint, compliance order, and notice of opportunity for hearing, ordering TWA to pay a penalty of $100,000; to develop and ultimately implement closure and post-closure plans for the ravine area; to discuss groundwater monitoring deficiencies and further action; and to develop a groundwater monitoring plan for the ravine area in accordance with the applicable federal and state environmental regulations. TWA and the EPA entered into a consent agreement and on September 29, 1989, an Administrative Order on Consent was issued. The 1989 Order provides for study, planning, and implementation of corrective measures, and includes stipulated penalties against TWA for any failure to abide by the terms of the Order. TWA alleges that it has spent more than $20 million to comply with the terms of the 1989 Order.

II. PROCEDURAL HISTORY

TWA initially filed its claim in 1994. On June 1, 1995, TWA filed its First Amended Petition for declaratory judgment, damages, and other relief. On July 22, 1997, TWA filed its Second Amended Petition seeking a declaration of coverage under insurance policies issued by the various respondent insurers between 1956 and 1991. TWA stated three causes of action. Count I was for declaratory relief for defense, Count II for declaratory relief of indemnity and Count III for breach of contract.

On August 11, 1997, respondents filed a motion for partial summary judgment asking the trial court to declare that the phrase "sudden and accidental" contained in the pollution exclusion of certain airline operators' liability policies bound in favor of TWA is unambiguous. They also contended that the phrase does not violate public policy, and should be enforced as written, thereby limiting any pollution coverage to only those instances where the discharge was both sudden, meaning abrupt, and accidental, meaning unexpected and unintended. On September 9, 1997, TWA cross-motioned for partial summary judgment asking the trial court to declare that respondents' pollution exclusion cannot and should not be interpreted to bar coverage for gradual, unintentional pollution damage. On October 29, 1997, the trial court⁵ entered an order of partial summary judgment declaring that those policies that provide coverage for pollution only where the pollution is sudden and accidental do not provide coverage when the pollution is gradual. On November 18, 1997, TWA filed a motion for reconsideration of the trial court's order declaring the meaning of the pollution exclusion. On December 22, 1997, the trial court⁶ overruled TWA's motion.

On July 1, 1998, TWA filed a motion for partial summary judgment requesting the trial court to declare that AAU breached its duty to defend TWA and order it to pay TWA all costs it incurred in defending and settling the MCI claims. TWA also filed a motion for partial summary judgment on all affirmative defenses through which respondents contend that environmental...