Travelers Indem. Co. v. Northrup Grumman Corp.

• Decision Date: 26 March 2020
• Docket Number: 16 Civ. 8778 (LGS)
• Parties: THE TRAVELERS INDEMNITY CO., ET AL., Plaintiffs, v. NORTHRUP GRUMMAN CORP., ET AL., Defendants.
• Court: U.S. District Court — Southern District of New York

THE TRAVELERS INDEMNITY CO., ET AL., Plaintiffs, v. NORTHRUP GRUMMAN CORP., ET AL., Defendants.

16 Civ. 8778 (LGS)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

March 26, 2020

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:

Plaintiffs, The Travelers Indemnity Co. ("Travelers"), and Defendants, Northrup Grumman Corp. ("Grumman") and Century Indemnity Company ("Century"), move for reconsideration of three related summary judgment opinions: (1) Travelers and Grumman seek reconsideration of the September 20, 2019, Opinion granting in part and denying in part Travelers' Motion for Summary Judgment as to the Romano Lawsuit (the "Romano Opinion"); (2) Grumman seeks reconsideration of the September 24, 2019, Opinion granting Travelers' Motion for Summary as to the Natural Resource Damages ("NRD") Claim (the "NRD Opinion"); and (3) Century and Grumman seek reconsideration of the September 26, 2019, Opinion granting in part and denying in part Century's Motion for Summary Judgment as to the Romano Lawsuit and the NRD Claim (the "Century Opinion") (collectively, the "Opinions"). Travelers also requests to file a sur-reply in support of its motion to reconsider the Romano Opinion. For the reasons below, all motions to reconsider are denied, except to the extent that: (i) late notice does not vitiate coverage of the NRD Claim under Travelers' primary policies, in effect from 1977 to 1985, as a matter of law, and (ii) late notice of an "accident" does not vitiate coverage of property damage claims under Century's excess policies, in effect before 1963, as a matter of law. These rulings are without prejudice to Travelers and Century continuing to assert late notice and other defenses as to these policies. Travelers' request to file a sur-reply is denied as moot.

I. STANDARD

"A motion for reconsideration should be granted only when [a party] identifies an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Tr., 729 F.3d 99, 104 (2d Cir. 2013) (internal quotation marks omitted); accord Impax Labs., Inc. v. Turing Pharm. AG, No. 16 Civ. 3241, 2018 WL 4007641, at *3 (S.D.N.Y. Aug. 21, 2018). The standard "is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked." Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (internal quotation marks omitted); accord In re Effecten-Spiegel AG, No. 18 Misc. 93, 2018 WL 3812444, at *3 (S.D.N.Y. Aug. 10, 2018). A motion for reconsideration is "not a vehicle for relitigating old issues, presenting the case under new theories, securing a rehearing on the merits, or otherwise taking a second bite at the apple." Id. (internal quotation marks omitted). The decision to grant or deny a motion for reconsideration, whether under Local Rule 6.3, Rule 59(e) or 60(a), rests within "the sound discretion of the district court." See Aczel v. Labonia, 584 F.3d 52, 61 (2d Cir. 2009); accord Reynolds v. Hearst Commc'ns, Inc., No. 17 Civ. 6720, 2018 WL 1602867, at *1 (S.D.N.Y. Mar. 29, 2018).

II. BACKGROUND

This action is part of a longtime dispute over what, if any, insurance coverage Travelers and Century owe for litigation arising from Grumman's alleged contamination around its Bethpage Facility, on Long Island, New York.

Travelers and Century filed a series of summary judgment motions, arguing that neither insurer had coverage obligations due to Grumman's failure to provide timely notice of an "occurrence" or "claim," as required for coverage.¹ Some policies require notice of an injury, property damage or accident, in lieu of an occurrence. The Opinions accordingly categorize the policies by notice provision and whether the policies provide primary or excess coverage, and issue distinct rulings for each category. The categories are: Travelers' "Majority Primary Policies," "Minority Primary Policies" and "Umbrella Policies," and Century's "Primary Policies" and "Excess Policies."

For the first time on reconsideration, the parties argue how the terms "injury," "property damage" and "accident" should be interpreted, and how an insured's notice obligation differs under primary versus excess policies. Failure to raise arguments on the original motion is sufficient to deny reconsideration. But because reconsideration is within the sound of the discretion of the Court, the parties' belated arguments, except as noted below, are addressed and rejected on the merits. See Aczel, 584 F.3d at 61 (internal quotation marks omitted); accord Reynolds, 2018 WL 1602867, at *1 (S.D.N.Y. Mar. 29, 2018).

III. DISCUSSION

A. The Romano Opinion

Travelers' and Grumman's motions to reconsider the Romano Opinion are denied.

1. Travelers' Reconsideration Motion

Travelers challenges the ruling that Grumman's notice of injury or property damage obligation did not arise until the Romano Complaint was filed in September 2016. Travelers argues that this ruling (1) overlooks evidence that Grumman knew about notice-triggering injuries from Bethpage community meetings and a newspaper article in the 1990s, and (2) undermines the policy goal of early notice to insurers. Travelers asserts that, by requiring an insured give notice only when it learns of the particular injuries of plaintiffs to a lawsuit -- often not possible until the lawsuit itself is filed -- an insurer will be denied an early opportunity to investigate and mitigate insurance claims. These arguments are unavailing.

The Romano Opinion does not hold that only when an insured learns of the injuries of particular plaintiffs to a lawsuit is the notice-of-injury or -property damage provision triggered.² Rather, the provision requires "notice of injuries themselves, and not of any prior incidents resulting in injury." Travelers Indem. Co. v. Northrop Grumman Corp., 413 F. Supp. 3d 263, 278 (S.D.N.Y. 2019) ("Romano Opinion"). Thus, an insured must give notice when it has sufficient knowledge of actual injury resulting from the insured's actions. See Am. Home Prod. Corp. v. Liberty Mut. Ins. Co., 565 F. Supp. 1485, 1502 (S.D.N.Y. 1983), aff'd as modified, 748F.2d 760 (2d Cir. 1984) (Under model insurance contract, the term "injury" means an "injury-in-fact," i.e. an actual injury has resulted from the insured's actions. "[W]hen injury occurs is a matter to be determined on the basis of facts."); accord Downey v. 10 Realty Co., LLC, 911 N.Y.S.2d 67, 67 (1st Dep't 2010) (recognizing "injury-in-fact" definition in New York insurance contracts); see also Chiarello v. Rio, 957 N.Y.S.2d 133, 136 (2d Dep't 2012) ("Failure or delay by insured in giving notice may be excused if insured lacked knowledge[.]"); Mason v. Allstate Ins. Co., 209 N.Y.S.2d 104, 147 (2d Dep't 1960) (An insured need not give immediate notice of an injury if it lacks "knowledge of facts . . . that injury has resulted."); 18 A.L.R.2d 443 (updated weekly). Under these principles, Grumman gained knowledge of facts of notice-triggering injuries from the Romano Complaint. Although a complaint is not evidence, the allegations have a sufficient factual basis. See Fed. R. Civ. P. 11(b)(3). Grumman timely notified Travelers of the Romano Complaint.

The anecdotal accounts of injury, which Travelers argues triggered Grumman's notice obligation earlier, describe suspected injuries and suspected public health trends possibly attributable to Grumman.³ For example, Travelers cites to how local residents and a newspaper described the "clusters of cancer," "cancer on 10th Street" or the "high rate of cancer" in the Bethpage area in the 1990s. Residents told Grumman at community meetings about health problems and property concerns, which they believed were Grumman's fault. Although these accounts are extremely serious, an insured must give notice of actual known injury, sufficiently grounded in fact. See Am. Home Prod. Corp., 565 F. Supp. at 1502 (Injury is "determined on the basis of facts"). Here, the distinction between notice-of-injury and notice-of-occurrenceprovisions is salient: notice-of-occurrence provisions require notice of even "colorable claim[s] of injury," a duty particularly relevant in contexts like environmental contamination, where injury may develop in a hidden or gradual way. Olin Corp. v. Ins. Co. of N. Am., 966 F.2d 718, 724 (2d Cir. 1992) ("Olin I"); see Am. Home Prod. Corp., 565 F. Supp. at 1501 (Around 1960, New York insurers adopted "the 'occurrence' approach . . . [which] expressly provided that an occurrence included any injury or damage that resulted . . . from injurious exposure over an extended period.") By contrast, the notice-of-injury standard requires notice of actual injury, rather than of a colorable or even likely claim of injury.⁴ See Am. Home Prod. Corp., 565 F. Supp. at 102 (A notice-of-injury provision is triggered not upon knowledge of "the causative event of occurrence but . . . [of] the injuries or damages which result from such an event and which happened during the policy period.") As most Travelers policies require notice of an occurrence, Travelers is entitled to receive early notice of suspected claims of injury, consistent with the policy aims of New York insurance law.

2. Grumman's Reconsideration Motion

Grumman seeks reconsideration of the ruling that Travelers timely disclaimed coverage of the Romano Lawsuit. According to Grumman, the Court failed to consider: (1) an April 11, 2013, letter (the "Hartmann Letter"), forwarded by Grumman to Travelers, which allegedly triggered Traveler's disclaimer obligation, and (2) evidence undercutting that Travelers had timely disclaimed coverage as a matter of law. These arguments are rejected.

The Romano Opinion held that Travelers' disclaimer obligation arose around September 30, 2016, when Travelers received a copy of the Romano Complaint from Grumman....