Travelers Indem. Co. v. Northrop Grumman Corp.

Decision Date25 February 2014
Docket NumberNo. 12 Civ. 3040KBF.,12 Civ. 3040KBF.
PartiesTRAVELERS INDEMNITY CO., et al., Plaintiffs, v. NORTHROP GRUMMAN CORP., et al., Defendants, and Century Indemnity Co., eventual successor in interest to Insurance Co. of North America, Nominal Defendant.
CourtU.S. District Court — Southern District of New York

Andrew Stuart Amer, Lynn Katherine Neuner, Mary Beth Forshaw, Bryce Allan Pashler, Ian Ronald Dattner, Meghan E. Cannella, Rae Caroline Adams, Rita Kathleen Maxwell, Simpson Thacher & Bartlett LLP, New York, NY, for Plaintiffs.

Edward H. Rippey, Eric Christian Bosset, Georgia Kazakis, Jamar Kentrell Walker, James A. Goold, Joshua David Asher, Kevin Robert Glandon, Laura Elizabeth Mellis, Richard Laird Hart, Shelli Li Calland, Thomas Leon Cubbage, III, Timothy Dezso Greszler, William F. Greaney, Covington and Burling LLP, Washington, DC, for Defendants.

Seth Goodman Park, Melvin R. Shuster, Mount Laurel, NJ, Brian C. Vance, Havertown, PA, David Chaffin, White and Williams LLP, Boston, MA, Guy A. Cellucci, Robert F. Walsh, Shane R. Heskin, White and Williams LLP, Philadelphia, PA, Lynn Katherine Neuner, Mary Beth Forshaw, Simpson Thacher & Bartlett LLP, New York, NY, for Nominal Defendant.

OPINION & ORDER

KATHERINE B. FORREST, District Judge.

This environmental insurance coverage action was commenced in April 2012 by Travelers Indemnity Co. and various affiliated companies (together, Travelers) against Northrop Grumman Corp. and Northrop Grumman Systems Corp. (together, “Northrop” or, during discussions of historical points, “Grumman”), and Century Indemnity Co. (Century), eventual successor in interest to Insurance Company of North America (“INA”), as nominal defendant. Together, Travelers and Century issued insurance policies to Northrop spanning a period from 1950 to 1985.

Pending before the Court are various motions for summary judgment by Travelers and Century. This Opinion relates to Travelers' motion for summary judgment with respect to an area that it refers to as the Bethpage Facility (“BF”) (ECF No. 358). The Court deals with the other motions in separate Opinions.

In this motion, Travelers argues that the statutory pollution exclusions effective for its policies issued between 1972 and January 1, 1983, along with pollution exclusions included in policies it issued between 1983 and 1985, are applicable to precisely the type of coverage claims that Northrop asserts with respect to the Bethpage Facility.

In addition, Travelers argues that summary judgment is separately warranted based on both late notice and violation of the so-called “voluntary payments” provisions in each of the policies at issue.

For the reasons set forth below, Travelers' motion as to the Bethpage Facility is GRANTED.

I. FACTS1

The area known here as the Bethpage Facility encompasses a 600–acre parcel of land on which Grumman commenced manufacturing operations in the 1930s. (Northrop Grumman's Response to Travelers' “Statement of Undisputed Material Facts Pursuant to Local Rule 56.1 in Supp. of Travelers' Mot. for Summ. J. Regarding Bethpage Facility” (“NGC 56.1”) ¶ 4.) For purposes of this motion, it does not include the 18–acre parcel that Grumman donated to the Town of Oyster Bay in 1962. The Bethpage Naval Weapons Industrial Reserve Plant (“NWIRP”) was located on the grounds of the Bethpage Facility but operated by Grumman.

Grumman manufactured and tested airplanes, weapons and satellites at the Bethpage Facility. In connection with its operations, it used and stored contaminants such as trichloroethylene (“TCE”), a liquid used as a degreaser for metal parts. (Id. ¶ 5.) TCE is “toxic by inhalation, by prolonged or repeated contact with the skin or mucous membrane, or when taken by mouth.” (Calland Decl. Ex. 39, at Feenstra 005746; see also Calland Decl. Ex. 60, at Feenstra 005828.)

There is a large plume of groundwater contamination below the Bethpage Facility, and now extending beyond its boundaries. (NGC 56.1 ¶ 2.) More than 2000 acres on Long Island are now impacted. (Id. ) This lawsuit concerns whether insurance policies issued by Travelers and Century (or Century's predecessor, INA), cover liabilities that Northrop has and may have relating to clean-up and remediation.

Grumman's use and storage of volatile organic compounds (“VOCs”), including TCE, at the Bethpage Facility, occurred particularly at plants # 1, # 2, # 3, # 5, and # 12. (Id. ¶¶ 5, 8, 214, 215.) Grumman concedes that it began using TCE at the BF in the 1940s. (Id. ¶ 9.)2 Grumman used TCE primarily as a cleaning solvent for metal parts. (Id. ¶ 10.) In particular, plants # 1, # 2, and # 3 each contained vapor degreasers that used TCE. (Id. ¶ 12.)

At least eight TCE degreasers operated in plant # 2 from the 1960s through the mid–1990s. (Id. ) At least six TCE degreasers operated at plant # 3 at various times spanning the 1960s through the 1980s. (Id. ) Plant # 5 had at least one TCE degreaser between the 1960s and had two in the 1970s. (Id. ¶ 14.) In addition, plant # 2 also used degreasers outfitted with spray wands that used TCE. (Id. ¶ 13.) Spray wands were used to degrease large parts, such as wings of planes. (Id. ) To perform his task with a spray wand, a Grumman operator would stand on a platform along the side of the degreaser. (Id. )

Grumman's operations included painting airplanes. It had paint shops on the grounds of the Bethpage Facility for this purpose. (Id. ¶ 15.) TCE was used to clean the paint guns used in the paint booths. (Id. ) To do this, the paint gun would be aimed at the paint curtain and discharged. (Id. ) A “waterfall” in a paint shop was intended to keep sprayed paint from escaping. (Id. ¶ 16.) Water circulated through a closed system and cascaded down the sides of the paint shop to catch paint overspray; water also circulated through troughs on the floor of the paint shop and then back through the waterfalls. (Id. ¶ 17; see also Calland Decl. Ex. 3, at 146:0421.) The paint shop consisted of one room and three waterfalls. (NGC 56.1 ¶ 17.) Grumman's practice was to clean each spray booth re-circulating tank weekly; the water residue would be pumped to the tank truck and taken to Grumman's on-site waste treatment plant. (Calland Decl. Ex. 42, at Feenstra 000101; Calland Decl. Ex. 48, at Feenstra 000113.) Sludges collected in the bottom of the tank were pumped into big vats. (NGC 56.1 ¶ 18.)

Sludges from both the paint booths and the paint shop were treated in plant # 2; “remaining sludge” was cleaned from the floor of the paint booths using rags. (Id. ¶ 18.) Smaller parts were also cleaned at plant # 2 using rags and TCE. (Id. ¶ 20.)

John Cofman, a Northrop Grumman employee, testified that plant # 2 had a system to distill TCE, which was dirty with oil because it had been used in degreasers and for cleaning, so that the company could reuse the TCE. (Calland Decl. Ex. 4, at 372:20–373:08.) According to a schematic, Grumman used concrete foundations for TCE storage tanks. (Calland Decl. Ex. 63.)

On September 8, 1948, Fred J. Biele of Grumman received a letter “recommend [ing] that tests be made of [sludge] to determine whether same is in fact insoluble in water such as rain water and therefore will not pollute the ground water of the Island.” (Calland Decl. Ex. 43, at Dewling 000946.) On November 5, 1949, Biele sent a letter to Stanley T. Barker of NYSDOH notifying him that Grumman was “having tests made to determine the chromium strength of the discolored paint liquor,” and that samples had been taken for analysis. (Calland Decl. Ex. 48, at Feenstra 000113.) On November 21, 1949, Grumman received a permit to discharge sewage or wastes into New York state waters “in a manner which will not contaminate any ground or surface water supplies or injure fish life.” (Calland Decl. Ex. 49, at Feenstra 000116.)

Grumman dug “recharge basins” directly into the ground throughout the Bethpage Facility, which it used at least in part to dispose of wastewaters. (NGC 56.1 ¶ 21.) The discharge basins were designed to allow the wastewater to infiltrate back into the ground and return it to groundwater. (Id. ¶ 22.) There were at least a dozen recharge basins across the Bethpage Facility at various points in its operational history. (Id. ¶ 23.)

The volume of discharge water was significant. For instance, during the period before 1974, there were five million gallons of wastewater per week coming out of plant # 3. (Id. ¶ 25.)

When the discharge basins became clogged and water could no longer percolate into the ground, Grumman would use bulldozers to scrape the basins. (Id. ¶ 28.) The scrapings obtained from these discharge basins were then used to fill in other low-lying areas on the premises of the Bethpage Facility. (Id. ¶ 29.)

Until 1949, Grumman also used wastewaters containing chromium, a contaminant, generated through manufacturing operations at the Bethpage Facility, in recharge basins. (Id. ¶¶ 30, 198200.) In December 1947, the New York State Department of Health (“NYSDOH”) contacted Grumman regarding a detection of chromium in the local municipal water supply well. (Id. ¶ 31.) In its letter, the NYSDOH stated that it required Grumman to take action to prevent chromium wastes from being discharged into the waters of the State without proper treatment for the removal of chromium. (Id. ) Three off-site wells were subsequently and permanently closed—one at which the chromium had been detected and two others. (Id. ¶ 32.)

In 1949, Grumman built an Industrial Wastewater Treatment Facility (“IWTF”) or Industrial Wastewater Treatment Plant (“IWTP”) at plant # 2 to remove chromic acid wastes from industrial wastewater. (Id. ¶ 33.) The IWTF did not treat wastewater for TCE contamination. (Id. ¶ 34.) Before 1981, water treated at the IWTF to remove chromium was directed to plant # 2 recharge basins. (Id. ¶ 35.)

One byproduct of the water treatment at the IWTF was sludge containing hexavalent chromium, which was further treated to become trivalent chromium; the sludge containing the trivalent...

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  • Travelers Indem. Co. v. Northrop Grumman Corp., 12 Civ. 3040(KBF).
    • United States
    • U.S. District Court — Southern District of New York
    • February 25, 2014
    ...999 F.Supp.2d 552TRAVELERS INDEMNITY CO., et al., Plaintiffs,v.NORTHROP GRUMMAN CORP., et al., Defendants,andCentury Indemnity Co., eventual successor in interest to Insurance Co. of North America, Nominal Defendant.No. 12 Civ. 3040(KBF).United States District Court, S.D. New York.Feb. 25, ......

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