Upjohn Co. v. Aetna Cas. and Sur. Co., K88-124 CA4.

• Citation: 768 F. Supp. 1186
• Decision Date: 18 January 1991
• Docket Number: No. K88-124 CA4.,K88-124 CA4.
• Parties: The UPJOHN COMPANY and the Asgrow Florida Company, Plaintiffs, v. AETNA CASUALTY AND SURETY COMPANY and General Accident Insurance Company of America, Defendants.
• Court: United States District Courts. 6th Circuit. United States District Court (Western District Michigan)

768 F. Supp. 1186

The UPJOHN COMPANY and the Asgrow Florida Company, Plaintiffs, v. AETNA CASUALTY AND SURETY COMPANY and General Accident Insurance Company of America, Defendants.

No. K88-124 CA4.

United States District Court, W.D. Michigan.

June 4, 1990.

On Motion for Reconsideration January 18, 1991.

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Paul T. Sorensen, Warner, Norcross & Judd, Grand Rapids, Mich., Robert N. Sayler, Keith A. Teel, Eric C. Bosset, Gregg H. Levy, Rebecca Snow, Seth A. Tucker, Covington & Burling, Washington, D.C., for plaintiffs.

William J. Heaphy, Vandeveer, Garzia, PC, Grand Rapids, Mich., Charles W. Browning, Vandeveer, Garzia, PC, Detroit, Mich., L. Roland Roegge, John M. Kruis, Carol D. Carlson, Smith, Haughey, Rice & Roegge, PC, Grand Rapids, Mich., for defendants.

Robert J. Dugan, Rhoades, McKee, Boer, Goodrich & Titta, Grand Rapids, Mich., Barry R. Ostrager, Mary K. Vyskocil, Simpson, Thacher & Bartlett, New York City, for amicus Travelers Ins.

OPINION

ENSLEN, District Judge.

This case is currently before me on plaintiffs Upjohn Company and Asgrow Florida Company's June 1, 1989 Motion for Partial Summary Judgment. This lawsuit stems from an insurance law dispute as to defense costs and indemnity related to environmental damage at a total of twenty-six (26) sites across the United States. Plaintiffs here — Upjohn Company and its subsidiary — ("plaintiffs" or "Upjohn") are defendants or potential defendants in a series of private actions and administrative proceedings alleging environmental damage at these twenty-six sites. Defendants Aetna Casualty & Surety Company and General Accident Insurance Company of America sold to Upjohn comprehensive general liability policies allegedly covering the periods when the environmental damage occurred. Plaintiffs are clear that summary judgment is sought on their motion as to only one of the two major liability issues in this case — whether the insurance companies are obligated to defend Upjohn for various sites in the underlying environmental proceedings. Plaintiffs move this Court for partial summary judgment in their favor and for a declaration that defendants are responsible for past and future defense costs incurred in the underlying proceedings. In addition, defendant Aetna asserts that with regard to two issues ripe for decision at this time, the Court should grant summary judgment in defendants' favor. The first issue is whether a PRP letter addressed to the insured constitutes a "suit" under a comprehensive general liability policy, thus triggering the insurer's duty to defend. The second issue is whether the underlying matters seeking CERCLA response costs constitute a suit for "damages" under the policy, thereby requiring a defense.¹ Also before me is defendant General Accident's December 13, 1989 motion for summary judgment on the issues of the duty to defend and to indemnify based on a late notice argument. Thus I will address plaintiffs' motion for partial summary judgment on the duty to defend issue only. I will analyze defendant General Accident's motion as to both the duty to defend and the duty to indemnify issue.

The reader should refer to both Appendix A and B for assistance in understanding the positions of the plaintiffs, two defendant insurance companies, and the relevant facts related to twenty-six different sites. Appendix A is primarily designed for use with the duty to defend issue. Appendix B is helpful on the duty to indemnify issue, as it is affected by the doctrine of late notice.

In settling these motions, the Court will first provide a background for this multi-party, multi-site lawsuit, setting forth the facts concerning the various insurance policies and then discussing the underlying proceedings: both administrative actions and four lawsuits. Following that, I will discuss two preliminary issues on the duty to defend question: 1) whether a PRP letter in an administrative procedure is equivalent of a complaint triggering a duty to defend in this context; and 2) whether clean up costs, technically an equitable remedy, are "damages" as defined under the relevant insurance policies. I will then apply these principles to the issue of Aetna's and then to General Accident's duty to defend plaintiffs. Finally, the Court will analyze defendant General Accident's duty to indemnify.

BACKGROUND

FACTS

Policies

The insurance policies at issue are known as primary comprehensive general liability policies. Issued by defendants Aetna Casualty & Surety Company ("Aetna") and General Accident Insurance Company of America ("General Accident"), these policies are similar, but not identical, and purport to provide a defense for any suit against the insured that seeks damages for bodily injury or property damage. See Plaintiffs' Memorandum in Support, Exhibits A-B (June 1, 1989) (excerpts from available policies). Together, these policies cover a period from December 31, 1947 to September 30, 1986. The parties do not dispute that the policies were issued and delivered to Upjohn, that all applicable premiums were timely paid, and that the insurers have rejected Upjohn's requests for defense costs. See Answer of General Accident, at ¶¶ 8, 10; Answer of Aetna, at ¶¶ 9, 18. Both defendant insurers contend that Upjohn did not give proper notice of the underlying proceedings.

The policies issued all contain similar language obligating the insurers to provide a defense for claims potentially within their coverage, even if the claims are fraudulent or without merit.

For example, the Aetna policies issued for the period March 1, 1965 to September 30, 1986 provide, as follows:

I. BODILY INJURY LIABILITY COVERAGE PROPERTY DAMAGE LIABILITY COVERAGE

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

bodily damage or

property damage

to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false, or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.

Plaintiffs' Exhibit A-3 to A-6.

An earlier version of this coverage read:

II. Defense, Settlement, Supplementary Payments

With respect to such insurance as is afforded by this Policy, the Company shall:

(a) defend any suit against the Insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the Company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient;

(b)(1) pay all premiums on bonds to release attachments for an amount not in excess of the applicable limit of liability of this Policy, all premiums on appeal bonds required in any such defended suit, the cost of bail bonds required of the Insured in the event of automobile accident or automobile traffic law violation during the policy period, not to exceed $100 per bail bond, but without any obligation to apply for or furnish any such bonds;

(2) pay all expenses incurred by the Company, all costs taxed against the Insured in any such suit and all interest accruing after entry of judgment until the Company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the Company's liability thereon;

(3) pay expenses incurred by the Insured for such immediate medical and surgical relief to others as shall be imperative at the time of the accident;

4) reimburse the Insured for all reasonable expenses, other than loss of earnings, incurred at the Company's request;

and the amounts so incurred, except settlements of claims and suits, are payable by the Company in addition to the applicable time limit of liability of this Policy.

Id. at Exhibit A-2 (Jan. 1, 1956-Jan. 1, 1957).

General Accident's policies have similar defense provisions. The policies from December 31, 1947 to January 1, 1954, for instance, provide, as follows:

II. Defense, Settlement, Supplementary Payments. As respects such insurance as is afforded by the other terms of this policy the company shall

(a) defend in his name and behalf any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the company shall have the right to make such investigation, negotiation and settlement of any claim or suit as may be deemed expedient by the company;

(b) pay all premiums on bonds to release attachments for an amount not in excess of the applicable limit of liability of this policy, all premiums on appeal bonds required in any such defended suit, but without any obligation to apply for or furnish such bonds, all costs taxed against the insured in any such suit, all expenses incurred by the company, all interest accruing after entry of judgment until the company has paid, tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon, and expenses incurred by the insured, in the event of bodily injury, sickness or disease, for such immediate medical and surgical relief to others as shall be imperative at the time of accident;

c) reimburse the insured for all reasonable expenses, other than loss of earnings, incurred at the company's request.

The company agrees to pay the amounts incurred under (1), (b) and (c) of this insuring agreement in addition to the applicable limit of liability on this policy.

Id. at Exhibit A-1. The policies issued by General...