US v. Conservation Chemical Co.
| Decision Date | 27 June 1986 |
| Docket Number | No. 82-0983-CV-W-5.,82-0983-CV-W-5. |
| Citation | 653 F. Supp. 152 |
| Parties | UNITED STATES of America, Plaintiff, v. CONSERVATION CHEMICAL COMPANY, et al., Defendants. |
| Court | U.S. District Court — Western District of Missouri |
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Niewald, Waldeck, Norris & Brown, Michael E. Waldeck, John L. Hayob, Terry L. Karnaze, Kansas City, Mo., for Conservation Chemical, CCC of Ill. and Norman Hjersted.
Thos. F. Fisher, John M. Kilroy, Jr., Shughart, Thomson & Kilroy, Kansas City, Mo., Edmund B. Frost, John A. Zackrison, Kirkland & Ellis, Washington, D.C., Robert F. St. Aubin, FMC Corp., Philadelphia, Pa., for FMC Corp.
Neil D. Williams, Overland Park, Kan., James F. Duncan, Watson, Ess, Marshall & Enggas, Kansas City, Mo., Allan J. Topol, Patricia A. Barald, David F. Williams, Covington & Burling, Washington, D.C., for IBM Corp.
Richard F. Adams, Ben R. Swank, Jr., John J. Williams, III, Slagle & Bernard, Kansas City, Mo., for third party plaintiffs.
Linde Thomson Fairchild Langworthy Kohn & Van Dyke, P.C., John R. Cleary, Darwin Johnson, Wm. Session and Robert J. Bjerg, Kansas City, Mo., for Norman Hjersted.
J. Jeffrey McNealey, Porter, Wright, Morris & Arthur, Columbus, Ohio, Martin J. Purcell, Robert M. Kroenert, Stanley A. Reigel, Morrison, Hecker, Curtis, Kuder & Parrish, Kansas City, Mo., Daniel W. Kemp, Legal Dept., Armco, Inc., Middleton, Ohio, for Armco, Inc.
Jerome T. Wolf, Carl H. Helmstetter, Spencer, Fane, Britt & Browne, Kansas City, Mo., John A. McKinney, Morton I. Zeidman, Alan R. Chesler, New York City, for AT & T Tech. Inc.
Stephen Jacobson, Lathrop, Koontz, Righter, Clagett & Norquist, Kansas City, Mo., for Mobay.
Kenneth Josephson, Asst. U.S. Atty., Kansas City, Mo., John R. Barker, Environmental Enforcement Section, Land Natural Resource Div., U.S. Dept. of Justice, Washington, D.C., Ken Weinfurt, Asst. U.S. Atty., Kansas City, Mo., John Wittenborn, Environmental Defense Section, Land and Natural Resources Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff.
On June 27, 1985, the Special Master filed a report issuing recommendations concerning the appropriate disposition of twenty-two motions and cross-motions for summary judgment and partial summary judgment. As required, the Court has independently reviewed the record regarding the issues relating to the Master's report, including the relevant motions and responses thereto, and the objections filed to the report. See United States v. Louisiana, 470 U.S. 93, 105 S.Ct. 1074, 1080, 84 L.Ed.2d 73 (1985). Accordingly, the Court vacates its Order of July 10, 1986 and enters the following rulings nunc pro tunc* in summary form and, with respect to those recommendations approved by the Court, the Court adopts the reasoning stated in the Master's report in support of those recommendations. Recommendations of the Master not adopted by the Court will be so designated.
a. Contracts — substantive law of Missouri will apply to all questions involving formation, construction or interpretation of the insurance policies, except for those policies which contain a choice of law provision. There the law of the state chosen will control.
b. Torts — substantive law of Missouri will apply to any claims sounding in tort.
c. Generally — where Missouri has not established, by statute or decision, a particular issue, general principles of insurance law will be applied.
As a matter of law, no "occurrence" took place after September 29, 1980 — the date the government instituted suit.
Accordingly, summary judgment is
(a) Granted in favor of Centaur Insurance Co. on the claims of CCC, CCCI, Hjersted, Armco, AT & T-TI, FMC, IBM, Sperry and Murray-Ohio1 on each of the three policies issued by Centaur after September 29, 1980;
(b) Granted in favor of Central National on the claims of CCC, CCCI, Hjersted, Armco, AT & T-TI, FMC, and IBM;
(c) Granted in favor of each third-party defendant insurer issuing a policy to CCC, CCCI and/or Hjersted after September 29, 1980.2
As a matter of law, claim must be made within the policy period of the relevant "claims-made" policy for coverage to be afforded.
Accordingly, summary judgment is
(a) Denied as to Lincoln Insurance Co.'s motion on the basis of the "claims-made" policy provision;
(b) Granted as to Evanston's 1985 policy, but denied on the basis of the claims-made policy provision;
(c) Denied as to Mutual Fire's motion on the basis of the claims-made policy provision.
There is no issue as to any material fact existing with respect to the claim for bad faith refusal to settle pleaded in Count III of the OGD's third-amended third-party complaint.
Accordingly, summary judgment is granted in favor of each of the 16 Third-party Defendant Insurers on Count III of the OGD's Third Amended Third-Party Complaint.
(i) Granted on the issues of issuance, delivery and payment of insurance policies against Central National, Home, American Fidelity, and Continental;
(ii) Granted on the single issue of issuance of insurance policies against Centaur, Evanston, Mutual Fire, Foremost, and Lincoln.
(iii) Over the recommendation of the Special Master, summary judgment is additionally granted on issues of delivery and payment regarding the policies against the same companies as listed in (ii) above.
(i) Granted on the issues of issuance, delivery and payment as to CCCI and Hjersted over the recommendation of the Special Master;
(ii) Granted on the issues of issuance, delivery and payment by CCC with respect to Central National, Home, American Fidelity, and Continental;
(iii) Over the recommendation of the Special Master, summary judgment is additionally granted as to the issues of delivery and payment by CCC regarding Centaur, Evanston, Mutual Fire, Foremost, and Lincoln.
As to the Original Generator Defendants, partial summary judgment is granted on the specific issues that:
(a) Environmental harm associated with the CCC site constitutes "property damage" as such term is used and defined in the CGL insurance policies issued and delivered to CCC;
(b) Cleanup costs arising out of the environmental harm caused by the discharge, dispersal, release or escape of toxic chemicals and waste material constitutes "damage" as that term is used in the CGL policies issued and delivered to CCC;
(c) Alleged economic losses in the form of response and cleanup costs sought by the United States constitute damage caused by or arising out of the environmental harm for purposes of the CGL insurance policies issued and delivered to CCC.
A question of fact remains as to when disposal of waste materials first commenced, when leaking first occurred, or when damage to the environment was first discovered. A further question remains as to the Site Operators' objective or subjective knowledge3 that there was a substantial probability that environmental harm would result from their activities.
Accordingly, summary judgment is denied as to the various insurers' motions on the issue that CCC expected and intended harm to result from its operations.
While the "owned property exclusion" cannot apply to percolating ground water under the CCC site, there remains a question of fact as to what portion of the remedy relates solely to damage to the CCC site itself.
Accordingly, summary judgment is denied as to the motion of Armco, AT & T-TI and FMC on the issue that the owned property defenses are inadequate as a matter of law to bar coverage for remedial measures being undertaken at the CCC site.
Questions of fact remain concerning the ambiguity of this exclusion clause. Further questions remain as to whether the pollution was sudden and accidental, and whether Hjersted had intent to cause harm.
Accordingly, summary judgment is denied on the basis of the pollution exclusion clause.
However, the exception is for damage occurring after the initiation of this action. Therefore, as pertains to Central National's January 1983 policy, summary judgment is granted.
Both the Original Generator Defendants and the Site Operator Defendants move for summary judgment on the issue of the Insurance Companies' obligation to defend CCC, CCCI and Hjersted against all claims asserted by the United States and "other parties." There is no issue as to material facts with respect to the duty to defend CCC. Over the recommendation of the Special Master, the Court additionally finds there is no question of fact as to the duty to defend Hjersted and as to the duty of two companies to defend CCCI.
Accordingly, summary judgment is
(a) Granted against those primary insurance carriers who issued and delivered standard-form CGL policies ("accident" or "occurrence") prior to September 29, 1980 to CCC, and for which CCC paid the applicable premium;
(b) Granted against Foremost and Mutual Fire as to their duty to defend CCCI;4
(c) Granted against the same insurance carriers as in (a) above, as to Hjersted (d) Denied as to any "excess" insurer on the duty to defend.
Questions of fact remain with respect to the intention and motive of the parties to confer a benefit on a third party.
Accordingly, summary judgment is denied on the motions filed by Foremost, ACIC and Centaur on the issue of third-party beneficiaries.
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