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INDEPENDENT PETROCHEMICAL CORP. v. AETNA CAS. & SU

December 6, 1991

INDEPENDENT PETROCHEMICAL CORPORATION, et al., Plaintiffs,
v.
AETNA CASUALTY AND SURETY COMPANY, et al., Defendants.


FLANNERY


The opinion of the court was delivered by: THOMAS W. FLANNERY

This matter comes before the Court on defendant U.S. Fire Insurance Company's ("U.S. Fire") renewed motion for summary judgment and defendant Insurance Company of North America's ("INA") motion for summary judgment. For the following reasons, the Court will grant defendants' motions.

 I.

 This diversity case was brought in 1983 by plaintiffs Independent Petrochemical Corporation ("IPC") and its affiliated corporations (collectively "plaintiffs"). The underlying facts are quite complex, and will be recounted here only insofar as is needed to decide the question before the Court. A fuller discussion may be found in this Court's previous decision. See Independent Petrochemical Corp. v. Aetna Casualty & Surety Co., 654 F. Supp. 1334 (D.D.C. 1986).

 In 1971, IPC arranged for Russell Bliss, an independent contractor, to dispose of certain waste materials for its customer Northeastern Pharmaceutical and Chemical Company ("NEPACCO"). The waste materials contained dioxin, a family of chemical compounds that, in sufficient concentrations, may cause serious harm to humans, animals, and plants. *fn1" Bliss removed over 20,000 gallons of the hazardous waste in his tank trucks to a facility in Frontenac, Missouri, where he mixed it with waste oil and emptied the resulting mixture into storage tanks. Bliss later sprayed the mixture as a dust suppressant at a number of sites in Missouri.

 As the toxic effects of the dioxin allegedly became apparent, a number of claims were brought against plaintiffs as well as Bliss. Eventually, fifty-seven civil actions involving more than 1,600 claimants have been filed in other courts against plaintiffs, in addition to class actions and suits by the State of Missouri and the United States. Most of the claims allege bodily injury and property damage from exposure to the contaminated spray material. The individual claimants seek in aggregate $ 4 billion in bodily injuries and property damage, as well as $ 4 billion in punitive damages.

 Between 1971, when IPC agreed to assist NEPACCO in disposing of the hazardous waste material, and 1983, when this case commenced, IPC purchased 67 primary and excess liability insurance policies from the 23 insurers named as defendants in this action. In November 1983, plaintiffs filed suit seeking a declaratory judgment that these primary and excess insurers are obligated to defend and indemnify plaintiffs for all settlements and judgments, if any, in the dioxin-related claims arising out of the spraying of the hazardous waste material.

 U.S. Fire and INA were among the defendant insurance carriers who issued excess liability insurance policies to plaintiffs. U.S. Fire issued four excess liability insurance policies to plaintiffs, two of which covered the periods dating from January 1, 1981 through January 1, 1982, and two of which covered the periods dating from January 1, 1982 through October 1, 1983. INA issued two excess liability insurance policies to plaintiffs, one of which covered the period dating from January 1, 1981 through January 1, 1982, and the other of which covered the period dating from January 1, 1982 through October 1, 1983. Each of the foregoing policies followed form to or incorporated Certificates No. CHAF 811 and No. CHAF 821 -- known as "First Casualty Excess Policies" -- issued by Corporate Insurance and Reinsurance Company, Ltd. ("CIRCL"). The CIRCL policies contain a choice of law provision which designates New York law as governing the interpretation of the contract language. In addition, the CIRCL polices contain pollution exclusion clauses. In pertinent part, these clauses state:

 This policy shall not apply:

 * * *

 to liability arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water, but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.

 A number of other primary and excess liability insurance policies issued to plaintiffs contained identical pollution exclusion clauses. See generally E. Joshua Rosenkranz, Note, The Pollution Exclusion Clause Through the Looking Glass, 74 Geo, L.J. 501 (1986).

 Several defendants moved for summary judgment on the ground that they had no duty to defend or indemnify plaintiffs based on the pollution exclusions contained in their policies. On September 7, 1988, the Court rejected these motions for summary judgment. See IPC v. Aetna, No. 83-3347, slip op. at 167-91 (D.D.C. Sept. 7, 1988). In regards to those policies which designated New York law as controlling, *fn2" the Court determined, relying on Allstate Insurance Co. v. Klock Oil Co., 73 A.D.2d 486, 426 N.Y.S.2d 603 (1980) ("Klock Oil"), that whether a discharge of pollutants into the environment is "sudden, unintended, and unexpected" -- in other words, sudden and accidental -- can be determined only by reviewing the surrounding circumstances "from the point of view of the plaintiffs." IPC v. Aetna, No. 83-3347, slip op. at 190-91.

 On December 23, 1988, U.S. Fire moved for summary judgment based on the pollution exclusion clauses in their excess liability insurance policies. U.S. Fire argued that two intermediate New York court cases, Technicon Electronics Corp. v. American Home Assurance Co., 141 A.D.2d 124, 533 N.Y.S.2d 91 (2d Dept. 1988), and Powers Chemco, Inc. v. Federal Insurance Co., 144 A.D.2d 445, 533 N.Y.S.2d 1010 (2d Dept. 1988), merited reconsideration of the Court's September 7, 1988 Order because they had served to overrule Klock Oil. On May 28, 1989, the Court denied this motion, but noted that it would reconsider its ruling if the New York Court of Appeals overturned Klock Oil.

 U.S. Fire now renews its motion for summary judgment in light of two recent decisions by the New York Court of Appeals: Technicon Electronics Corp. v. American Home Assurance Co., 74 N.Y.2d 66, 542 N.E.2d 1048, 544 N.Y.S.2d 531 (1989) ("Technicon "), and Powers Chemco, Inc. v. Federal Insurance Co., 74 N.Y.2d 910, 548 N.E.2d 1301, 549 N.Y.S.2d 650 (1989) ("Powers ...


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