a toxic or hazardous waste similarly must fail. The Court has previously determined that "Bliss' spraying of dioxintainted waste oil surely constitutes pollution and contamination within the common meaning of those terms." IPC v. Aetna, No. 83-3347, slip op. at 173. Plaintiffs point to nothing in the record that would controvert this finding. Plaintiffs' citations to a number of news items which discuss scientists' continuing questions concerning the hazards of dioxin do not call the Court's previous finding into question. While dioxin may not now be considered as hazardous as it once was, none of the news items cited indicate that dioxin is no longer considered to be a pollutant or that it is a benign chemical compound.
The Court therefore finds that the pollution exclusion clauses in the policies at issue are applicable and operative.
Having so established, the next inquiry for the Court to consider is whether the sudden and accidental exception at the tail of the exclusion provision "saves the coverage by neutralizing the exclusion clause." Technicon, 74 N.Y.2d at 74, N.E.2d at 1050. "Since the exception is expressed in the conjunctive, both requirements must be met for the exception to become operative. Stated conversely, discharges that are neither nonsudden or nonaccidental block the exception from nullifying the pollution exclusion." Id. at 75, 542 N.E.2d at 1050.
U.S. Fire and INA contend that because the discharge of hazardous waste materials by Bliss was deliberate, such discharges cannot be considered accidental under the operative pollution exclusion clauses. Noting that in Technicon, the New York Court of Appeals rejected the argument that an intentional discharge of toxic or hazardous materials into the environment can be considered accidental if the policyholder did not intend to cause environmental harm, U.S. Fire and INA insist it is irrelevant whether or not Bliss was aware of the chemical composition of the waste he sprayed and understood that environmental damage could result from the spraying.
Plaintiffs dispute this analysis. Plaintiffs argue that for a discharge or dispersal of toxic or hazardous materials to be deemed intentional, the policyholder must have knowledge that it is discharging a known pollutant. Here, because Bliss allegedly tasted the dioxin-tainted waste oil mixture and spread the mixture on his own field, plaintiffs claim genuine issues of material fact remain as to whether Bliss knew that the waste oil he was spraying contained a measurable amount of dioxin and whether he knew that the dioxin was hazardous. In addition, plaintiffs point out that as of 1991, the United States Environmental Protection Agency still permits waste oil to be sprayed as a dust suppressant. Plaintiffs thus maintain that genuine issues of material fact remain as to Bliss' state of mind at the time of the discharges.
Based on its own review of Technicon and Powers Chemco, the Court agrees with the position of U.S. Fire and INA. The New York Court of Appeals in Technicon nowhere linked a determination of whether a discharge of toxic or hazardous materials was accidental to the discharger's specific knowledge of the toxicity or hazards of the materials. Rather, the Technicon court focused exclusively on the deliberateness of the discharge -- in other words, the discharger's knowledge that it was dispersing the toxic or hazardous materials. In pertinent part, the New York Court of Appeals held that "inasmuch as the underlying complaint alleges and Technicon's answer concedes that its dumping of wastes was deliberate, the occurrence cannot be 'accidental' within the meaning of the policy. . . . The pollution exclusion clause at issue here is directed at the polluting act itself--the discharge, dispersal or escape." Id. at 75-76, 542 N.E.2d at 1051; see also New York v. AMRO Realty Corp., 936 F.2d 1420, 1427 (2d Cir. 1991) ("Where the underlying complaint unequivocally alleges that the discharge of pollutants was intentional and deliberate, an insured may not claim the benefit of the sudden and accidental exclusion." (relying on Technicon)). Here, the record is clear that Bliss was cognizant of the presence of the dioxin-tainted NEPACCO waste in the waste oil mixture which he sprayed at the several sites. The record reveals that Bliss removed over 20,000 gallons of the NEPACCO waste in his tank trucks, mixed it with waste oil and emptied the resulting mixture into storage tanks, and sprayed the mixture as a dust suppressant at a number of sites in Missouri.
Plaintiffs' contentions would turn the Technicon court's inquiry on its head, asking not whether there had been a knowing discharge of toxic or hazardous wastes, but whether there had been a discharge of known toxic or hazardous wastes. Plaintiffs' assertions -- that Bliss did not know that the dioxin was toxic or hazardous and that he did not believe the waste oil mixture contained a measurable amount of dioxin -- therefore do not implicate the deliberateness of the discharge. Indeed, by focusing on the discharger's knowledge of the toxicity or hazards of the dispersed materials, plaintiffs' argument inexorably goes to the issue of whether Bliss, the discharger, in any way intended for damages to result from his spraying, an analysis which was specifically rejected by the Technicon court, which stated that I "the pollution exclusion clause, by its own terms, does not distinguish between intended or unintended consequences of intentional discharges; rather it excludes from coverage liability based on all intentional discharges of waste whether consequential damages were intended or unintended." Technicon, 74 N.Y.2d at 75, 542 N.E.2d at 1050. The Court thus rejects plaintiffs' contention that Bliss' alleged lack of knowledge of the toxicity or hazards of dioxin and alleged belief that the waste oil mixture did not I contain a measurable amount of dioxin indicates that his discharge of these materials was not intentional or deliberate.
Plaintiffs contend, however, that under a reasonable policyholder's construction of the pollution exclusion clause, whether a discharge of pollutants was accidental would depend on what the policyholder knew at the time of the alleged discharge. Under this analysis, plaintiffs argue that even if Bliss' discharge of the hazardous waste materials was intentional and deliberate, the discharge still can be considered accidental as to plaintiffs because plaintiffs did not expect or intend for Bliss to use the waste materials for spraying, nor did they expect or intend for any resulting harm to have occurred. Plaintiffs point out that IPC, the policyholder here, did not generate NEPACCO's waste oil, that IPC only intended to act as an intermediary between NEPACCO and Bliss by arranging for Bliss to transfer NEPACCO's waste oil to a disposal site, and that IPC had no knowledge that Bliss would fail to complete the transaction agreed to, and instead spray a portion of the NEPACCO waste oil as a dust suppressant. Plaintiffs conclude that the discharge of hazardous materials by Bliss was accidental as to plaintiffs.
The Court rejects this argument as well. In Powers Chemco, the New York Court of Appeals rejected a similar argument, stating that "simply put, there is nothing in the language of the pollution exclusion clause to suggest that it is not applicable when liability is premised on the conduct of someone other than the insured. . . . [the exclusion clause] represents only a single discrete exception to the insurer's obligation to indemnify under the policy." Powers Chemco, 74 N.Y.2d at 911, 548 N.E.2d at 1302. Consistent with its decision in Technicon, the New York Court of Appeals in Powers Chemco thus focused on the accidental nature of the discharge of hazardous waste itself, rather than the intent of the insured.
The Court concludes that because Bliss' discharge of the dioxin-tainted NEPACCO waste materials into the environment were intentional and deliberate, such discharges cannot be considered accidental under the pollution exclusion clauses contained in U.S. Fire and INA's excess liability insurance policies. Accordingly, the Court finds that U.S. Fire and INA have no duty to defend or indemnify plaintiffs under New York law based on the pollution exclusion clauses contained in the policies at issue.
Finally, plaintiffs contend that even if U.S. Fire and INA's reading of Technicon and Powers Chemco is accepted by the Court, the motions for summary judgment still must be denied because New York law would then be in conflict with a fundamental policy of Missouri law. Noting that this Court had previously determined in its Order of September 7, 1988 that the policies which designate a particular state's law as controlling would be given effect unless that state's law was in conflict with a fundamental policy of the law of Missouri, plaintiffs argue that two decisions which have construed Missouri law, United States v. Conservation Chemical Co., 653 F. Supp. 152 (W.D. Mo. 1986), and Aetna Casualty & Surety Co. v. General Dynamics Corp., No. 88-2220C(A) (E.D. Mo. Jan. 23, 1991), appeal pending, demonstrate that such a conflict between the law of New York and a fundamental policy of Missouri would arise.
Comment g of the Restatement (Second) of Conflict of Laws provides that a "fundamental policy" of state law is a policy that "must . . . be a substantial one." Restatement (Second) of Conflict of Laws § 187 comment g (rev. ed. 1989). Comment g goes on to state that "a policy of this sort will rarely be found in . . . general rules of contract law," but instead "may be embodied in a statute which makes one or more kinds of contracts illegal . . . ." Id. Under this framework, the Court finds no fundamental policy of Missouri law that is in conflict with the law of New York as set forth in Technicon and Powers Chemco. The Missouri Supreme Court has not spoken on the issue. Nor do plaintiffs point the Court to a single Missouri statute or decision by a Missouri court which establishes a fundamental policy on the pollution exclusion that is in conflict with the principles set forth in Technicon and Powers Chemco. Plaintiffs instead rely exclusively on two federal district court decisions, Conservation Chemical and General Dynamics. After reviewing both cases, the Court finds that neither sets forth a fundamental policy of Missouri law as it relates to the pollution exclusion.
In Conservation Chemical, the United States District Court for the Western District of Missouri approved a Special Master's finding that summary judgment was not appropriate for a finding that the pollution exclusion should be applied to exclude coverage as to the policies at issue. Conservation Chemical, 653 F. Supp. at 203-04. Notably, however, the court did not cite or rely on a single Missouri statute or decision by a Missouri court in reaching this conclusion. In contrast, the United States District Court for the Eastern District of Missouri in General Dynamics purported to rely on principles of Missouri law in determining the meaning of the term accidental as being an event that takes place without one's foresight or expectation. See General Dynamics, No. 88-2220C(A), slip op. at 17-18 ("The Missouri courts have established that the meaning of the term 'accidental' is an event that takes place without one's foresight or expectation and is not bounded to an event which occurs suddenly."). However, the cases cited by the General Dynamics in support of this proposition, Murphy v. Western & Southern Life Insurance Co., 262 S.W.2d 340 (Mo. Ct. App. 1953), and St. Paul Fire & Marine Insurance Co. v. Northern Grain Co., 365 F.2d 361 (8th Cir. 1966), do not withstand scrutiny. Murphy involved an intermediate Missouri court's interpretation of the term accidental as it was used in a life insurance policy. In reaching its conclusion, the Murphy court relied exclusively on a dictionary definition of the term; it did not turn to principles of Missouri law or did it cite to decisions of other Missouri courts. See Murphy, 262 S.W.2d at 342. Nor did the Murphy court in any way indicate that its holding was controlling beyond the limited scope of life insurance. And in St. Paul Fire, the United States Court of Appeals for the Eighth Circuit interpreted an insurance policy based on the law of the State of South Dakota, not Missouri. As such, it has no relevance here.
The Court therefore finds no fundamental policy of Missouri law that is in conflict with the law of New York as set forth in Technicon and Powers Chemco.
The Court concludes that the pollution exclusion clauses contained in the excess liability insurance policies issued to plaintiffs by U.S. Fire and INA impose no duties or obligations upon U.S. Fire or INA to defend or indemnify plaintiffs with regard to personal injury or property damage claims against-plaintiffs allegedly arising out of dioxin contamination at any of the following sites at which it is undisputed that Bliss sprayed the waste oil mixture: Times Beach; Shenandoah; Timberline; Bubbling Springs; Saddle and Spur Club; Rosati/Piazza Road; Frontenac; Quail Run; Castlewood/Sontag Road; Highway 100/Erxleben; East North Street; Lacy Manor; Bliss Farm/Mid-America Arena; Bull Moose Tube Company; Hamill Transfer Company; Jones Truck Lines; Overnite Transport/P.I.E.; Southern Cross Lumber; Arkansas Best Freight; Bonifield Brothers Trucking; Community Christian Church; Manchester Methodist Church; Baxter Garden Center; Access Road to Old Highway 141; East Texas Motor Freight; and Bristol Steel. The Court further finds that the pollution exclusion clauses at issue impose no duties or obligations upon U.S. Fire or INA to defend or indemnify plaintiffs with regard to personal injury or property damage claims against plaintiffs allegedly arising out of dioxin contamination at either the sites of Minker/Stout/Romaine Creek and Southwestern Bell at which it is undisputed that allegedly contaminated soil was moved from sites sprayed by Bliss. See EAD Metallurgical, Inc. v. Aetna Casualty & Surety Co., 701 F. Supp. 399, 402 (W.D.N.Y. 1988) (insured precluded from coverage for damage caused to secondary sites in cases in which waste was intentionally disposed of in the first instance).
Thomas W. Flannery
United States District Judge