Petition for Writ of Certiorari — F L Aerospace Corp. v. Aetna Casualty & Surety Co.

| YD Supreme Court, U.S,

-a FILED

90-2 89 “swe

JOGEPH F. PP aAMOL JR,

_—_— CLERK

4 Pe nas oe

In The

Supreme Court of the Huited States

a , ae

October Cerm, 1990

—

F L AEROSPACE,

Petitioner,

Vv.

AETNA CASUALTY & SURETY Co.,

Respondent.

PETITION FOR WRIT OF CERTIORARI

’ TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

a , aa

— AND APPENDIX —-

Of Counsel: WALLACE K. SAGENDORPH

ALLEN KEZSBOM Counsel of Record for Petitioner

ALAN V. GOLDMAN

FRIED, FRANK, HARRIS,

SAGENDORPH AND Moore, P.C.

5455 Corporate Drive, Suite 301

SHRIVER & JACOBSON Troy, Michigan 48098-2620

professional corporations)

One New York Plaza

New York, New York 10004-1980

(212) 820-8000

Interstate Brief & Record Company, a division of North American Graphics, Inc.

1629 West Lafayette Boulevard, Detroit, MI 48216 (313) 962-6230

i

QUESTIONS PRESENTED

I.

WHETHER A CIRCUIT COURT OF APPEALS, WHEN EXER-

CISING ITS DIVERSITY JURISDICTION, MAY PREDICT A

STATE SUPREME COURT RESULT CONTRARY TO

DIRECTLY APPLICABLE, RECENT INTERMEDIATE STATE

COURT PRECEDENT?

II.

WHETHER, SINCE A STATE SUPREME COURT HAS NOW

AGREED TO HEAR THE SAME ISSUES DECIDED BY THE

CIRCUIT COURT OF APPEALS, THIS COURT SHOULD

ABSTAIN PENDING THE OUTCOME OF THE STATE

SUPREME COURT PROCEEDINGS?

il

RULE 29.1 STATEMENT

The Parent Company of Petitioner FL Aerospace Corp

is MRC Acquisition Corp, which is wholly owned by

FL Aerospace Holdings Corp, all Delaware corporations.

FL Aerospace Corp owns no interest in any sub-

sidiaries other than wholly owned subsidiaries.

ili

TABLE OF CONTENTS

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RFRA OD RPRE MEINE 20 0c cece eee eens

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POINT I. THE CIRCUIT COURT OF APPEALS FOR

THE SIXTH CIRCUIT VIOLATED THE

_ ERIEDOCTRINE. ................

POINT Il. THIS COURT SHOULD ABSTAIN FROM

RULING ON THIS PETITION UNTIL

AFTER THE MICHIGAN SUPREME

Sef gg US 8 4 |, Se

i as ee Sowa ke Ske es eS

APPENDICES:

Order on Petition for Rehearing — United States

Court of Appeals for the Sixth Circuit ......

Opinion — United States Court of Appeals for

et eee cg edad evacuees

Judgment — United States District Court for the

Eastern District of Michigan .............

Opinion — United States District Court for the

Eastern District of Michigan .............

Orders — Michigan Supreme Court ..........

12

14

A-15

A-16

lV

TABLE OF AUTHORITIES

Page

Cases:

Allstate Insurance Co. v Freeman, 432 Mich

656, 443 NW2d 734 (1989) .............. 11, 12

Bernhardt v Polygraphic Co., 350 US 198 {1956} 12

Borden, Inc. v Affiliated FM Ins. Co., 682 FSupp

927 (SD Ohio 1987), aff'd, 865 F2d 1267 (6th

Cir), cert denied, 110 SCt 68 (1989) ......... 13

Chemetco Inc. v Citizens Ins. Co., No. 87-

328896-CZ (Mich Ct App Feb 13, 1990) ..... 8

Claussen v Aetna Casualty & Surety Co, 676

FSupp 1571 (SD Ga 1987), revd and remanded,

888 F2d 747 (ilth Cir Sept 29, 1989) ...... 10, il

C. L. Hauthaway & Sons v American Motorists

Insurance Co., 712 FSupp 265 (D Mass 1989) 13

Erie Railroad Co. v Tompkins,

ce 2 | 1,2,9

Grant-Southern Iron & Metal Co., et al. v CNA

Insurance Co., et al., __ F2d __ (6th Cir, No. 89-

1049, June 19, 1990), 1990 US App LEXIS 96678

Harris County Commissioners Court v Moore,

et ee PF SEPT das en a wee eae a eee 12

Hayes v Maryland Casualty Co., 688 FSupp 1513

Se Sn Gl a iin ey ied ey 13

Hicks v Feiock, 485 US 624 (1988) ........... ll

Jonesville Products Inc. v Transamerica Ins.

Group, 156 Mich App 508, 402 NW2d 46

(1986), lv to appeal denied, 428 Mich 897

TE Cs ak eee ee eee 16,8

Page

Just, et al. v Land Reclaimation, et al., __ Wis

—__, — NW2d _., No. 88-1656 (Wisc Sup Ct

PE TR EP 6 3s ke SOE eee ll

Pepper’s Steel & Alloys, Inc. v US Fidelity &

Guar.,, 668 FSupp 1541 (SD Fla 1987)........ 13

Polkow vy Citizens Ins. Co. of America, 180 Mich

App 651, 447 NW2d 853 (1990), lv to appeal

granted, __ Mich __ (#87617, July 13, 1990) 1, 3, 13

Protective National Ins. Co. v City of Woodha-

ven, No. 101968 (Mich Ct App Sept 28, 1988),

lv to appeal denied, 432 Mich 927 (1989),

denial vacated and leave to appeal granted,

— Mich App _ (#85180, July 13, 1990) .. 1,3, 13

Ray Indus. v Liberty Mut. Ins. Co., 728 FSupp

RSID) (EE? RG EGG) ok sw ncn os die Ve es 13

Shue v D&B Brine, Inc., No. 92404 (Mich Ct

Age telly 22 WATT 8. os osc 1,7

Upiohn Co. v New Hampshire Insurance Co.,

178 Mich App 706, 444 NW2d 813 (1989), Iv

to appeal granted, __ Mich App __ |(## 86906-

869068, July 13, 1990) . oc ce nee es 3,13

US Fidelity and Guaranty Co. v Thomas Solvent

Co., 683 FSupp 1139 (WD Mich 1988) ....... 13

West v AT&T Co, 31) US 223 (1940) ...... 1,9 10

Statute:

Comprehensive Environmental Response, Com-

pensation and Liability Act (“CERCLA”), 42

La, Op Fe ere so cee kvecuees eee 4

7a

Iu The

Supreme Court of the United States

—

Mctober Term, 1990

a

F L AEROSPACE,

Petitioner.

v.

AETNA CASUALTY & SURETY Co..,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

This case arises from a decision of the Court of

Appeals tor the Sixth Circuit that disregarded applic-

able Michigan appellate court precedent and thus vio-

lated this Court's decisional rule enunciated in Erie

Railroad Co. v Tompkins, 304 US 64 (1938) and West v

AT&T Co, 311 US 223 (1940).

When this case was argued to the Sixth Circuit four

separate decisions of the Michigan Court of Appeals’

' Upjohn Co. v New Hampshire Insurance Co., 178 Mich App

706, 444 NW2d 813 (1989), lv to appeal granted, — Mich —

| # #86906-86908, July 13, 1990); Protective National insurance Co

v City of Woodhaven, No. 101968 {Mich Ct App Sept 28, 1988)

(unpublished), /v to appeal denied, 432 Mich 927 (1989), denia!

vacated and lv to appeal granted, __ Mich —_ (#85180, July 13,

1990); Shue v D&B Brine, Inc., No. 92404 (Mich Ct App July 27

1987} (unpublished); Jonesville Products, Inc. v Transamerica

Insurance Group, 156 Mich App 508, 402 NW2d 46 (1986), /v to

appeal denied, 428 Mich 897 (1987). Polkow v Citizens Insurance

Co. of America, 180 Mich App 651, 447 NW2d 853 (1990), Jv to

(concluded on page 2)

2

already held, consistent with the law in many other

states, that the terms “sudden and accidental,” as

applied to environmental claims under a general lia-

bility insurance contract, are to be interpreted as

having a non-temporal meaning (that is, as whether an

event was “unexpected or unintended” by the insured).

The Sixth Circuit found each one of these cases (and

one other subsequent decision) flawed or inapplicable.

The Court predicted that the Michigan Supreme Court

would most likely disregard all its lower court prece-

dents on the point and interpret the terms “sudden and

accidental” as the Sixth Circuit had done in other cases

and as having a purely temporal meaning, i.e., referring

only to abrupt events such as explosions or spills.

The Court of Appeals for the Sixth Circuit made this

prediction about Michigan law without the support of

any “persuasive data” as required by West (see discus-

sion infra). The Sixth Circuit provided no evidence that

it the Michigan Supreme Court were to decide this

issue today, it would determine to reverse all four

panels of the Michigan Court of Appeals. The Sixth

Circuit simply disagreed with the Michigan courts and

supplied its own version of “general” law — just as if

Erie Railroad Co. v Tompkins, supra, had never been

decided. This unsupported prediction of Michigan law,

contrary to recent lower court precedent, in itself con-

stitutes a brazen disregard for Erie principles that this

Court should not tolerate.

Moreover, less than two months after the Sixth Cir-

cuit’s rash action the Michigan Supreme Court decided

to hear several of the same Michigan cases the Sixth

jcontinued from page 1)

appeal granted, _. Mich __ (#87617, July 13, 1990) was decided sub-

sequent to the September 29, 1989 argument to this case. When the

Sixth Circuit considered this case five Michigan Court of Appeals

panels had interpreted “sudden and accidental” non-temporally.

3

Circuit had disregarded. On July 13, 1990 the Michigan

Supreme Court granted applications for leave to appeal

in three of the five Michigan Court of Appeals deci-

sions’ referred to here. The highest court of the State

will now decide the meaning of “sudden and acciden-

tal” as used in general liability insurance policies.

Thus, Petitioner asks that this Court abstain from any

decision on this Petition until after the Michigan

Supreme Court has spoken.

OPINIONS BELOW

The opinion of the United States Court of Appeals is

reported at 897 F2d 214 (6th Cir 1990). The opinion of

the United States District Court is unreported. The two

opinions are reproduced in the appendix at pages A-2

and A-16, respectively.

JURISDICTION

The opinion of the Sixth Circuit was entered March

|, 1990. The order of the Sixth Circuit denying

rehearing en banc was entered May 17, 1990. This

Court’s jurisdiction is invoked pursuant to 28 USC

§ 1254(1).

STATEMENT OF THE CASE

From 1973 to 1975, Petitioner’s predecessor in inter-

est, Midland-Ross Corporation, transported its indus-

trial waste via a state-licensed hauler to a disposal

Upjohn Co. v New Hampshire Insurance Co., supra; Polkow v

Citizens Ins. Co. of America, supre; and l’rotective National

Insurance Co. v City of Woodhaven, supra.

4

site in Michigan owned and operated by a state-licensed

firm, Berlin & Farro Liquid Incineration, Inc. Berlin &

Farro operated the site until September of 1975, when

it was shut down by Michigan regulatory authorities

because of citizen complaints arising from, inter alia,

spills, releases and incomplete combustion of industrial

waste. Berlin & Farro ultimately was adjudicated a

bankrupt and abandoned the site.

In 1983 the United States Environmental Protection

Agency (USEPA) determined the site contained

hazardous waste and placed it on the USEPA’s “‘prior-

ity” list of contaminated sites for Superfund cleanup

pursuant to the Comprehensive Environmental Re-

sponse, Compensation and Liability Act (“CERCLA”),

42 USC 8§ 9601-9675. The USEPA named Midland-Ross

a “potentially responsible party” under CERCLA in

September of 1983. Immediately thereafter Midland-

Ross, together with scores of other “generators,” was

sued by a group of individuals who owned real property

near the former disposal site. The detendants were

accused of creating and maintaining a “nuisance” on

the site which allegedly devalued plaintiff’s property

and endangered their health.

Midland-Ross had discussions with its insurance

carriers, notably the sales agent tor Respondent Aetna

Casualty & Surety Company, in late 1983 regarding

these legal proceedings in Michigan. No written notice

of any claim was immediately filed. In March of 1984,

upon the issuance of an administrative order by the

USEPA pursuant to CERCLA § 106, 42 USC § 9606,

Midland-Ross entered into a proposed settlement with

the USEPA in which Midland-Ross agreed to pay a prop-

ortionate amount of the cost for the “Phase I” clean up

of the Berlin & Farro site. Discussions between the

USEPA and several of the generators regarding addi-

tional cleanup operations continued, and a “Phase II”

Consent Decree was lodged in the Federal District

Court for the Eastern District of Michigan in February

of 1986.

Formal written notice of the state court litigation

was provided to Aetna in November of 1984. Formal

written notice of the Phase I USEPA settlement and

Phase II proceedings was given in June of 1985. To each

of the state court suit notifications Aetna issued “reser-

vation of rights” letters in January of 1985. Aetna

issued a similar letter to the EPA notification in Jan-

uary of 1986. In all of these letters Aetna agreed to

participate in the defense of the claims, subject to

specific policy exemptions and exclusions. Aetna cited

provisions of the comprehensive general liability

policies it had issued to Midland-Ross during the 1973-

1975 period the Berlin & Farro Incinerator was in oper-

ation, including the “sudden and accidental” pollution

exclusion. Aetna did not, however, raise late notice or

material prejudice as defenses against payment. Aetna

investigated the claims, was kept informed of the prog-

ress of the state court litigation and the EPA Phase II

investigation, and was informed of potential settlements.

Yet when the state court litigation was concluded

Aetna failed to acknowledge or pay any of the claims.

Suit was commenced in the state court against Aetna

in February of 1987 for indemnity and defense costs

arising from the state court claims, the Phase I USEPA

settlement and the Phase II potential liability. Aetna

denied any responsibility and raised a number of

defenses for the first time, including late notice and

material prejudice. Aetna removed the case to the fed-

eral district court for the Eastern District of Michigan

solely on diversity of citizenship, and the case was tried

to the court in August of 1988.

The trial court found that the property damage

alleged by the state court plaintiffs and the USEPA was

6

an “occurrence” under the Aetna policy and that the

cleanup costs were “damages” under Michigan law. The

trial court also found that pursuant to Michigan law,

namely a Michigan Court of Appeals’ decision entitled

Jonesville Products Inc. v Transamerica Insurance

Group, 156 Mich App 508, 402 NW2d 46 (1986), lv to

appeal denied, 428 Mich 897 (1987), that the insurance

policy’s “sudden and accidental” pollution exclusion

does not apply if the discharges were “unexpected” and

“unintended” from the standpoint of the insured.”

The trial court held, however, that a deiay in pro-

viding written notice to Aetna’s home office materially

prejudiced Aetna’s ability to defend the case. The court

granted judgment of no cause of action in favor of

Aetna. FL Aerospace appealed the trial court’s decision

that Aetna was prejudiced by late notice. Aetna cross-

appealed the trial court’s decision, among others, that

in Michigan the insurance contract terms “sudden and

accidental” are to be interpreted as non-temporal, i.e.,

whether such pollution was “expected” or “intended”

from the standpoint of the insured. The appeal was

heard by the Court of Appeals for the Sixth Circuit on

September 29, 1989.

In its March 1, 1990 opinion the Sixth Circuit

atfirmed the trial court, but for reasons other than

those used by the trial court. The Sixth Circuit

found that contrary to five published and unpublished

The “pollution exclusion” provides that Aetna insurance does

not apply:

to bodily injury or property damage arising out of the

discharge, dispersal, release or escape of smoke, vapors,

soot, tumes, acids, alkalis, toxic chemicals, liquids or gases

waste materials or other irritants, contamination or pollut-

ants into or upon land, the atmosphere or any watercourse

or body of water; but this exclusion does not apply if

such discharge, dispersal, release or escape is sudden and

accidental. (Emphasis added.)

_&<&4£

>

opinions of the Michigan Court of Appeals, the Mich-

igan Supreme Court would hold that the terms

“sudden and accidental” in a general liability insurance

contract are unambiguous and exclusively temporal;

that is, they can only refer to events of brief temporal

duration.

The Sixth Circuit rejected all of the Michigan appel-

‘ate Opinions as not determinative of Michigan law. The

-ourt tound them variously to be without “explana-

or “analysis.” The Court said none of the opin-

ns held the terms “sudden and accidental” were

ambiguous, (one opinion, Shue v D&B Brine, supra, did

so hold!) and none of the opinions ruled out the possi-

ility of a temporal interpretation of those terms. On

these bases the Sixth Circuit concluded that, since it

Jid not deem any of the Michigan Court of Appeals

opinions rose to the stature of a definitive pronounce-

ment of Michigan law, it was free to look “to other

sources of law on this question.”

,

These “other sources” were Michigan Supreme Court

opinions on the general rules of interpretation of insur-

ance contracts. The Court found that “ambiguous”

terms are construed against the drafter, but no construc-

tion is required for “unambiguous” terms. Such terms

are to be construed according to their “strict, plain,

common meaning” and “should not be perverted

merely to benefit the injured party.”

Applying these principles the Sixth Circuit found

that its interpretation of the terms “sudden and acci-

dental” was closer to its perception of the Michigan

Supreme Court’s likely interpretation than was the

Michigan Court of Appeals’. Relying on non-contextual

detinitions found in dictionaries, the Sixth Circuit

expressly acknowledged that its “interpretation of the

‘sudden and accidental’ exception departs from the

8

Michigan Court of Appeals decision in Jonesville as

well as several subsequent Michigan Court of Appeals

decisions; ... .” It concluded, however, that the Mich-

igan Supreme Court would apply the rules of construc-

tion it cited and hold “the word ‘sudden’ has a plain,

everyday temporal component and would interpret the

‘sudden and accidental’ exception in light of that

finding.” *

Petition for Rehearing and Suggestion for Rehearing

en Banc was filed on March 15, 1990. Pursuant to direc-

tion of the Court Aetna filed a Response on April 26,

1990. On May 17, 1990 the Court of Appeals denied the

Petition for Rehearing.

Petitioner anticipates Respondent will cite the unpublished

decision of Chemetco, Inc. v Citizens Ins. Co., No. 87-328896-CZ

Mich Ct App Feb 13, 1990), in support of its temporal construction

of “sudden” under Michigan law. Any reliance on this case would

be misleading and inappropriate. The Sixth Circuit did not cite it or

in any way rely on it, despite the fact that it was decided prior that

Court's March Ist opinion. Defendant insurer in that case accepted

the Jonesville definition that “sudden” means “happening without

previous notice or with very brief notice, coming or occurring

unexpectedly; unforeseen; unprepared for.” Indeed, the thrust of the

insurer's argument was that the discharge or release was intentional

and not accidental and was therefore excluded from coverage. The

analysis employed by the Chemetco Court is thoroughly consistent

with the Jonesville detinition of “sudden and accidental.” But see

Grant-Southern Iron & Metal Co., et al. v CNA Insurance Co., et

al F2d __ (6th Cir, No. 89-1049, June 18, 1990), 1990 US App

LEXIS 9667, wherein the Sixth Circuit cited Chemetco tor the

proposition that “the Michigan Court of Appeals now seems to be

divided on the question of whether ‘sudden and accidental’ includes

a temporal element.” Grant-Southern, supra, n.4

(RRR

9

REASONS FOR GRANTING THE WRIT

Petitioner respectfully submits that the Court should

grant the writ of certiorari for two reasons:

1. To enforce the existing limits on the discretion of

a federal court sitting in diversity to disregard and

preempt the decisions of state courts construing state

law.

2. To suspend the effect of the decision by the

Court of Appeals for the Sixth Circuit until after the

Michigan Supreme Court renders its decision in the

three cases it has accepted for review.

POINT I

THE COURT OF APPEALS FOR THE SIXTH CIRCUIT

VIOLATED THE ERIE DOCTRINE.

For over fifty years Erie Railroad Co. v Tompkins, 304

US 64 (1938) and subsequent decisions of this Court

have ensured that federal ccurts would apply state law

in diversity cases: “|Tjhere is no doctrine of “transcen-

dental” or “general” law, which allowed federal judges

to disregard the law of the forum state in diversity

cases, were struck down. In diversity the law has been

and is today the law of the forum state “whether it be

ot its legislature or of its Supreme Court.” 304 US 79.

In the absence of clear statutory or state court prece-

dent, however, it is well settled that federal courts

must determine the state law based upon “rules of

decision commonly accepted and acted upon by the bar

and interior Courts.” West v AT&T Co., 311 US 223, -

236 |1940). In West, the Court of Appeals for the Sixth

Circuit refused to follow an Ohio appellate court

opinion in a case involving the same parties and issues

as the case then before the Sixth Circuit.

10

West v AT&T Co. was an early post-Erie decision of

this Court holding that a federal court should not disre-

gard the decisions of intermediate state appellate courts

“unless it is convinced by other persuasive data that

the highest court of the state would decide otherwise,”

311 US 237 (emphasis supplied). Although the Sixth

Circuit cited this language in its opinion here, it paid

scant attention to its meaning; rather, the Court of

Appeals below included only the observation that it

was not persuaded by the reasoning of the then-five

relevant Michigan appellate court opinions. It also

reviewed general rules of contract interpretation found

in several Michigan Supreme Court opinions — all of

which are standard rules that were available to the five

intermediate Michigan appellate courts when consid-

ering their decisions. On such dubious grounds the

Sixth Circuit rejected an entire body of Michigan law

and replaced it with its own “general law.”

It the Sixth Circuit were to review “other persuasive

data,” West, supra, 31l US 237, it would find strong

reinforcement for the conclusions reached by the five

panels of the Michigan Court of Appeals. In two recent

decisions in which state supreme courts reviewed insur-

ance industry documents contemporaneous with the

drafting of the “sudden and accidental” language, these

courts noted forcefully that in appearances before sev-

eral state insurance commissions in the early 1970's

insu.ance company spokespersons — including Aetna’s

— represented that the “pollution exclusion clause”

was intended only to clarify existing coverage so as to

bar intentional polluters from insurance benefits under

a comprehensive general liability policy.

Indeed, in one of those cases such representations,

inter alia, were held to preclude Aetna itself from

asserting a certain interpretation in that case for its

own benefit. Claussen v Aetna Casualty & Surety Co.,

676 FSupp 1571 (SD Ga 1987), certified question to Sup

Ct of Ga, 865 F2d 1217 (llth Cir Sept 29, 1989), certi-

22 —

1]

fied question answered, Claussen v Aetna Casualty &

Surety Co., 259 Ga 333, 380 SE2d 686 (1989), 676 FSupp

1571, revd and remanded, 888 F2d 747 (11th Cir Sept

29, 1989). Accord, Just v Land Reclaimation, __ Wis _,

— NW2d _, No. 88-1656 (Wisc Sup Ct June 19, 1990)

in which the Wisconsin Supreme Court concluded that

the word “sudden” is “reasonably susceptible to dif-

ferent meanings and is therefore ambiguous,” (Slip op,

p 3), and that the phrase “sudden and accidental”

means “damages that are unexpected and unintended.”

(Slip op, p 9). The Just court also found that this inter-

pretation “comports with substantial evidence indicat-

ing that the insurance industry itself originally

intended the phrase |“sudden and accidental” | to be

construed as ‘unexpected and unintended.’” (Slip op, p 9).

Just as the Sixth Circuit should have consulted

Aetna’s own prior testimony as reflected in the drafting

history of the “sudden and accidental” clause before

making its decision, it should also have consulted other

recent decisions of the Michigan Supreme Court. In

Allstate Insurance Co. v Freeman, 432 Mich 656, 443

NW2d 734 (1989), decided July 18, 1989, Michigan

Supreme Court chief justice Dorothy Comstock Riley

defined an “accident” as “an undesigned contingency, a

casualty, a happening by chance, something out of the

usual course of things, unusual, not anticipated, and

not naturally to be expected.” (Opinion of Riley, CJ)

443 NW2d 741 {emphasis supplied). This definition is

devoid of any “temporal” element and presupposes

sufficient ambiguity as to require interpretation.

There is no doubt that West, supra, remains a viable

and vital holding in this Court. As recently as 1988 in

Hicks v Feiock, 485 US 624 (1988), West was quoted at

length in its support of the conclusion that despite

arguments the California state appellate court had

12

misinterpreted state law: “... the California Supreme

Court denied review of this case, and we are not free in

this situation to overturn the state court’s conclusions

of state law.” 485 US 630. In this respect the federal

court may be said to be, in effect, sitting as a state

court. Bernhardt v Polygraphic Co., 350 US 198

(1956).

Consequently, to what extent is the Sixth Circuit,

sitting as a Michigan state court, free to disregard state

appellate authority, as it presumably was entirely free

to do in pre-Erie days? The answer is only to the extent

that it is convinced by “other persuasive data” that the

state supreme court would not follow the recent deci-

sions of its own appellate courts. Petitioner submits

that the data cited by the Sixth Circuit — disagreement

with the holdings in appellate cases and general rules

of contract interpretation — are not “persuasive data”

when compared with the definition of “accident” as

found in Freeman, supra, the drafting history of the

“sudden and accidental” language in the pollution

exclusion clause (including Aetna’s own statements to

the state insurance boards) and the plethora of case law

in a number of states holding that “sudden and acciden-

tal” are ambiguous terms.

POINT If

THIS COURT SHOULD ABSTAIN FROM RULING ON

THIS PETITION UNTIL AFTER THE MICHIGAN

SUPREME COURT HAS SPOKEN.

In Harris County Commissioners Court v Moore, 420

US 77 (1975), this Court held that “|w]here there is an

action pending in state court that will likely resolve

the state law questions underlying the federal claim, we

have regularly ordered abstention,” 420 US 83 (citations

13

omitted). In fact, however, federal courts around the

country have not been faithfully adhering to this prin-

ciple. Specifically, this Court is urged to note that

federal court interpretations of “sudden and accidental”

have often disagreed with the interpretations of inter-

mediate level state appellate courts.’ The present case

thus affords the Court an opportunity to call a halt to

the increasing disregard for state precedent exhibited by

federal courts when exercising their diversity jurisdiction.

Here, the Sixth Circuit has improperly disregarded

applicable Michigan precedent when predicting how the

Michigan Supreme Court would interpret the terms

“sudden and accidental” as used in an insurance con-

tract relating to claims for environmental issues. More-

over, the proper interpretation of those terms in that

context is now squarely before the Michigan Supreme

Court in Upjohn, Polkow, and City of Woodhaven,

supra. If the Sixth Circuit’s prediction of Michigan law

See, e.g., C.L. Hauthaway & Sons v American Motorists

Insurance Co., 712 ESupp 265, 268 (D Mass 1989) (disagreeing with

intermediate level Massachusetts appellate court on proper interpre-

tation of pollution exclusion); Borden, Inc. v Affiliated FM Ins. Co.,

682 FSupp 927, 929-30 (SD Ohio 1987) (disagreeing with inter-

mediate level Ohio appellate court on proper interpretation of

pollution exclusion), affd, 865 1267 (6th Cir!, cert denied, 110 SCt

68 (1989).

Federal district courts have also disagreed with one another on

the proper construction of the pollution exclusion under the laws of

their respective states. Compare Hayes v Maryland Casualty Co.,

688 FSupp 1513, 1515 (ND Fla 1988) (“sudden and accidental”

pollution exclusion bars coverage for routine discharges of waste)

with Pepper's Steel & Alloys, Inc. v United States Fidelity & Guar.

Co., 668 FSupp 1541, 1548-50 (SD Fla 1987) (“sudden and acciden-

tal” pollution exclusion applies only when the insured intends to

harm the environment), and Rav Indus. v Liberty Mut. Ins. Co., 728

FSupp 1310, 1315-20 (ED Mich 1989) (continuous discharge of

pollutants over thirteen-year period not “sudden and accidental”)

with United States Fidelity & Guar. Co. v Thomas Solvent Co., 683

FSupp 1139, 1155-61 {WD Mich 1988) (“sudden and accidental”

exception to pollution exclusion is ambiguous and not limited to

events that happen over a short period of time).

l4

is proven incorrect, its holding should be vacated so

that Petitioner may yet press its claims against Aetna

tor detense and indemnity costs, and this Court would

not be required to reach the issue of whether the Sixth

Circuit's actions run atoul of Erie. Although Petitioner

believes strongly that reversal of the Sixth Circuit's

decision is proper on the basis of Erie alone, the fact

that the Michigan Supreme Court will decide these

issues argues strongly for the granting of our Petition

and abstention pending the Michigan Court's decision

CONCLUSION

For all the toregoing reasons, Petitioner respectfully

requests that this Court issue a writ of certiorari in

this case to review the decision of the United States

Court of Appeals for the Sixth Circuit

Respecttully submitted

By S/ WALLACE K. SAGENDORPH

Counsel of Record for Petit!

SAGENDORPH AND MOORE, P<

9455 Corporate Drive, Suite 30]

Troy, Michigan 48098-2620 31.3) 641-1860

Of Counsel

ALLEN KEZSBOM

ALAN V. GOLDMAN

FRIED, FRANK, HARRIS,

SHRIVER & JACOBSON

A partership including

professional corporations)

One New York Plaza

New York, New York 10004-1980 212) 820-8000

Dated: Troy, Michigan

August 13, 1990

A-|

APPENDIX TO PETITION FOR CERTIORARI

ORDER

(United States Court of Appeals — Sixth Circuit)

(Filed May 17, 1990)

\F LAEROSPACE CORPORATION, ETC., Plaintiff-Appellant

Cross-Appellee, v. AETNA CASUALTY INSURANCE COM-

PANY, ETC., Detendant-Appellee Cross-Appellant —

No|s}. 88-2051/2106}

BEFORE: MERRITT,-Chief Judge; RYAN, Circuit Judge;

and BROWN, Senior Circuit Judge.

The Court having received a petition for rehearing en

banc, and the petition having been circulated not only

to the original panel members but also to all other

active judges of this Court, and less than a majority of

the judges having favored the suggestion, the petition

tor rehearing has been referred to the original hearing

panel.

The panel has further reviewed the petition for

rehearing and concludes that the issues raised in the

petition were fully considered upon the original sub-

mission and decision of the case. Accordingly, the peti-

tion is denied.

ENTERED BY ORDER OF THE COURT

s/ Leonard Green,

Clerk

A-2

OPINION

RECOMMENDED FOR FULL TEXT PUBLICATION

(See Sixth Circuit Rule 24)

(United States Court of Appeals — Sixth Circuit}

(Decided and Filed March 1, 1990)

(F LAEROSPACE, Plaintiff-Appellant, Cross-Appellee, v.

AETNA CASUALTY & SURETY CO., Defendant-Appellee,

Cross-Appellant — Nos. 88-2051/2106; ON APPEAL from

the United States District Court for the Eastern District

of Michigan)

Betore: MERRITT, Chiet Judge; RYAN, Circuit Judge;

and BROWN, Senior Circuit Judge.

BAILEY BROWN, Senior Circuit Judge.

F L Aerospace | “Aerospace” ), the successor in interest

to Midland-Ross Corporation {“Midland-Ross”), the

original insured party under Comprehensive General

Liability (‘“CGL”) policies issued by Aetna Casualty &

Surety Company (“Aetna”), appeals a bench trial decision

of no cause of action in favor of Aetna.' Aetna cross-

appeals the district court’s denial of its motion tor sum-

mary judgment and cross-appeals the bench trial decision

to the extent that it denied some of Aetna’s defenses. This

diversity action arose out of Aetna’s refusal to indemnity

Midland-Ross for money Midland-Ross expended to

settle two private nuisance actions and to pay Midland-

Ross’ assessed portion of costs associated with an

Environmental! Protection Agency (“ EPA” )-mandated

clean-up of the Berlin and Farro industrial waste site

(“Berlin & Farro site”) in Swartz Creek, Michigan. Aetna

l

Aerospace succeeded Midland-Ross sometime after Midland-

Ross filed the complaint on February 22, 1987. We will refer to the

insured as Midland-Ross throughout the opinion.

A-3

refused to indemnify Midland-Ross, contending that, in

violation of policy provisions, Midland-Ross had failed

to give proper notice of the claims and had made volun-

tary payments, that the clean-up costs were not

“damages” and the loss did not constitute an “occur-

rence” within the meaning of the policy, and that the

policy's pollution exclusion provision barred recovery.

After denying Aetna’s motion for summary judg-

ment,* the district judge found that there was an

“occurrence” within the meaning of the policy and

that the pollution exclusion was not a bar to recovery;

however, he also found that Midland-Ross had failed to

notify Aetna timely in writing as required by the policy

and that this failure materially prejudiced Aetna. The

district judge also found that any payments made to

settle the nuisance claims and the clean-up claim were

voluntary. He held, therefore, that there was no cause of

action against Aetna. We believe, however, that the

pollution exclusion provision does bar recovery under

the facts of this case; therefore, we do not reach the

other issues. Accordingly, we affirm the judgment of no

cause of action in favor of Aetna on that basis.

FACTS

Midland-Ross was insured for the period January 1,

1966 through January 1, 1975, under CGL policies

issued by Aetna. During the period between April, 1973

and September, 1975, Midland-Ross had liquid indus-

trial waste removed from its manufacturing facility in

Owosso, Michigan by Berlin & Farro, which was

licensed by the state of Michigan to haul and store in-

dustrial waste. Berlin & Farro transported the liquid

’

The district court, in resolving Aetna’s summary judgment

motion, agreed with Midland-Ross that the clean-up costs were

“damages” within the meaning of the policy.

A-4

waste in its trucks and stored it at its site in Swartz

Creek.

Midland-Ross was named as one of numerous

defendants in two separate civil actions in nuisance

tiled in October, 1983 and March, 1984, respectively, by

individuals living near the Berlin & Farro site. We will

refer to these actions in this opinion as the Bradford

and Acker actions. The plaintiffs in both actions alleged

that the waste at the site had contaminated the earth

there and that the contamination was likely to migrate

to their residences. They alleged bodily injury and prop-

erty damage as a result of the nuisance created by the

Berlin & Farro site.

In addition to this potential tort liability, Midland-

Ross received notification from the EPA in September,

1983, that an investigation of the Berlin & Farro site

had resulted in a finding that Midland-Ross was pos-

sibly in violation of the Comprehensive Environmental

Response, Compensation and Liability Act (“CERCLA”),

42 U.S.C. §§ 9601-9675. Subsequently, Midland-Ross

consented to pay its share of EPA-mandated clean-up

costs in an amount equal to the percentage Midland-

Ross’ waste was to the total waste stored at the Berlin

& Farro site.

Although Midland-Ross’ representatives spoke infor-

mally with Aetna’s sales agent in late 1983 about the

filing of the Bradford action, no written notice was

given concerning the civil actions until November,

1984; and none was given regarding the EPA matter

until June, 1985, some fifteen months after Midland-

Ross had agreed to pay its portion of the clean-up costs.

Midland-Ross eventually was assessed a clean-up

amount of $508,561.00, and it settled the Bradford and

Acker matters in late 1986 for a total of $61,503.42.

Once all settlements were final and binding on Midland-

A-5

Ross, the company requested reimbursement for the

clean-up and settlement amounts, as well as for related

attorney fees and costs. Some seven weeks later, after

having received no favorable responses from Aetna,

Midland-Ross filed this action.

Aetna moved for summary judgment, contending

that, on the undisputed record, each and all of its

defenses heretofore stated prevented recovery The dis-

trict court held that the payment required in the clean-

up proceeding was “damages” within the meaning of

the policy and that the other defenses of Aetna raised

issues of fact that could not be disposed of at the sum-

mary judgment stage.

During the trial, the district court heard uncon-

troverted testimony from John Shauver of the EPA

about contamination at the site. Shauver testified that

he investigated the Berlin & Farro site following com-

plaints in 1972-73 about odors and the general oper-

ation of the incinerator. Either he or others employed

by him were at the site at least weekly during the

period 1972 through January 1, 1975, when Aetna’s

coverage applied.

Shauver learned that Berlin & Farro maintained

plastic-lined storage lagoons for liquid waste. Each

truck that transported waste into the site was required

to carry a liquid waste removal record that identified

the waste source and the description and quantity of

waste involved. Shauver recalled that some of the

vehicles carried waste from Midland-Ross’ facility in

Owosso.

Shauver testified that because truck drivers were

usually in a hurry or not paying attention, it was not

uncommon for them to pull hoses out of the lagoon

without first allowing the hoses to drain, thereby

A-6

allowing one or two gallons of waste to fall onto the

ground outside of the lagoon. Because Shauver and

other EPA employees were not present at all times and

Berlin & Farro operated the site twenty-four hours a

day, he could not testify as to the total amount of spil-

lage. He estimated, however, that there was a substan-

tial amount. Notwithstanding that estimate, he did not

testify that any of the spillage came from the Midland-

Ross facility.

Shauver also testified that in 1978, the north lagoon

swelled and exceeded its bank as a result of severe

storms, and in 1981, while Berlin & Farro was attempt-

ing to solidify the north lagoon, contaminated soil

became mixed with uncontaminated soil, resulting in

the need tor a clean-up by a state agency. Both of these

events, of course, came well after Aetna’s coverage had

ceased.

After the bench trial, the district court found that

there was an “occurrence” within the meaning of the

policy and that the “sudden and accidental” exception

to the pollution exclusion clause applied so that the

pollution exclusion clause did not bar recovery. How-

ever, the district court found that informal verbal com-

munications with Aetna’s sales agent did not satisfy the

policy’s notice requirement, that the written notice to

Aetna was untimely and prejudicial to Aetna, and that

any payments by Midland-Ross were voluntarily made.

The court granted judgment of no cause of action in

favor of Aetna.

ANALYSIS

We conclude, as we have heretofore indicated, that

the district court erred in its determination that the

pollution exclusion provision does not apply. Accord-

ingly, because we conclude that the pollution exclusion

A-7

does apply, we affirm the district court’s decision dis-

missing the claim against Aetna.

Aetna’s policy provides coverage for bodily injury or

property damage caused by an occurrence. An “occurre-

nce” is defined as

an accident, including continuous or repeated

exposure to conditions, which results in bodily

injury or property damage neither expected

nor intended from the standpoint of the

insured|.|

This policy excludes coverage, however, for damage that

is caused by pollution, unless the damage is caused by

sudden and accidental” discharge, dispersal, release

or escape of the pollutant. The pollution exclusion

provides in its entirety:

This insurance does not apply:

t} to bodily injury or property damage

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.

{Emphasis added.) There is no question but that any

damages in this case were caused by pollution. It is the

“sudden and accidental” exception to the pollution

exclusion that we must interpret to decide whether or

not coverage is barred in this case.

A-8

We begin by stating the well-known rule that a fed-

eral court sitting in a diversity case must apply the

state law that the state court in that state would apply.

Erie R.R. v. Tompkins, 304 U.S. 64 (1938). Furthermore,

the federal court must apply a state’s law in accordance

with the controlling decisions of the highest court of

that state. Vandenbark v. Owens-Illinois Glass Co., 311

U.S. 538, 543 (1941). Michigan law, therefore, controls in

this case, but the Michigan Supreme Court has never

interpreted the policy provision at issue, although the

meaning of “sudden and accidental” has been litigated

often in Michigan,* and this court unsuccessfully

attempted to have the Michigan Supreme Court answer

the question in 1989.* We must, therefore, determine

what the Michigan Supreme Court would decide if the

question were before it. To make this determination,

we must look at available data on the subject. Clutter

v. Johns-Manville Sales Corp., 646 F.2d 115], 1153 (6th

Cir. 1981).

3

See Firemen’s Fund Ins. Co. v. Ex-Cell-O Corp., 702 F. Supp.

1317 (E.D. Mich. 1988) (“Ex-Cell-O II); United States Fidelity &

Guar. Co. v. Thomas Solvent Co., 683 FE Supp. 1139 (W.D. Mich.

1988); Fireman's Fund Ins. Co. v. Ex-Cell-O Corp., 685 F. Supp. 621

(E.D. Mich. 1987) (“Ex-Cell-O 1”); American States Ins. Co. v.

Maryland Casualty Co., 587 FE. Supp. 1549 (E.D. Mich. 1984); Polkow

v. Citizens Ins. Co. of America, No. 108437 (Mich. Ct. App. Oct. 17,

1989); Upjohn Co. v. New Hampshire Ins. Co., 178 Mich. App. 706,

444 NW2d 813 (1989); Protective Nat'l Ins. Co. v. City of Woodha-

ven, No. 101968 (Mich. Ct. App. Sept. 28, 1988) (unpublished), eave

to appeal denied, 432 Mich. 927 (1989); Shue v. D&B Brine, Inc.,

No. 92404 (Mich. Ct. App. July 27, 1987) (unpublished); Jonesville

Prod., Inc. v. Transamerica Ins. Group, 156 Mich. App. 508, 402

N W.2d 46 (1986), leave to appeal denied, 428 Mich. 897 (1987).

There presently are other cases pending before this court, including

International Surplus Lines v. Anderson Dev., No. 87-2102, and

Grant-Southern Iron & Metal v. CNA Ins., No. 89-1049.

4

A panel of this court certified this question to the Michigan

Supreme Court in /nternational Surplus Lines v. Anderson Dev.,

No. 87-2102, on January 26, 1989. The Michigan Supreme Court

declined to answer the question on July 10, 1989.

A-9

Midland-Ross urges us to follow, as the district court

did, Jonesville Products, Inc. v. Transamerica Ins.

Group, 156 Mich. App. 508, 402 NW.2d 46 (1986), leave

to appeal denied, 428 Mich. 897 (1987). which held

that the “sudden and accidental” exception to the pol-

lution exclusion provision means that the exclusion

does not apply if the discharges were “unexpected” and

“unintended” from the standpoint of the insured. In

other words, Jonesville interpreted the requiremeni: of

the exception that the discharge be “sudden” to mean

only that it be “unexpected.” The Jonesville court said:

We find that the circuit court failed to distin-

guish between the frequency of acts which

resulted in the release of contaminants and

plaintiff’s knowledge or notice of the release of

pollutants as a result of those acts.

The circuit court erred in finding that the allega-

tion of “continuous” negligent discharge of

waste onto Jonesville’s property took... the...

complaint out of the defendant’s exception for

“sudden and accidental” release. It is possible

that the releases could have been sudden, i.e.,

unexpected, and accidental, i.e., unintended, and

thus outside the exclusion. Plaintiff’s affiant

swore that plaintiff had no knowledge of prior

complaints regarding dumping or spillage.

Id. at 512, 402 NW.2d at 48. Thus, Jonesville, without

explanation, failed to give any temporal meaning to the

word “sudden” in the “sudden and accidental” excep-

tion to the pollution exclusion.°

5

In Jonesville, the issue that the trial court had before it, on

summary judgment, was whether the insurer had a duty to defend

(concluded on page A-10)

A-10

Aetna urges that we not follow Jonesville, claiming

that its definition of “sudden and accidental” distorts

the plain meaning of the phrase. Aetna contends that

we should define the term “sudden” as we did in

United States Fidelity & Guaranty Co. v. Star Fire

Coals, Inc., 856 E2d 31, 34 (6th Cir. 1988), a Kentucky

diversity case in which tkis court construed the

“sudden and accidental” exception by giving the word

“sudden” a temporal meaning.

Although we recognize that the Michigan Court of

Appeals in Jonesville offered no analysis in announcing

its definition, we are mindful that an intermediate

appellate court's judgment that announces a rule of law

is “‘a datum for ascertaining state law which is not to

be disregarded by a federal court unless it is convinced

by other persuasive data that the highest court of the

state would decide otherwise.’” Woodruff v. Tomlin, 616

F.2d 924, 929 (6th Cir.) (quoting from West v. American

Tel. & Tel. Co., 311 U.S. 223, 237 (1940)), cert. denied,

449 U.S. 888 (1980). Moreover, a federal court should

not reject a state rule just because it was not an-

nounced by the highest court of the state, even if the

federal court believes that the rule is unsound in prin-

ciple. Jd. at 928-29. We turn our attention, therefore, to

other sources of law on this question to determine

whether the Michigan Supreme Court would follow

Jonesville.

Michigan law is settled concerning the interpretation

of provisions in insurance contracts. In Michigan, the

(continued from page A-9}

the insured because the “sudden and accidental” exception to the

pollution exclusion did not apply. The Jonesville court, applying the

Michigan rule that the insurer has a duty to defend if the claim is

even arguably covered by the policy, gave this interpretation of the

“sudden and accidental” exception to the pollution exclusion. The

issue in the instant case focuses on the insurer's duty to indemnify.

|

A-11

rules for the construction of an insurance contract are

the same as for any other written contract. Hall v.

Equitable Life Assur. Soc’y, 295 Mich. 404, 295 NW.

204 (1940). Any ambiguous terms must be construed

against the insurer and in favor of the insured, because

the insurer drafts the document. Mays v. Insurance Co.

of N. Am., 407 Mich. 165, 284 NW.2d 256 (1979). On

the other hand, if the terms in the policy are not ambi-

guous, “no construction, in the usual sense of the

word, is called for.” Schiff v. Automobile Ins. Co., 290

Mich. 457, 287 NW. 920 (1939); see also Indemnity Ins.

Co. of N. Am. v.~Geist, 270 Mich. 510, 259 NW. 143

(1935). When the words are free from ambiguity, “the

instrument is always to be construed according to the

strict, plain, common meaning of the words them-

selves.” Hall, 295 Mich. at 408, 295 NW. at 206. More-

over, the plain meaning of words should not be per-

verted merely to benefit the insured party. Wozniak v.

John Hancock Mut. Ins. Co., 288 Mich. 612, 286 NW.

99 (1939).

We think that the terms “sudden” and “accidental”

are not ambiguous and should be given their plain,

everyday meaning. We note that this finding is not at

odds with the Jonesville decision to the extent that

nothing in that opinion or in subsequent Michigan

Court of Appeals decisions relying on it have indicated

that the terms should be given anything other than their

plain meaning.® The dictionary definition of “sudden”

6

The Michigan Court of Appeals steadfastly has affirmed its

Jonesville definition. See Polkow v. Citizens Ins. Co. of Am.,

No. 108437 (Mich. Ct. App. Oct. 17, 1989); Upjohn Co. v. New

Hampshire Ins. Co., 178 Mich. App. 706, 444 NW.2d 813 (1989);

Protective Nat'l Ins. Co. v. City of Woodhaven, No. 101968 (Mich.

Ct. App. Sept. 28, 1988) (unpublished), leave to appeal denied, 432

Mich. 927 (1989). None of these cases, however, have held that the

terms “sudden” and “accidental” are ambiguous. Moreover, the

(concluded on page A-12)

A-12

is “happening, coming, made or done quickly, without

warning or unexpectedly; abrupt.” American College

Dictionary 1209 (1970). See also Webster’s Third New

Int’] Dictionary 2284 (1961). The term “accidental”

means “happening by chance” or “unintentional” or

“fortuitous.” American College Dictionary 8; Webster's

Third New Int’l Dictionary 11. These definitions com-

port with the common understanding of the terms as

they are used in everyday parlance. A sudden and acci-

dental event is one that happens quickly, without warn-

ing, and fortuitously or unintentionally.

We recognize that our interpretation of the “sudden

and accidental” exception departs from the Michigan

Court of Appeals decision in Jonesville as well as from

several subsequent Michigan Court of Appeals deci-

sions;’ however, we believe that the Michigan Supreme

Court, following its own rules of insurance contract

interpretation, would find, as we have found,” that the

word “sudden” has a plain, everyday temporal compo-

nent and would interpret the “sudden and accidental”

exception in light of that finding. Moreover, we think it

is worthy of noting that the Michigan Court of Appeals,

(continued from page A-11)

decision in Shue v. D&B Brine, Inc., No. 92404 (Mich. Ct. App. July

27, 1987), although not citing to Jonesville, dealt with the same

question that we now are dealing with, and that opinion stated that

“{p|laintiffs’ broad allegations do not rule out the possibility of a

discharge which was ‘sudden and accidental,’ as those terms are

commonly understood.” (Emphasis added.)

See cases cited supra at note 6.

8 See also Fireman's Fund Ins. Co. v. Ex-Cell-O Corp., 702 F.

Supp. 1317, 1325 (E.D. Mich. 1988) (“Ex-Cell-O II”), in which the

district judge, app!ying Michigan law, reached the same conclusion

that we reach here.

>

-

A-13

in a case subsequent to Jonesville, itself indicated that

the word “sudden” in the “sudden and accidental”

exception has a temporal component. In Protective

National Ins. Co. v. City of Woodhaven, No. 101968

(Mich. Ct. App. Sept. 28, 1988), leave to appeal denied,

432 Mich. 927 (1989), an unpublished case, a child died

from alleged exposure to a pesticide sprayed on trees by

the city. The fumes from the pesticide allegedly entered

his family’s home through an open window from the

street where the spraying occurred. The court of

appeals, in reviewing the trial court’s grant of summaiy

judgment in favor of the insurer on the question of

whether the insurer had a duty to defend, stated:

[W]hile it is clear from the record that the

release of the pesticide was a regular, intentional

activity of defendant, it is arguable that the “dis-

persal” or “escape” of the pesticide to an area

where it could come in contact with Ronald

Vann’s skin was both a sudden and accidental

event, which caused injury to Ronald Vann.

Potentially, a temporal event, i.e., a sudden gust

of wind, blew the pesticide into the window of

the Vann’ |sic| house causing the injury.

(Emphasis added.) Jd. at 4.

Turning now to the facts of the case at hand, we

cannot agree with Aetna’s position that simply because

Berlin & Farro transported some 500,000 gallons of

Midland-Ross waste to the Berlin & Farro site over a

period of years, any discharges cannot be considered

sudden and accidental. The “sudden and accidental”

exception applies to the discharge, release, dispersal or

escape of pollutants into the environment. Mere deli-

very of waste for storage at a facility that is licensed

A-14

to store waste is not a discharge of pollutants into the

environment

On the other hand, there is no evidence from which

the trial court could have found that any pollution

damage that was the subject of the October, 1983 and

March, 1984 nuisance actions or the EPA clean-up was

caused by any “sudden and accidental” discharge of any

Midland-Ross pollutant from the Berlin & Farro tacility

the last of which was delivered to the site in Sep

tember, 1975

Accordingly, we AFFIRM the judgment of the district

court of no cause of action itn tavor of Aetna

Midland-Ross does not contend that it has shown that th

evidence supports such a finding. Its position in this case apparently

?

was that, relying on Jonesville, it did not need to supply that proot

A-15

JUDGMENT OF NO CAUSE FOR ACTION

IN FAVOR OF DEFENDANT

(United States District Court —

Eastern District of Michigan —

Southern Division)

(Session held September 30, 1988)

\F L AEROSPACE CORPORATION, a foreign corporation,

Successor In Interest To MIDLAND-ROSS CORPORA-

TION, Plaintiff, vs AETNA CASUALTY AND SURETY

COMPANY, a foreign corporation, Defendant —

No: 87 CV 60070 AA; HON. GEORGE LA PLATA)

At a session of said court held in the courthouse, City

of Ann Arbor, Washtenaw County, Mich., on Sep-

tember 30, 1988.

PRESENT: HON. GEORGE LA PLATA,

United States District Court Judge.

The court having conducted a bench trial and on

Aug. 23, 1988 the court having made certain conclu-

sions of law and findings of fact on the record and in

accordance therewith;

IT IS HEREBY ORDERED AND ADJUDGED that defend-

ant AETNA CASUALTY AND SURETY COMPANY is

hereby granted a judgment of no cause for action in its

tavor.

/s/ JUDGE GEORGE LA PLATA

Judge, United States District Court

A?PROVED AS TO FORM:

/s/ Wallace Sagendorph P 19838

Attorney for PLAINTIFF

(Certification Omitted)

scence

A-l¢

OPINION

United States District Court

Eastern District of Michigan

Southern Division)

Proceedings ot August 23, 1988

FL AEROSPACE CORPORATION, Successor in Interest to

MIDLAND-ROSS CORPORATION, an Ohio corporation

Plaintiff, vs. AETNA CASUALTY AND SURETY COM

PANY, a foreign corporation Detendant (ase No. &

CV-60070AA: Volume No. I

PROCEEDINGS HAD in the above-entitled matter betore

the Honorable GEORGE LA PLATA, United States Dis

trict Judge of the Eastern District of Michigan

Southern Division, at U.S. Courthouse and Federal

Building, 200 E. Liberty, Ann Arbor, Michigan, on

Tuesday, August 23, 1988

\PPEARANCES: MR. WALLACE K. SAGENDORPH Esq

on behalt ot the Plaintitt; MR. CHARLES

W. BROWNING, Esq., on behalf of the

Defendant

} August 23, |YSS

Ann Arbor, Michigan

On the record at about 8:31 a.m

THE CLERK The Court calls the case ot Midland

Ross versus Aetna Casualty_and Surety Company

number 87-0070

THE COURT: Mr. Sagendorph, why don’t you take a

Seat at the table

MR. SAGENDORPH: Okay

A-17

THE COURT: All right. This is an action for defense

and indemnification costs pursuant to insurance

policies previously in existence between Midland-Ross

Corporation, the predecessor in interest to plaintiff FL

Aerospace, and Aetna Casualty and Surety Company.

The six comprehensive general liability policies in

question cover a continuous period from January Ist of

1966 to January the Ist of 1975. And pursuant to the

complaint that was filed in this case, by Aerospace

Corporation, the plaintiff is asking the following:

For an award for breach of contract of sixty one

thousand tive hundred and three dollars forty two cents

in settlement amounts paid with respect to the Brad-

ford and Aker |sic| litigation;

(5) Five hundred and eight thousand five hundred

and sixty one dollars, paid to date in connection with

the USEPA-ordered clean up at the Berlin and Farro site;

Then the sum of one hundred sixty six thousand

seven sixty four dollars and seventy four cents in

attorney fees, expert witness fees and related costs paid

to detend the Bradtord-Aker cases, as well as the EPA

clean up indemnification for present and future liability

and reimbursement for expenses for phase two and

possible subsequent phase liability for clean up costs

and related attorney fees and costs, many amounts of

which are not known at this time.

Because of the fact that a more than adequate joint

tinal civil pretrial order was issued and put together by

the counsel for both parties, this Court is going to

incorporate the facts as set out in that pretrial order. So

I’m not going to recite the facts at this time.

The parties have, in addition, stipulated to numerous

tacts, and they comprise pages ten through sixteen of

the final pretrial order. And the Court's going to incor-

porate that as part of its, of the Court’s final decision.

a

A-18

Now the issues of fact that remain to be litigated was

one, whether Midland-Ross failed to give Aetna timely

notice of an occurrence as required in condition 4(a) of

(6) the policies.

Two, whether Aetna has been materially prejudiced

in its duty to defend or indemnify by any action ot

Midland-Ross.

And three is whether Midland-Ross voluntarily

entered into a consent decree with USEPA requiring it

to pay five hundred and eight thousand five hundred

sixty one dollars in clean up costs without notice to

Aetna, contrary to condition 4(c) of the policies.

Four is whether Midland-Ross’ payment of five

hundred eight thousand five hundred sixty one dollars

in the clean up costs was unreasonable in that it did

not ship any hazardous waste to Berlin-Farro.

And five is whether Midland-Ross’ generation ot

waste was a continuous and systematic part of its busi-

Ness activity.

And six whether Midland-Ross knew or should have

known that its transporting of waste would contribute

to the creation of a nuisance at the Berlin-Farro site.

Seven is whether Midland-Ross has suffered and will

continue to suffer damages as a result of defendant’s

breach.

And eight is whether the plaintiff violated condition

4(b) of the policies by failing to immediately deliver

legal papers to Aetna relating to the EPA, Bradford (7)

and Aker claims.

Nine is whether Midiand-Ross failed to give Aetna a

timely written notice of the occurrence as required in

condition 4(a) of the policies.

And ten is whether the plaintiff violated condition 5

of the policies which indicates that no action shall be

tiled against the company without full compliance with

all policy terms.

ennai a

A-19

Now the Court had the benefit of the testimony of

the following witnesses. Three of them were live, that

was John Schauver, the DNA representative, Eugene

Bulgrin, who is the head of the risk management

department at Midland-Ross, and Michael}! Babbitt, the

corporate attorney for Midland-Ross.

In addition, the Court had the benefit of the deposi-

tion testimony of the following: Michael Taylor, senior

analyst for Aetna; Douglas Grund, the manager of the

commercial claim department for Aetna; David Duran,

was in the risk management department of Midland-

Ross and worked closely with Gene Bulgrin; James

Vicker, Vickers, who was the president of Luce, Smith

and Scott. And these were the folks who sold the insur-

ance policies to, to Aetna. And including — I should

say sold the insurance policies to Midland-Ross,

including the Aetna policy; John D. Stevenson, who

was the senior claims representative of Aetna; and (8)

Benton H. Gallup, who was the senior analyst for

Aetna.

Now the first matter the Court will take up is the

question about whether this was an occurrence. And

this is a matter that was, that was brought forth by the

defendant and vigorously defended by the defendant.

And the essence of it goes to the question of the inter-

pretation by this Court of the provision in the policy

which reads as follows, and that’s under the CGL insur-

ance policy, and it provides as follows:

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 injury or property damage

to which this insurance applies, caused by an

occurrence.

A-20

And then we drop down and look at the definition of

occurrence and it states as follows:

Occurrence means an accident, including con-

tinuous or repeated exposure to conditions

which results in bodily injury or property

damage neither expected nor intended from the

standpoint of the insured.

(9) Now included within the provision coverage is

an exclusion. And it reads as follows:

Exclusions: This insurance does not apply to

bodily injury or property damage 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 or accidental.

And the defense of course urged this Court to adopt

the regular understanding of the words sudden and

accidental. And sudden and accidental would seem to

indicate that it would have to be something that hap-

pened quickly, unexpectedly, possibly, and accidental.

The plaintiff, of course, argued that under the recent

ruling of the Court of Appeals in the State of Michigan,

and this Court is duty bound to follow the Michigan

substantive law, that Jonesville case equated sudden

and accidental with unintended and unexpected.

(10) Now just for a brief review of the facts there,

and these facts are stipulated and agreed to by the par-

ties, there’s no question in this case that Midland-Ross

shipped in excess of five hundred thousand gallons of

liquid waste material to Berlin-Farro, but it’s of sudden

interest to note that all shipments were made by Berlin

and Farro trucks. There’s nothing in the record and

_——————

A-21

there is no testimony this Court knows of which indi-

cates that the plaintiff, Midland-Ross, had any know-

ledge that there was anything wrong with what was

transpiring at Schwartz Creek, or that the operation of

any of the equipment by Berlin-Farro was defective or

in any way causing any kind of problem.

So with that background of facts, this Court, being

duty bound to follow the Michigan laws announced in

Jonesville, which I say again equates the words sudden

and accidental with unintended and unexpected, and

that is trom the insured’s viewpoint, this Court finds

specifically that the exclusion clause did not apply, and

that the events at Berlin-Farro was |sic|] an occurrence

within the coverage of the policy.

Now that brings us now to this question of notice.

Now there was no dispute with regard to the fact that,

as to the two lawsuits, the Bradford lawsuit and then

the subsequent suit in the Akers case, that notice, that

ll) written notice was not given to Aetna as soon as

the Midland-Ross people received the papers in that

case.

In tact, | think the, the notice was given some one

year later with respect to the Bradford, seven months

with respect to Akers. With respect to the action that

was brought by the USEPA, notice was given some

titteen months after a, a commitment had been made

by corporate counsel Babbitt on behalf of Midland-Ross.

And even that notice was really in response to a letter

trom Aetna asking if in fact the transmittal of certain

papers was to be interpreted as a claim being made by

Midland-Ross on the policy.

Now let's see what the notice provision says. That

provision says, it’s under 4, Section 4, it says:

Insured’s duties in the event of occurrence,

claim or suit: (a) In the event of an occurrence,

written notice containing particulars sufficient

A-22

to identify the insured and also reasonably

obtainable information with respect to the time,

place and circumstances thereof, and the names

and addresses of the injured and of available

witnesses shall be given by or for the insured to

the company or any of its authorized (12) agents

as soon as practicable.

Now the Court scrutinized the testimony of Gene

Bulgrin, who ran the risk management program for

Midland-Ross, the testimony of Jim Vickers, James

Vickers, the chap who, who sold the policies to Midland-

Ross, and the testimony of Michael Babbitt, the testi-

mony of Mr. Duran, who was the other fellow that

worked on risk management.

And Mr. Bulgrin testified that he had regular contacts

with Mr. Vickers. And he said that, that it was not

unusual at all for him to phone in claims. And that in

tact, 4(a) really had no significance to him, because ot

his daily, he said almost regular daily contact with Mr.

Vickers. HoWever, he did indicate in his testimony that

he knew that Jim Vickers was in sales and was not a

claims man.

And Mr. Bulgrin’s testimony was to the affect |sic|

that Mr. Bulgrin himself had extensive experience in

the insurance business. In fact, he was a supervisor at

Kemper before going to Midland-Ross.

He told us that he talked with Jim Vickers about this

pollution problem up at Schwartz Creek, and they dis-

cussed the problem about the, the exclusion of provi-

sion in the CGL. And they both came to the conclu-

sion that, that it applied. Ard so that therefore, (13) no

claim would be made.

In answer to the question, well, why not make a

claim anyway, Mr. Bulgrin testified that’s not a profes-

sional way to do things and I don’t do things that way.

|

A-23

Then what happened is he tells you that, subsequent

thereto, that because of recent Court decisions that

seemed to indicate that the Courts were interpreting

that sudden and accidental in different matters, that he

felt he should submit a claim. And of course they did.

But they did not submit the EPA claim at that time.

And there’s no question, I think Mr. Bulgrin made it

perfectly clear that he understood that, even though,

because of his contacts with Jim Vickers, that even

though a claim, or even though Vickers indicated that

the claim may not be honored, that he knew you’re

supposed to submit the claim because Mr. Vickers

could not bind the company as to whether they denied

claim or accepted claim.

Mr. Vickers’ testimony is sort of interesting because

he sort of disputes a lot of the things that Mr. Bulgrin

said. For example, he said that he had a lot of contacts

with Mr. Bulgrin, but they were really not about much

more than the, than the surety bonds that he dealt

with. And he said that’s really the majority of his con-

tact with Mr. Bulgrin was regarding the surety bond.

(14) That he knew very little about the pollution

problem. That he possibly could have discussed it with

Mr. Bulgrin. Doesn’t dispute that Mr. Bulgrin’s testi-

mony that the two of them agreed it probably was not

covered by the policy was probably true.

Now what about Mr. Babbitt? Mr. Babbitt’s the

attorney for the company. And he was responsible for

the management of all the environmental claims that

were made against Midland-Ross. He managed the

claim, he retained counsel, consultants, experts or

anything like that.

And it was of some interest to this Court to note

that the way this Midland-Ross operated that many

times the matters did not pass between risk manage-

ment and the legal department, as you would think

A-24

they would, so that each party would know what the

other one was doing. :

And so, this Court, in listening to the testimony and

reviewing all the documents and exhibits, came to the

conclusion that it was obvious that, that there were

certain things being done and certain things not having

been done which were confusing to risk management

and to the legal department, and it’s very possible that

that had something to do with the fact that, that

written notice was not made as it should have been

under the provisions of the policy.

Mr. Babbitt got himself involved in the EPA (15) prob-

lem, and he indicated that the notification by the

agency caused an immediate problem for him. That

they did not have a lot of time to consider it. That they

were being charged, along with many other generators,

with liability under the federal statutes, and they just

did not have a lot of time to do a lot of investigation

and other things that probably should have been done.

But anyway, the significant thing is that, that the

notice, the first notice was sent out on September the

19 of 1983. And then there was an administrative order

that was dated March the 7th of 84, and that is a lapse

of some six months, and no notice had been given to

Aetna with respect to that.

And this Court is aware of the fact that, in a situ-

ation like that, Mr. Babbitt could have sought a

declaratory judgment in a Federal Court and sought

injunctive relief.

And this is especially true, because all through this

litigation, Midland-Ross has taken the position that

they did nothing wrong. And this Court agrees with

that position, as a matter of fact, because there is no

evidence that Midland-Ross knew or should have

known that any of the material which was all, which is

nese

A-25

ninety percent water soluble, were causing any problem

at, at Berlin-Farro.

Then of course, we had the testimony of Mr. (16)

Stevenson, Mr. Gallup, Mr. Grund about the meetings

that took place between Mr. Babbitt and Mr. Sagen-

dorph, who’s counsel for the, for Midland-Ross in this

lawsuit, concerning the matters of coverage and

defense.

And there’s certain testimony that, at one of these

meetings, the representatives of Aetna agreed that, that

they were liable, at least to defend, if not to indemnify,

based on the, on the provisions of the policy, the exclu-

sion clause, the notice provision, and then the settle-

ment provision.

Well under Michigan law, Michigan interprets stan-

dard notice clauses to require notice within a reason-

able time, that’s Kennedy versus Dashner.

In determining whether notice is timely, the Court

places the burden upon the insurer, that of course

would be Aetna, to demonstrate that it has been pre-

judiced by the insured’s inaction. That’s Wendel versus

Swanberg, 348 Michigan 468.

And the Court, in determining prejudice, took into

account the question of time, the question of available

defenses, the question of being able to select their own

counsel, and the, the ability to, to bring in experts and

to attempt to interpose a defense that would not create

the liability that was obviously created here by the

settlements with Bradford, Akers and the EPA.

(17) This Court makes the following findings of fact

with respect to the notice provision. This Court finds

that the verbal communications between the represen-

tatives of Midland-Ross and the representatives of

Aetna were not sufficient to comply with the written

notice provision contained in Section 4(a) of the policy.

A-26

The Court further finds that, although written notice

was eventually tendered to defendant Aetna regarding

Bradford-Akers and the EPA, the notices were untimely

and prejudiciai to the defendant.

This Court makes a further finding of fact that the

defendants were prevented from engaging in any inde-

pendent investigation within the time necessary to

allow an informed decision regarding legal options, vis-

a-vis the Bradford-Akers and EPA action.

This Court specifically finds that the meeting

between plaintiff’s representatives and defendant’s rep-

resentatives did not constitute a waiver of the notice

provision 4(a).

This Court finds, that whether due to mismanage-

ment, the subsequent takeover of Midland-Ross by FL

Aerospace or the lack of a SOP regarding environ-

mental claims, that there never was any meaningful

compliance with the provisions of 4(b) of the policy.

This Court further finds, because the plaintiff (18)

continually and during this trial contended there was

no wrongdoing on its part, and this Court has indicated

this Court felt that was true, this Court finds that a

meritorious defense existed under the circumstances

surrounding these actions.

Now this CGL policy also contained the following

provision, and that was provision 4(c). And that pro-

vides that the:

Insured shall not, except at his own cost, volun-

tarily make any payment, assume any obligation

or incur any expense other than for first aid to

others at the time of the accident.

And this Court looked at the decision of the Mich-

igan Court of Appeals in Coil versus Wolverine Insur-

ance, which is 120 Michigan Appeals 118. And in there

the Court said that, I quote:

A-27

That defendant, as insurance company, has bar-

gained for the contractual right to contest the

liability of its insured instead of having its

money given away by an agreement to which it

was not a party.

This Court specifically finds that the payments made

in all three claims were voluntarily made, and (19}

therefore violative of 4(c).

Section 5 of the policy provides:

Actions against the company: No action shall lie

against the company unless, as a condition pre-

cedent thereto, there shall have been full com-

pliance with all of the terms of this policy.

Applying this Court’s finding of fact, this Court con-

cludes the plaintiff has failed to carry the day. The

defendant owes no duty to either defend or indemnify

the plaintiff. This Court finds no cause of action in

favor of defendant. That is the decision of the Court.

(Off the record.)

(Certificate of Reporter Omitted)

A-28

[| VARIOUS] ORDERS OF THE MICHIGAN SUPREME COURT

ORDER

(State of Michigan — Supreme Court)

(Entered July 13, 1990)

(THE UPJOHN COMPANY, a Delaware corporation;

JOHN RUSSELL BUTLER, a foreign insurance under-

writer; FIRST STATE INSURANCE COMPANY, issuing

property policy GC-809000, a Delaware corporation; and

THE HOME INSURANCE COMPANY, a New York corpor-

ation, Plaintiffs-Appellees, v [86906] NEW HAMPSHIRE

INSURANCE COMPANY, a New Hampshire corporation;

GRANITE STATE INSURANCE COMPANY, a New Hamp-

shire corporation; THE INSURANCE COMPANY OF THE

STATE OF PENNSYLVANIA, a foreign corporation; and

FIRST STATE INSURANCE COMPANY, issuing excess

liability policy 916075, a Delaware corporation, jointly

and severally, Defendants, and ALLSTATE INSURANCE

COMPANY, Successor to NORTHBROOK EXCESS AND

SURPLUS INSURANCE COMPANY, an Illinois corpora-

tion, Defendant-Appellant, and INSURANCE ENVIRON-

MENTAL LITIGATION ASSOCIATION, Amicus Curiz)

(THE UPJOHN COMPANY, a Delaware corporation;

JOHN RUSSELL BUTLER, a foreign insurance under-

writer; FIRST STATE INSURANCE COMPANY, issuing

property policy GC-809000, a Delaware corporation; and

THE HOME INSURANCE COMPANY, a New York corpor-

ation, Plaintiffs-Appellees, v [86907] NEW HAMPSHIRE

INSURANCE COMPANY, a New Hampshire corporation;

THE INSURANCE COMPANY OF THE STATE OF PENN-

SYLVANIA, a foreign corporation; and FIRST STATE

INSURANCE COMPANY, issuing excess liability policy

916075, a Delaware corporation, jointly and severally,

Defendants, and ALLSTATE INSURANCE COMPANY,

Successor to NORTHBROOK EXCESS AND SURPLUS

A-29

INSURANCE COMPANY, an Illinois corporation,

Defendant-Appellant, and GRANITE STATE INSURANCE

COMPANY, a New Hampshire corporation, Defendant-

Appellee, and INSURANCE ENVIRONMENTAL LITIGA-

TION ASSOCIATION, Amicus Curiz)

(THE UPJOHN COMPANY, a Delaware corporation;

JOHN RUSSELL BUTLER, a foreign insurance under-

writer; and FIRST STATE INSURANCE COMPANY,

issuing property policy GC-809000, a Delaware corpora-

tion, Plaintiffs-Appellees, and THE HOME INSURANCE

COMPANY, a New York corporation, Plaintiff, v [86908]

NEW HAMPSHIRE INSURANCE COMPANY, a New

Hampshire corporation; and GRANITE STATE INSUR-

ANCE COMPANY, a New Hampshire corporation,

Defendants, and ALLSTATE INSURANCE COMPANY,

Successor to NORTHBROOK EXCESS AND SURPLUS

INSURANCE COMPANY, an Illincis corporation,

Defendant-Appellant, and THE INSURANCE COMPANY

OF THE STATE OF PENNSYLVANIA, a foreign corpora-

tion; and FIRST STATE INSURANCE COMPANY, issuing

excess liability policy 916075, a Delaware corporation,

Defendants-Appellees, and INSURANCE ENVIRON-

MENTAL LITIGATION ASSOCIATION, Amicus Curiz}

‘SC: 86906, 86907, 86908; COA: 98969, 99012, 99145,

LC: 85-288651-CK)

Dorothy Comstock Riley, Chief Justice; Charles L.

Levin, James H. Brickley, Michael F Cavanagh, Pat-

ricia J. Boyle, Dennis W. Archer, Robert P. Griffin,

Associate Justices.

On order of the Court, the application for leave to

appeal and the motion for leave to file brief amicus

curiz are considered, and they are GRANTED.

We further ORDER that this case be argued and sub-

mitted to the Court together with the cases of Protec-

tive National Insurance Company v City of

Woodhaven (Docket No. 85180) and Polkow v Citizens

A-30

iInsusauce Couipany (Docket No. 87617) at such future

session of the Court as all cases are ready for

submission.

Persons or groups interested in determination of the

questions may move the Court for permission to file

briefs amicus curiz.

(Certification Omitted)

ORDER

(State of Michigan — Supreme Court)

(Entered July 13, 1990)

(ROBERT POLKOW, d/b/a POLKOW OILING SERVICE,

Plaintiff-Appellee, v CITIZENS INSURANCE COMPANY

OF AMERICA, Defendant-Appellant — SC: 87617;

COA: 108437; LC: 86-57197-CZ)

Dorothy Comstock Riley, Chief Justice; Charles L.

Levin, James H. Brickley, Michael F Cavanagh,

Patricia J. Boyle, Dennis W. Archer, Robert P. Griffin,

Associate Justices.

On order of the Court, the application for leave to

appeal, the motions of the Michigan Association of

Insurance Companies and of the Michigan Farm Bureau

and Farm Bureau Mutual Insurance Companies of

Michigan for leave to file briefs amicus curie and the

motion for admission pro hac vice are considered, and

they are GRANTED.

We further ORDER that this case be argued and sub-

mitted to the Court together with the cases of Protec-

tive National Insurance Company v City of Woodhaven

(Docket No. 85180) and Upjohn Company v Allstate

insurance Company (Docket No. 86906-8), at such

A-31

future session of the Court as all cases are ready for

submission.

Persons or groups interested in determination of the

questions may move the Court for permission to file

briefs amicus curiz.

(Certification Omitted)

ORDER

(State of Michigan — Supreme Court}

(Entered July 13, 1990)

{PROTECTIVE NATIONAL INSURANCE COMPANY OF

OMAHA, Plaintiff-Appellant, v CITY OF WOODHAVEN,

a Municipal Corporation, Defendant-Appellee, and

RONALD L. VANN and LINDA VANN, individually, and

RONALD L. VANN as Next Friend of RONALD A. VANN,

MARK R. VANN and THOMAS A. VANN, Minors,

Defendants — SC: 85180; COA: 101968; LC: 86-600321-

CZ)

Dorothy Comstock Riley, Chief Justice; Charles L.

Levin, James H. Brickley, Michael F. Cavanagh,

Patricia J. Boyle, Dennis W. Archer, Robert P. Griffin,

Associate Justices.

On order of the Court, the motion for reconsideration

of this Court’s order of July 6, 1989 is considered, and it

is GRANTED. We VACATE our order dated July 6, 1989

and we GRANT the application for leave to appeal.

We further ORDER that this case be argued and sub-

mitted to the Court together with the cases of The

Upjohn Company v New Hampshire Insurance Com-

pany and Allstate Insurance Company (Docket Nos.

86906, 86907, 86908) and Polkow v Citizens Insurance

A-32

Company (Docket No. 87617) at such future session of

the Court as all cases are ready for submission.

Persons or groups interested in determination of the

questions may move the Court for permission to file

briefs amicus curiz.

(Certification Omitted)