Appendix — Certain Underwriters at Lloyd's v. Independent Petrochemical Corp.

Supreme Court brief1992

Ask Donna

What actually matters in this document.

Text

nl Supreme Court, U.S,

oO i iLED

Sl > 12 ov.

IN THE OFFIOE OF THE CLERK

Supreme Court of the United States

OCTOBER TERM, 1991

CERTAIN UNDERWRITERS AT LLOYD’S, LONDON, et al.,

‘ Petitioners,

INDEPENDENT PETROCHEMICAL CORPORATION, et al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the

District of Columbia Circuit

APPENDIX TO

PETITION FOR WRIT OF CERTIORARI

RICHARD N. DICHARRY MICHAEL NUSSBAUM

PAMELA G. MICHIELS Counsel of Record

PHELPS DUNBAR MARTIN R. BAACH

Thirtieth Floor MarRK J. LEIMKUHLER

Texaco Center NUSSBAUM & WALD

400 Poydras Street One Thomas Circle, N.W.

New Orleans, LA 70130-3245 Washington, D.C. 20005

(504) 566-1311 (202) 833-8900

LUTHER T. MUNFORD

MICHAEL B. WALLACE

PHELPS DUNBAR

Suite 1400

Mirror Lake Plaza

2829 Lakeland Drive

Post Office Box 55507

Jackson, MS 39296-5507

(601) 939-3895

Counsel for Certain Underwriters at Lloyd’s, London

(Counsel for Petitioners Continued on Inside Cover)

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

DENNIS M. FLANNERY

JOHN R. READ

WILMER, CUTLER & PICKERING

2445 M Street, N.W.

Washington, D.C. 20037-1420

(202) 663-6000

Counsel for Insurance Company

of North America

IGNATIUS JOHN MELITO

SIFF, ROSEN & PARKER, P.C.

233 Broadway

New York, NY 10279

(212) 238-8400

Counsel for First State

Insurance Company

JOHN P. ARNESS

L. ANTHONY SUTIN

HOGAN & HARTSON

Columbia Square

555 Thirteenth Street, N.W.

Washington, D.C. 20004

(202) 637-5600

Counsel for Hartford Accident

& Indemnity Company

JAMES E. Rocap, II]

MARTIN D. MINSKER

NIKI KUCKES

MILLER, CASSIDY, LARROCA &

LEWIN

Suite 500

2555 M Street, N.W.

Washington, D.C. 20037

202) 293-6400

Counsel for Aet t Casualty &

Surety Company

LAWRENCE E. CARR, JR.

MARGARET H. WARNER

KYLE A. KANE

CARR, GOODSON & LEE, P.C.

Suite 790

1919 Pennsylvania Ave., N.W.

Washington, D.C. 20006

(202) 463-6063

Counsel for The Continental

Insurance Company

RICHARD H. GIMER

STEPHEN L. HUMPHREY

KATHY A. UNDERHILL

RICHARD A. IFFT

HOPKINS & SUTTER

888 16th Street, N.W.

Washington, D.C. 20006

(202) 835-8000

Counsel for American

Employers’ Insurance

Company and Employers

Commercial Union

insurance Company

BARRY R. OSTRAGER

ANDREW S. AMER

SIMPSON THACHER & BARTLETT

425 Lexington Avenue

New York, NY 10017-3909

(212) 455-2000

Counsel for The Travelers

Indemnity Company

JAMES P. SCHALLER

M. ELIZABETH MEDAGLIA

TIMOTHY R. DINGILIAN

JACKSON & CAMPBELL, P.C.

Suite 300 South

1120 20th Street, N.W.

Washington, D.C. 20036

(202) 457-1600

Counsel for American Home

Assurance Company, T he

Insurance Company of the

State of Pennsylvania, and

Lexington Insurance Company

ROBERT E. HEGGESTAD

CASEY, SCOTT, CANFIELD

& HEGGESTAD, P.C.

805 15th Street, N.W.

Suite 600

Washington, D.C. 20005

(202) 682-4082

Counsel for Harbor Insurance

Company

JANET R. DAVIS

TRIBLER & ORPETT

30 North LaSalle Street

Suite 2200

Chicago, IL 60602

(312) 201-6400

Counsel for Unigard Security

Insurance Company

JAMES W. GREENE

BROMLEY, GREENE & WALSH

1050 Seventeenth Street, N.W.

Suite 830

Washington, D.C. 20036

(202) 955-3100

Counsel for American

Re-Insurance Company,

Unigard Security Insuranc:

Company, Continental

Casualty Company, and

North Star Reinsurance

Corporation

MICHAEL D. GALLAGHER

JUNE E. GILSON

GERMAN, GALLAGHER &

MURTAUGH

200 S. Broad Street

Suite 500

Philadelphia, PA 19102

(215) 545-7700

Counsel for Stonewall

Insurance Company

TABLE OF CONTENTS

APPENDIX A Page

Opinion of September 13, 1991, of the United

States Court of Appeals for the District of

Columbia Circuit la

APPENDIX B

Memorandum Opinion of September 7, 1988, of

the United States District Court for the District

of Columbia 17a

Order of September 7, 1988, of the United States

District Court for the District of Columbia 201a

\PPENDIX (¢

Order for Entry of Final Judgement of August 23,

1989, of the United States District Court for

the District of Columbia 204a

Judgment of August 25. 1989, of the United States

District Court for the District of Co] imbia 206a

APPENDIX D

Order of November 5. 1991, of the United States

Court of Appeals for the District of Columbia

Circuit Denying Rehearing 208a

Order of November 5, 1991. of the United States

pe . * — ;

Court of Appeals for the District of Columbia

Circuit Denying Rehearing En Bane 209a

APPENDIX E

42 U.S S 96 va 1 > a

APPENDIX F

femorandium Order ard Daxi:. Fea dh comes :

Memorandum, Order and Partial J ldgment of

4 wm + - f +

epcven er Ij ne { reu (ourt f Vi =

S ll {S Ls 4iS) nN ( i u > [

‘ ur ™ 7 ,

; é / / f N nt | Ss

00284 14

—_ — ta

A DDQEUATTT wv {.

Ai lsANViA r

. ¢ D + .

at y a ) = ~, ) ~ . -+

s a t 4 Ait

29g oa

APPENDIX A

“ED STATES COURT OF APPEALS

1 DISTRICT OF COLUMBIA CIRCUIT

+ _

Od 4

> —

—

eon

mej pone

Argued March 14, 1991 Decided September 13, 1991

No. 89-5367

INDEPENDENT PETROCHEMICAL CORPORATION, et al.,

Appellants

AETNA CASUALTY AND SURETY COMPANY, ef al.

No. 89-5368

INDEPENDENT PETROCHEMICAL CORPORATION, et al.,

Appellants

AETNA CASUALTY AND SURETY COMPANY, et al.

Appeals from the United States District Court

for the District of Columbia

(Civil Action No. 83-03347 )

v) ith VW hom Je rold Osh insk /. She rr W.

They DD 3 , J 2,7 t ’ ' —

ert, Rob H. Shulman and Stephan G. Weil were on

in 89-5367 and 89-5368.

Dennis M. Flannery, with whom W. Scott Blackmer

was on the brief, for appellee Insurance Company of

North America, in 89-5368.

Paul L. Friedman, with whom Anne D. Smith was on

the brief, for appellee, Pacific Indemnity Company, in

89-5367. Lloyd H. Randolph also entered an appearance

for appellee.

Richard B,. Stewart, Assistant Attorney General, Anne

S. Almy, Steven R. Baer and Catherine M. Flanagan,

Attorneys, Department of Justice, were on the brief, for

amicus curiae, in 89-5367 and 89-5368 urging that the

Order granting Summary Judgment to Independent Pe-

trochemical Corporation’s insurers be reversed.

James P. Schaller and Timothy R. Dingilian entered

appearances for appellees, American Home Assurance

Company; Insurance Company of the State of Pennsyl-

vania; and Lexington Insurance Company, in 89-5367

and 89-5368.

James E. Rocap, III, Niki Kuckes and Martin D.

Minsker entered appearances for appellee, Aetna Casu-

alty and Surety Company, in both cases.

Peter J. Schlesinger entered an appearance for appel-

lee, The Travelers Indemnity Company, in both cases.

Robert E.. Heggestad entered an appearance for appel-

lee, Harbor Insurance Company, in both cases.

Joseph F. Cunningham entered an appearance for ap-

pellee, Stonewall Insurance Company, in both cases.

James W. Green entered an appearance for appellees,

American Re-Insurance Company, et al., in both cases.

Before: EDWARDS, WILLIAMS, and RANDOLPH, Circuit

Judges.

Opinion for the Court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge: This diversity case reaches

us on appeal after eight years of litigation in the dis-

trict court about matters that have no connection what-

ever to the District of Columbia. The litigation, which

involves a wide array of complex issues, is continuing.

See Independent Petrochemical Corp. v. Aetna Casualty

& Surety Co., 654 F. Supp. 13834 (D.D.C. 1986). With

respect to two claims, the court below entered final judg-

ments pursuant to Rule 54(b) of the Federal Rules of

Civil Procedure, after finding “no just reason for delay.”

The first of these claims presents the question whether,

under the law of the State of Missouri, insurance policies

providing reimbursement for “damages” awarded against

the insured include sums representing the cost of remedy-

ing environmental harm for which the insured is legally

responsible. The second claim, also governed by state

law, raises the question whether a particular policy

issued by Pacific Indemnity Company continued to cover

independent Petrochemical Corporation after it became

a wholly-owned subsidiary of plaintiff Charter Oil Com-

pany, which is owned by plaintiff The Charter Company.

With respect to the first claim, the facts, as set forth

by the district court, are these. In 1971, Independent

Petrochemical agreed to assist one of its Missouri cus-

tomers in disposing of waste material containing “di-

oxin,” a family of chemical compounds that, in sufficient

concentrations, may cause serious harm to humans, ani-

mals and plants. Independent Petrochemical hired Rus-

sell M. Bliss, an independent contractor, to do the job.

Bliss transported more than 20,000 gallons of the hazard-

ous waste in his tank trucks to a facility in Frontenac,

Missouri, where he mixed it with waste oil and emptied

the resulting mixture into storage tanks. Bliss later

sprayed the mixture to suppress dust at various sites in

eastern Missouri. 654 F. Supp. at 1339.

In order to cure the harm resulting from Bliss’s activi-

ties, the federal government and the State of Missouri

undertook environmental cleanup activities costing mil-

lions of dollars. In an action by the United States seek-

ing reimbursement from Bliss, Independent Petrochemi-

-al, its affiliated corporations and others, the United

States District Court for the Eastern District of Mis-

souri held Independent Petrochemical jointly and sever-

ally liable for these costs under section 107(a) of the

Comprehensive Environmental Response, Compensation

and Liability Act of 1980 (“CERCLA”), 42 U.S.C.

$ 9607(a). United States v. Bliss, 667 F. Supp. 1298

(E.D. Mo. 1987). Missouri also sued Independent Pe-

trochemical to recover its cleanup costs. Missouri v.

Independent Petrochemical Corp., No. 83-2670-C (E.D.

Mo. filed Nov. 23, 1988). Independent Petrochemical’s

potential joint liability is estimated to be at least $96 mil-

lion. The company is insolvent.’ Under a plan of liqui-

dation approved by the United States Bankruptcy Court

for the Middle District of Florida, Independent Petro-

chemical will continue to defend the CERCLA claims

against it and pursue coverage from its insurers.

Between 1971, when Independent Petrochemical agreed

to assist its customer in disposing of the hazardous waste

material, and 1983, when this case began, Independent

Petrochemical purchased 67 Comprehensive General Lia-

bility policies from the 23 insurers named as defendants

in the court below.” The Comprehensive General Liability

Policy is a standard-form insurance policy drafted by

insurance representatives under the sponsorship of the

Insurance Service Office, a trade association that provides

drafting assistance to about 3,000 insurers. The parties

1 Independent Petrochemical, The Charter Company and Charter

Oil initiated chapter 11 proceedings in the United States Bank-

ruptcy Court for the Middle District of Florida in 1984. That

court approved a settlement of the federal government’s claims

against The Charter Company and Charter Oil, and approved each

company’s plan of reorganization. The United States later dis-

missed its claims against the two companies. See United States

v. Bliss, 667 F. Supp. 1298, 1302 n.1 (E.D. Mo. 1987).

* Only 21 of the insurers have entered appearances in this court.

The two that have not appeared are in liquidation.

agree that each of these 67 policies contained language

such as the following:

The [insurance] company will pay on behalf of the

insured [Independent Petrochemical] all sums which

the insured shall become legally obligated to pay as

damages because of bodily injury or property dam-

age to which this insurance applies, caused by an

occurrence. ...

None of the policies defined the term “damages.”

In November 1983, two weeks before Missouri brought

its CERCLA action, Independent Petrochemical and its

affiliated corporations brought this suit for a declaratory

judgment. Jurisdiction rested on diversity of citizenship.

28 U.S.C. § 1332. Although Independent Petrochemical

had its principal place of business in Missouri, where the

incidents giving rise to this dispute occurred, and al-

though none of the parties are incorporated in the Dis-

trict of Columbia, the case could be brought here appar-

ently because the District of Columbia’s Superintendent

of Insurance accepts service of process for the defendant

insurers (D.C. CoDE ANN. § 35-423), which is sufficient

to lay venue under the expansive provisions of 28 U.S.C.

$ 1391(a) & (ce). Among other claims, plaintiffs sought a

judgment that the provision just quoted obligates Inde-

pendent Petrochemical’s insurers to cover liability for en-

vironmental cleanup costs incurred by the United States

and Missouri.

While this litigation proceeded, the United States Court

of Appeals for the Eighth Circuit, sitting en banc, held

in a five-to-three decision that under Missouri law “the

term ‘damages’ in the standard-form comprehensive

general liability insurance . . . policy does not include

cleanup costs” (Continental Ins. Cos. v. Northeastern

Pharmaceutical & Chemical Co., 842 F.2d 977, 979 (8th

Cir.), cert. denied, 488 U.S. 821 (1988) (“NEPACCO”) ).

NEPACCO not only dealt with the identical issue now

facing us, but also arose out of the same factual cir-

)

cumstances. The hazardous waste Bliss handled un-

der his agreement with Independent Petrochemical was

NEPACCO’s. The Eighth Circuit’s decision relieved Con-

tinental Insurance Company of any contractual duty

under the policy to reimburse NEPACCO for cleanup

cost incurred by the state and federal governments, costs

NEPACCO was legally obligated to pay under CERCLA.

Because NEPACCO was rendered by the “home cir-

cuit” for Missouri, the district court in this case treated

the decision with deference. Finding no basis for con-

cluding that the Eighth Circuit had ignored clear signals

from the Missouri courts, the court followed the

NEPACCO “precedent with respect to those policies not

containing a choice-of-law provision directing the applica-

tion of the law of some other state.” Independent Petro-

chemical Corp. v. Aetna Casualty & Surety Co., No. 83-

3347, mem, op. at 220 (D.D.C. Sept. 7, 1988) .* The court

therefore granted the insurers’ motions for partial sum-

mary judgment.‘

Our duty in this case, as in any diversity case, is to “as-

ain and apply the state law” (Huddleston v. Dwyer,

3822 U.S. 232, 236 (1944)). The parties agree that under

the District of Columbia’s choice of law rules, Missouri

law governs the interpretation of the insurance policies

and of the term “damages.” See Bledsoe v. Crowley, 849

F.2d 639, 641 (D.C. Cir. 1988). The district court so

h Qyrti h« ’ ; ; ] , " . .

held, the parties have not objected, and, finding no ap-

]

‘

parent error, we also view Missouri law as controlling.

BWX Rlectroy Ics. Ine. Uv. ("0 away! Data ('o De. QOG I 98d

%’ Betore NEPACCO, the district court had viewed the term

“damages” under Missouri law as including cleanup costs. Inde

per lent Petrochemical (¢ orp. ljetna Cas alty & Suret Co 654

F. Supp. 1834, 13859 (D.D.C. 1986)

* Several other policies were expressly governed by the law of

New York. The cistrict court, relying on two New York trial court

decisions, held that cleanup costs were included within the term

“damages” in those policies.

CG COL A CT

Té

707, 710 (D.C. Cir. 1991). Missouri’s appellate courts,

however, have not spoken to the issue before us.° The

state’s highest court had an opportunity to do so when

the Third Circuit certified this question to it, but the

Missouri Supreme Court found the certification statute

(Mo. Ann. Stat. § 477.004 (Vernon Supp. 1990)) to be

unconstitutional. See Jones Truck Lines, Inc. v. Trans-

port Co., No. 72650 (Mo. July 13, 1990).

Because Missouri law thus remains unsettled, and be-

cause the Eighth Circuit is the “home” circuit for Mis-

sourl, the defendant insurers urge us simply to adhere to

the NEPACCO decision, much as the district court did.

One rather obvious consideration favors that course. If

our interpretation of Missouri law were at odds with the

Kighth Circuit’s, only the Supreme Court could resolve the

resulting conflict, in the absence of a Missouri appellate

court ruling. While the Supreme Court has on occasion

reviewed decisions in diversity cases to determine whether

a federal appellate court properly applied settled prin-

ciples in ascertaining state law, see, e.g., Exxon Co.,

U.S.A. v. Banque de Paris et des Pays-Bas, 488 U.S. 920

(1988) (order), such occasions are understandably infre-

quent. Intercircuit conflicts could be entirely avoided if,

after the first federal appellate court ruled, other federal

5’ The Circuit Court of the City of Saint Louis, in an opinion ren-

dered after the decision here, held that an insurer’s obligation to

pay “damages” includes reimbursement for environmental clean-up

costs incurred by the government. Cooper Indus., Inc. v. Ameri-

can Mutual Liability Ins. Co., No. 864-00284, mem. op. at 36-37

(Mo. Cir. Ct. Sept. 8, 1989). Rejecting the Eighth Circuit’s view

in NEPACCO, the court determined that under Missouri principles

of insurance contract interpretation, the word “damages” unam-

biguously includes clean-up costs sought by the government under

CERCLA, 42 U.S.C. $ 9607(a). This decision, however, is not con-

trolling on the question of Missouri law because it was not ren-

dered by the state’s court of last resort, or an intermediate appellate

court. See Commissioner of Internal Revenue v. Estate of Bosch,

3887 U.S. 456, 465 (1967); West v. American Tel. & Tel. Co., 311

U.S. 223, 237 (1940)

courts of appeals simply followed that ruling without

exercising any independent judgment. Hrie R. Co. v.

Tompkins, 304 U.S. 64 (1938), however, requires federal

courts in diversity cases “to determine how the highest

court of the state would decide,’ C. WRIGHT, FEDERAL

Courts 873 (4th ed. 1983); since a state’s highest court

would not be bound by a federal court decision interpret-

ing state law, one might question whether other federal

courts of appeals may be. Another consideration is pres-

ent when the initial federal decision is that of the home

circuit, which may be thought to be experienced in inter-

preting the particular state’s laws, even though the “very

essence of Erie is that the bases of state law are pre-

sumed to be communicable” to any federal judge. Salve

Regina College v. Russell, 111 S. Ct. 1217, 1225 (1991).

The potential for forum-shopping within the federal

judicial system caused by intercircuit conflicts over the

meaning of state law, and the assumption of expertise on

the part of the home circuit, have led us to conclude that

a home circuit’s view of state law is entitled to deference.

Abex Corp. v. Maryland Casualty Co., 790 F.2d 119, 125-

26 (D.C. Cir. 1986).° See also Waters v. American Auto.

®In a diversity case, we stand in the shoes of the court of the

forum state, which here is the District of Columbia Court of

Appeals. Bernhardt v. Polygraphic Co., 350 U.S. 198, 203 (1956).

Erie had two objectives—‘‘discouragement of forum-shopping and

avoidance of inequitable administration of the laws.” Hanna v.

Plumer, 380 U.S. 460, 468 (1965). Both aims were accomplished

by requiring uniformity between “coordinate state and federal

courts sitting side by side.” Klaxon v. Stentor Co., 313 U.S. 487,

196 (1941). This may suggest that the extent of our obligation to

defer to the Eighth Circuit would depend on what weight the Dis-

trict of Columbia Court of Appeals would give to that court’s rul-

ing in the absence of governing Missouri precedent. See 19 C.

WRIGHT, A. MILLER & E. COOPER, FEDERAL PRACTICE AND PROCEDURE

§ 4507, at 112 (1982). But the local courts in the District of

Columbia have not spoken to this issue; accordingly there is no

indication that they would treat the matter of deference any dif-

ferently than the rule set forth in our decision in Aber.

rm i ee

Ins. Co., 8363 F.2d 684, 689 (D.C. Cir. 1966). Deference

is one thing; blind adherence quite another. Under Abez,

we will not follow another circuit’s decision if that court

“ignored clear signals emanating from the state courts”

or “clearly misread state law.” 790 F.2d at 125-26 (em-

phasis in original), citing with approval Factors, Etc.,

Inc. v. Pro Arts, Inc., 652 F.2d 278 (2d Cir. 1981), cert.

denied, 456 U.S. 927 (1982). While the instances when

this has occurred will be “rare” (790 F.2d at 125), we

believe the Eighth Circuit’s decision in NEPACCO falls

within the Abex exception.

NEPACCO begins with an analysis of Missouri’s prin-

ciples of insurance contract interpretation. The court

determined that under Missouri law the language of an

insurance policy is to be given “the meaning that would

ordinarily be understood by the lay|[person] who bought

and paid for the policy.” NEPACCO, 842 F.2d at 985,

quoting Robin v. Blue Cross Hosp. Serv., Inc., 687 S.W.2d

695, 698 (Mo. 1982). On this score, the court was clearly

correct. “Meaning of words or terms in an insurance con-

tract is tested by common understanding and speech of

men.” Whited v. National Western Life Ins. Co., 526

S.W.2d 364, 367 (Mo. App. 1975); see also Greer v.

Zurich Ins. Co., 441 S.W.2d 15, 27 (Mo. 1969) ; Wehmeier

v. State Farm Mut. Auto. Ins. Co., 556 S.W.2d 739, 740

(Mo. App. 1977). The court also ruled that under Mis-

sourl law if the language is unambiguous, the insurance

policy is to be enforced strictly in accordance with its

plain and ordinary meaning; if it is ambiguous—that is,

“reasonably open to different constructions’—then it

should be construed against the insurer. 842 F.2d at 985.

Here too the Eighth Circuit was on solid ground. When

language is susceptible to more than one plain and or-

dinary interpretation, “that most favorable to the insured

must be adopted.” Krombach v. Mayflower Ins. Co., 785

S.W.2d 728, 731 (Mo. App. 1990). A technical meaning

that is in conflict with common understanding shall not

be applied “unless it plainly appears that the technical

10a

meaning is intended.” Krombach, 785 S.W.2d at 731;

see also Greer, 441 S.W.2d at 27.

Our difficulty with NEPACCO is that it fails to apply

these Missouri law principles. Rather than relying on the

common understanding of the word “damages,” the court

proceeded to analyze how that term is used “by astute

insurance specialists or perspicacious counsel” (Hammon-

tree v. Central Mut. Ins. Co., 385 S.W.2d 661, 666 (Mo.

App. 1965)). Relying on Maryland Casualty Co. v.

Armco, 822 F.2d 1348 (4th Cir. 1987), which interpreted

“damages” based on “the legal, technical meaning” (id.

at 1352), the court concluded that “damages” unambigu-

uously refers to compensatory relief but does not include

equitable monetary relief. NEPACCO, 842 F.2d at 985-

86. Law-suits by the government seeking reimbursement

or restitution for environmental cleanup costs “are essen-

tially equitable actions for monetary relief” (id. at 987).

Therefore, the court found such costs to be outside the

realm of insurance policies indemnifying for “sums” to be

paid “as damages.”

As the NEPACCO majority itself acknowledged, the

lay insured would not distinguish between legal and

equitable relief when construing “damages.” 842 F.2d at

985. The term broadly refers to “the estimated reparation

in money for detriment or injury sustained,” or “compen-

sation or satisfaction imposed by law for wrong or in-

jury.” WEBSTER’S THIRD NEW INTERNATIONAL DICTION-

ARY 571 (1981). The Missouri layperson would expect

“damages” to encompass all financial liabilities one is obli-

gated to pay as a result of another’s loss. At least one

Missouri trial court has interpreted “damages” this way

in a case involving the same insurance policy language at

issue here. Cooper Indus., Inc. v. American Mutual Lia-

bility Ins. Co., No. 864-00284, mem. op. at 33 (Mo. Cir.

Ct. Sept. 8, 1989). Before Missouri adopted model jury

instructions, in decisions concerning the adequacy of triai

courts’ jury instructions on the issue of damages in negli-

gence actions, Missouri courts defined “damages” as re-

lla

compense or reparation for injury sustained. See Jackson

v. St. Louis-San Francisco R. Co., 211 S.W.2d 931. 936

(Mo. 1948); Lord v. Austin, 39 S.W.2d 575, 578 (Mo.

App. 1931). Under Missouri’s model instructions, recov-

ery reflecting the cost of restoring or repairing property

is also understood as a form of “damages.” Cf. Jack L.

Baker Cos. v. Pasley Mfg. & Distrib. Co., 413 S.W.2d 268,

272-73 (Mo. 1967). As the Missouri trial court observed

in Cooper Industries, these jury instruction cases are sig-

nificant because Missouri courts “were confronted with

the meaning of the term damages as it would be under-

stood by laymen—the jury.” Cooper Industries, mem. op.

at 34-35.

Liability for environmental cleanup costs quite nat-

urally fits this common and ordinary understanding of

damages. Missouri and the United States “are not mee

contractors who act out of expectation of recompense for

their cleanup work.” AJU Ins. Co. v. Superior Court, 51

Cal. 3d 807, 829, 274 Cal. Rptr. 820, 836, 799 P.2d 1253,

1269 (1990). Their out-of-pocket expense in cleaning up

the property contaminated by dioxin is a loss or detriment

“incurred as a matter of public duty” and constitutes

harm to the public fise. Jd. Independent Petrochemical’s

liability compensates for that harm.

Our research reveals that, with the exception of

NEPACCO, in every case in which the operative state’s

rules of insurance contract interpretation required—as

Missouri’s does—resort to the common and ordinary un-

derstanding of language, the word “damages” has been

construed to cover reimbursement for environmental re-

sponse costs incurred by a government.’ These decisions

7 See, e.g., New Castle County v. Hartford Accident & Indem.

Co., 933 F.2d 1162 (3d Cir. 1991); Avondale Industr., Inc. v. Trav-

elers Indem. Co., 887 F.2d 1200, 1207 (2d Cir. 1989), cert. denied,

110 S. Ct. 2588 (1990); Jones Truck Lines v. Transport Ins. Co.,

29 Env’t Rep. Cas. (BNA) 1606, 1613 (E.D. Pa. 1989) ; Chesapeak«

Utils. Corp. v. American Home Assurance Co., 704 F. Supp. 551,

12a

are discussed in depth by Judge Becker, in his opinion for

the court in New Castle County v. Hartford Accident &

Indemnity Co., 933 F.2d 1162, 1187-90 (3d Cir. 1991).

Decisions construing the term differently were apparently

governed by state rules of interpretation under which the

technical or legal meanings of language controlled.®

Had the record revealed that Independent Petrochemi-

cal intended to be bound by the technical meaning of

“damages,” the common and ordinary understanding of

that term wou!d not control. Krombach, 785 S.W.2d at

731. But no such evidence was presented. The insurers

here simply relied on the argument that “damages” has

an unambiguous technical meaning. While that may be

true, it misses the point. Technical meaning is the excep-

tion rather than the rule in Missouri, and the insurers

therefore also had to show that the parties intended to be

bound by it. We thus disagree with the Eighth Circuit

that the Missouri Supreme Court would not construe

“damages” to carry the meaning a layperson would give

to it.

We also reject the insurers’ argument, adopted in

NEPACCO (842 F.2d at 986), that the language of

CERCLA is against construing the word “damages” to

encompass liability for the governments’ cleanup costs. It

559-60 (D. Del. 1989); United States Fidelity & Guar. Co. v.

Thomas Solvent Co., 683 F. Supp. 1139, 1169-70 (W.D. Mich. 1988) ;

Fireman’s Fund Ins. Cos. v. Ex-Cell-O Corp., 662 F. Supp. 71, 75

(E.D. Mich. 1987); Boeing Co. v. Aetna Casualty & Surety Co.,

784 P.2d 507, 511-12 (Wash. 1990).

8 See, e.g., Cincinnati Ins. Co. v. Milliken & Co., 857 F.2d 979,

981 (4th Cir. 1989); Maryland Casualty Co. v. Armco, Inc., 822

F.2d 1348, 1352 (4th Cir. 1987), cert. denied, 484 U.S. 1008 (1988) ;

Cedar Chemical Corp. v. American Universal Ins. Co., No. 87T-

2838-4B, mem. op. at 6 (W.D. Tenn. Sept. 13, 1989); Hayes 2.

Maryland Casualty Co., 688 F. Supp. 1513, 1515 (N.D. Fla. 1988) ;

Travelers Ins. Co. v. Ross Elec. of Washington, Inc., 685 F. Supp

742, 745 (W.D. Wash. 1988) ; Lido Co. of New England v. Fireman’s

Fund Ins. Co., 574 A.2d 299, 301 (Me. 1990) ; Braswell v. Faircloth,

387 S.E.2d 707, 710-11 (S.C. Ct. App. 1989).

l3a

is of no consequence that CERCLA lists separately lia-

bility for “all costs of removal or remedial action in-

curred by the United States Government or a State” (42

U.S.C. § 9607(a) (4) (A)), and liability for “damages for

injury to, destruction of, or loss of natural resources”

(id. § 9607(a) (4) (C)). Other sections treat response

costs as a subset of damages. CERCLA provides, for ex-

ample, that the measure of “damages to natural re-

sources” shall “not be limited to the sums which can be

used to replace or restore such resources.” 42 U.S.C.

§ 9607(f) (1). Moreover, courts that have interpreted

CERCLA do not seem to distingish governmental cleanup

costs from “damages.” The Supreme Court characterized

ection 107 as providing “liability in damages,” and con-

cluded that CERCLA “hold[s] States liable in damages

in federal court.” Pennsylvania v. Union Gas Co.. 491

U.S. 1, 12, 13 (1989). Other courts have also identified

CERCLA claims for relief as including cleanup costs “or

other damages.” See, e.g., Cadillac Fairview/California

v. Dow Chemical Co., 840 F.2d 691, 693 (9th Cir. 1988) :

Gopher Oil Co. v. Union Oil Co. of California, 757 F.

Supp. 988, 997 (D. Minn. 1990) ; Commerce Holding Co.

v. Buckstone, 749 F. Supp. 441, 443 (E.D.N.Y. 1990);

Ogden Corp. v. The Travelers Indem. Co., 739 F. Supp.

796, 801 (S.D.N.Y. 1989) ; Philadelphia v. Stepan Chem-

ical Co., 713 F. Supp. 1484, 1486 n.3 (E.D. Pa. 1989).

We not only have done the same, but also have stated

that restitutionary relief (cost of restoration) is a proper

measure of recovery in “resource damages actions.” See

Ohio v. U.S. Dep’t of Interior, 880 F.2d 432, 459 (D.C.

Cir. 1989).

The insurers also argue that to interpret “damages”

to include cleanup costs would make no sense when the

clause—“all sums which the insured shall become legally

obligated to pay as damages’”—is read as a whole. They

believe such a reading must be incorrect because it would

make the term “damages” all-inclusive; if cleanup costs

are “damages,” then so are “all sums” a party might

have to pay, such as fines, penalties, and attorneys’ fees.

14a

The argument, in other words, is that the reference to

“damages” would be rendered redundant because it would

not limit or qualify the term “all sums.

We can see how an ordinary person might view re-

sponse costs, but not fines or penalties, as “damages.”’

Liability for environmental response costs is similar to

compensation placing an individual in the position that he

would have been in had the injurious action not occurred.

This is how “damages” is ordinarily understood. A fine

1 y . . oa at _ —fy4+ ; . ] lle y

or penalty, in contrast, is not understood to be dollar-

"ny ] - ron 5 Path > it 7 ‘ ’ rawr for f

for-dollar recompense. Rather, it is a pecuniary form of

punishment for the commission of an act society finds re-

pugnant and seeks to deter. See WEBSTER’S THIRD NEW

INTERNATIONAL DICTIONARY 852, 1668 (1981); BLACK’S

LAW DICTIONARY 632, 1133 (6th ed. 1990); see also

Gloucester Township v. Maryland Casualty Co., 668 F

Supp. 394, 401 (D.N.J. 1987). In regard to attorneys’

fees, Missouri law is inst the insurers’ position. A

Miss +} QY\Y ale wT hac bk ald that TT rneyv ? fees qj Vro

i issour!l appedis CUUT nas neia lial a Oorneys Ces alt

“indistinguishable from a damages award for [/!insur-

nce] coverage purposes” where the operative policy lan-

guage is the same as in this case. Hyatt Corp. v. Occi-

dental Fire & Casualty Co. of North Carolina, 801 S.W.

2d 382, 393 (Mo. Ct. App. 1990)

We therefore hold that under the insurance policies

]

governed by Missouri law, “damages” includes costs the

insured is legally obligated to pay to the United States

5 |

and Missouri as reimbursement for their activities in

remedying environmental harm.

The remaining question on appeal is whether an insur-

ance policy issued by Pacific Indemnity Company covered

Independent Petrochemical, Charter Oil and The Charter

Company at the time Bliss sprayed the oil containing

dioxin. Pacific Indemnity maintains that the policy

expired on January 7, 1971, when Signal Oil and Gas

Company sold all of Independent Petrochemical’s out-

standing stock to Charter Oil Company, six weeks before

bilss first began removing the dioxin-eont:

10xin- aminated mate-

a0} | that the policy exnired

and therefore granted Pacific’s motion for summary judg-

] ] W I I

As pr nary matter, we must decide what law

verns our Interpretation of the Pacific policy, a ques-

non ddressed below. Pacific Indemnity maintains

rnia law governs. Pacific Indemnity is a Cali-

a corporation, Pacific and Signal Oil have their

! es of business in California, Signa] paid

remiun n Californi nd Pacific administered the

‘e. On the other hand, Missouri jaw might

er) cause Missouri is where the insured risk is

See RESTATI MENT (SECOND) OF CONFLICT OF

LAWS 193 (1971). We need not choose between the

er, bi se the laws of Missouri and Cali-

rally are compatible. See Muller v. Massachu-

Wui. Life Ins. Co., 644 F. Supp. 916, 918 (D.D.c.

L9S¢ Like Missouri law, California law merely re-

rn ' the Pacific policy to be construed ac-

rding to their ordin: ry meaning. AIU Ins. Co. v. Su-

or Court, 51 Cal. 3d 807, 274 Cal. Rptr. 820, 799.

P.2d 1253 (1990); Mill Valley v. Transamerica Ins. Co.

YS Cal. App. 3d 595, 602, 159 Cal. Rptr. 635, 639 (Ct.

App. Ist Dist. 1979); Highlands Ins. Co. v. Universal

Underwriters Ins. Co., 92 Cal. App. 3d 171, 174-75, 154

Cal. Rptr. 683, 685 (Ct. App. 2d Dist. 1979).

in relevant part, Item 1(A) of the nolicy defines

"y and associate com-

les of “The Signal Companies’ . . . or other com-

pany but only as listed in Item 6 of the Declarations

” Item 6 is a listing of companies entitled “Schedule

{ Subsidiaries /Associates Insured.” When read together,

m 1A nd Item 6 express the parties’ intention to

nsure com) es that are in some way affiliated with

speaks of “subsidiary and associate

companies,” and refers to what is an “at-a-glance” ref-

erence list for identifying who those subsidiaries and

l6a

associates might be. At the time of the stock transfer

from Signal to Charter Oil, Independent Petrochemical

lost its status as a subsidiary and therefore no longer

fell within the ambit of the Pacific policy.

It is equally clear that continued coverage was not

intended to be an automatic consequence of the stock

transfer transaction. In Article XXI(a) of their Agree-

ment and Plan of Reorganization, Signal agreed to main-

tain Independent Petrochemical’s coverage “pending the

Closing Date.” Article XXI(b) provides that “[a]t

Charter Oil’s request” and “for a reimbursement by

Charter Oil of a pro-rata share of premiums paid by

Signal,” Signal would “use its best efforts to continue

coverage ... after the Closing Date and until expira-

tion of the policy year... to the extent permitted by

the particular Signal insurance policy.” Charter took

none of these steps. Instead, it obtained other insur-

ance coverage for Independent Petrochemical effective

October 3, 1970, months before the closing date.

* * * ¥

We affirm the district court’s order of February 4,

1986, and its judgment, in favor of Pacific Indemnity

“on all claims made by Plaintiffs in this section.” For

the reasons set forth in part I, we reverse the district

court’s judgment that the policies governed by Mis-

souri law do not cover environmental cleanup costs, in-

curred by the state and federal governments, for which

the insured is legally obligated.

17a

APPENDIX B

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 83-3347

INDEPENDENT PETROCHEMICAL CORPORATION, et al.

Pla int ffs,

AETNA CASUALTY AND SURETY CoMPANY, et al.

Defe ndan ts.

Filed Sep. 7, 1988]

Introduction

This declaratory judgment action has been brought to

determine defendant insurers’ defense and indemnifica-

tion obligations to plaintiffs Independent Petrochemical]

Corporation (IPC), Charter Oi] Company (COC) and

The Charter Company (TCC). Plaintiffs have been

named as defendants in a great number of suits brought

as a result of dioxin contamination jn Missouri.' Both

defendants and plaintiffs have filed motions for summary

' For the sake of simplicity, throughout much of this memorandum

“plaintiffs” will be used gen rically to refer to any of the plaintiff

organizations. The court note 3, however, that it was IPC that was

directly engaged in marketing petrochemicals in Mi ourl in the

1970s

18a

judgment and partial summary judgment based on

various issues involving, for example, the formation and

interpretation of policy provisions.’ The discussion below

addresses the various defendants’ and plaintiffs’ motions

together on an issue-by-issue basis. A listing of these

issues follows:

(1) Waiver of Defenses p. [19a]

(2) Nondisclosure p. [66a]

(3) Timely Notice p. [78a]

(4) Named Inured p.

—

—"

one

_—

(5) Limits of Liability p. | 109:

(6) Number of Policy Periods p. |117a|

(7) Policies Claimed To Have Expired

3efore Contamination at Specific Sites p. |123a]

(8) Property Damage Claims From

Contamination Before Policies Started _ p. [139a]

(9) Completed Operations p. [146a]

(10) Pollution Exclusion Clause p. [155a]

(11) Punitive Damag p. [175a]

(12) Cleanup Costs p. [196a]

2 Certain defendants have requested that final judgment be entered

pursuant to Rule 54(b) of the federal rules of civil procedure with

regard to the issues decided here. Because of the federal policy

against pliece-meal appeals, the greater efficiency of having all of

the issues in this case considered on appeal together, and the lack of

prejudice or injustice to the defendants from this delay, the court

will not grant rule 54(b) certification with regard to ar if

issues decided here. See Cullen v. Margiotta, 618 F.2d 226, 228

2nd Cir. 1980) (rule 54(b) certification appropriate only where

delay would create danger of hardship or injustice); McSurley v

McClellan, 697 F.2d 309, 315 (D.C. Cir. 1982) (denial of motion for

summary judgment ordinarily not reviewable).

19a

l. WAIVER OF DEFENSES

Plaintiffs move for partial summary judgment declar-

ing that the following defendants have walved the affirm-

ative defenses listed below by failing to assert them within

a reasonable time after being notified of the claims under-

lying this suit:

Insurance Company of North Ame rica (INA)

—Failure to Disclose (Fifth Defense )

—Failure to Mitigate (Eleventh Defense )

Ae tna Casualty & Sure ty Company

~——Pollution Exelusion (Third Defense )

Hartford Accid nt & Inde mnity Company

—Pollution Exclusion (S venth Defense)

-Conduct in Disregard of Laws (FF

Defense )

Unigard Mutual Insurance ¢ ompany

—Misrepresentation of Material Facts (Ty

Defense )

American Home Assurance Company

Lexington Insurance Company

Insurance Company of the State of Pe nnsylvania

(ISOP)

—Nondisclosure with respect to 1975 policies

(Eleventh Defense)

—Pollution Exclusion (September 2. 1986

Letter)

Harbor Insurance ( ‘compan if

Pollution Exclusion (Ninth Defense)

U. S. } ire Insurance ( ‘Om pany

—Fraud (Third Defense)

20a

—Misrepresentation of Material Facts (Fourth

Defense).

Plaintiffs allege that defendants were obligated to in-

form them of any defenses that would prevent coverage

as soon as defendants possessed enough information to de-

termine that the defense applied. No later than July 19,

1983, according to plaintiffs, suf ficient information to put

defendants on notice of each of these defenses was pro-

vided to each of the above listed defendants.

Defendants, however, did not notify plaintiffs of any of

the above listed defenses before July of 1985. As a result,

plaintiffs argue, defendants implicitly waived these de-

fenses and should be barred from asserting them in this

litigation. Defendants deny that they have waived these

defenses. Primary insurers INA, Aetna and Hartford ar-

gue that a waiver must be intentional and cannot result

from mere delay in notifying plaintiffs of these defenses.

Estoppel is also unjustified according to these defendants

because plaintiffs have not made a sufficient showing of

reliance or prejudice from this delay. Excess insurers

Unigard, American Home, Lexington, ISOP, Harbor, and

U.S. Fire contend that they have no duty to notify plain-

tiffs of their position on coverage until the underlying

primary coverage has been exhausted or they are required

to provide a defense. Finally, many defendants claim that

contrary to plaintiffs’ assertions, they did not possess suffi-

cient information to establish the applicability of these

defenses following the July 1983 meeting, and so did not

raise these defenses until 1985 and 1986, in their answers

to plaintiffs’ complaint and in answers to interrogatories

Under rule 56(c) of the federal rules of civil procedure,

summary judgment “shall be rendered forthwith if the

pleadings, depositions, answers to interrogatories, and ad-

missions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and

that the moving party is entitled to a ju

ter of law.” Fed. R. Civ. P. 56(«

opment aS a mat-

7 A mee ree ee ee ee ee

2la

In evaluating the factual basis of defendants’ motions,

the court must determine “whether the evidence presents

a sufficient disagreement to require submission to a jury

or whether it is so one-sided that one party must prevail

as a matter of law.” Anderson ». Liberty Lobby Inc., 477

U.S. 242, 251-52, 106 S.Ct. 2505, 2512 (1986).

I. Factual Background

In 1971 IPC arranged for Russell Bliss. an independent

contractor, to dispose of certain waste products for its

customer Northeastern Pharmaceutical and Chemical

Company (NEPACCO). It is alleged that these waste

products contained dioxin, a highly toxic substance. Bliss

allegedly mixed the dioxin with other waste oils and

sprayed it as a dust suppressant on nonpaved roads and

horse arenas in various communities in Missouri, As the

toxie effects of the dioxin became apparent, claims were

brought against Bliss. NEPACCO, IPC and IPC’s corpo-

rate parents COC and TCC.

Plaintiffs IPC, COC, and TCC subsequently notified

their primary insurers, and in some cases their excess in-

surers, of these claims. While the insurers’ responses

varied to some extent, all defendants except Aetna either

denied coverage, reserved their right to do so. or other-

wise failed to provide plaintiffs with a defense. Plain-

tiffs consequently secured their own defense counsel, main-

taining contact with their primary insurers about cover-

age,

On June 28, 1983, plaintiffs wrote to all primary and

excess insurers inviting them to a meeting on July 19,

1983, at which plaintiffs would “present information re-

garding the allegations in the dioxin] Actions and dis-

' Aetna initially agreed to d fend plaintiffs, while res rving its

rights to disclaim coverag: later, against the Drinkard claim. This

claim was later settled by other insurers on behalf of plaintiffs.

22a

cuss proposed case management and defense plans.” * All

defendant insurers attended except for excess insurer

American Home.

At the July 19, 1983 meeting, plaintiffs’ presentation

included background information on the events from

which the underlying dioxin claims arose, and a descrip-

tion of claims filed and anticipated claims. This back-

ground included: information about plaintiffs and other

entities involved, including Bliss and his activities; the

names and locations of identified and potential sites; a

description of dioxin and its alleged effects on human

health and the environment; and a status report on claims

filed as of that date. Information on the history of the

dioxin claims included the history of IPC; IPC’s relation-

ship to NEPACCO; IPC’s relationship with Bliss; and

state and federal involvement in the 1970s.

Plaintiffs also proposed a “Standstill Agreemen nt” by

which the primary carriers would participate with the

plaintiffs in a cooperative arrangement for defending the

claims, while reserving their rights to disclaim liability

at a later date. han egg produced no agreement, how-

ever, and on November 9, 1983 plaintiffs brought this ac-

tion. On November 11th, plaintiffs wrote to the excess

insurers:

This action has been filed reluctantly because of our

inability to reach a mutually acceptable standstill

agreement relating to these cases. Our clients are

anxious to resolve these questions and will not ac-

tively prosecute this case pending an early meeting

to reach such agreement. We would like to continue

the spirit of cooperation evidenced at our meeting on

July 19, 1983

)

]

4 Attachment A to Plaintiffs’ Statement of Points and Authoritie 3

in Support of Their Waiver Motion, Exhibit 1 (‘“Plaintiffs’ Waiver

Motion’”’)

23a

We have agreed with the primary

insurers to meet

in Washington D.C.. on Thursday, November 17,

1983, to reach an agreement. The meeting will be

held at The Charter Company’s office at 2550 M

Street, N.W., Suite 780, Washington, D.C. We be-

lieve it more productive to meet fir

primary carriers and such excess insurer representa-

tives as the primary insurers believe are appropriate.

A second meeting will then be scheduled with all par-

ticipating, if desired.

st with the six

No excess insurer defendant was asked to attend the

November 17th meeting, nor was a second meeting to in-

volve the excess insurers held. Court proceedings were

Stayed, at the request of the parties, for most of the

period up to June 13, 1985.

During this period, a “Standstill

Agreement” was negotiated and finally

tiffs and the primary insurers,

A reservation of righ

Interim Defense

signed by plain-

effective February 1984

its provision was included:

2. Reservation of Rights—This Interim A

does not adopt any specific coverage theory. All

parties to this Interim Agreement fully reserve al]

rights and obligations with regard to all

defense and indemnity, whether or

party specifically reserves its rights ¢

relation to each or any of the individual claims or

legal actions that form the basis for this Interim

Agreement. All parties accept all other

ervations of rights: and. except

greement

issues of

not any such

oncerning or in

parties’ res-

as otherwise spe-

cifically provided herein. no Waiver or estoppel shall

arise as a result of this Interim Agreement. or any

delay in its having been undertaken, nor shall any

exclusion or other limitation he considered waived.

5 Partial Joint Opposition Of Aetna C

iny, Hartford Accident And

ompany Of North Americ

asualty And Surety Com

Indemnity Company

. t

And Insurance

a To Plaintiffs’ Motj n For

Su mmary

24a

Both plaintiffs and defendants have since filed numer-

ous pleadings, and engaged in discovery, concerning the

defenses at issue here. This material will be discussed

below, in relation to each specific defendant and defense

involved.

II. Choice of Law Principles

In determining what law to apply to issues in contract,

the court should generally apply the law chosen by the

parties unless it is contrary to a fundamental policy of a

state with a materially greater interest. See Restatement

(Second) of Conflict of Laws § 187 (1971). Absent a

determination by the parties, the court will apply “the

local law of the state which, wtih respect to that issue, has

the most significant relationship to the transaction and

the parties”. Jd. § 188. The contacts to be considered in

determining which state has the most significant rela-

tionship include:

“(a) the place of contracting,

(b) the place of negotiation of the contract,

(ec) the place of performance,

(d) the location of the subject matter of the contract,

and

(e) the domicil, residence, nationality, place of incor-

poration and place of business of the parties.

These contacts are to be evaluated according to their

relative importance with respect to the particular

issue.”

Id. § 188(2); See Koro Co, Ine. v. Bristol-Meyers Co.,

568 F.Supp. 280, 286 (D.D.C. 1983) (citing Restate-

ment).

Judgment Against Certain Defendants With Respect To The Waiver

of De fenses, Attachment at 4-5 “Partial Joint Opposition to

Plaintiffs’ Waiver Motion )

25a

Where the contract is one for liability insurance, “the

State which the parties understood was to be the principal

location of the insured risk during the term of the policy”

will control the rights created under the policy “unless

with respect to the particular issue, some other state has

a more significant relationship.” Jd. § 193.

This court has made a number of rul

law to be applied in this case. In general, the law to be

applied to a waiver claim wil] be the same law that gov-

erns the affirmative defense at issue. See Memorandum of

January 8, 1987 at 1] (Waiver issue entwined with de-

fense of nondisclosure).

ings regarding the

Because all of the activities giving rise to the underly-

ing dioxin-related claims took place in Missouri, where

IPC was operating during the relevant time period 1971-

1983, and which is the location of the insured risk in-

volved here, in general the court will evaluate

that are rooted in the inter

cording to Missouri law.

defenses

pretation of the policies ac-

See Independent Petrochemical

Corp. v Aetna Casualty & Surety Co., 654 F.Supp. 1334,

1356-57 (D_D.C. 1986) (trigger-of-coverage issue strongly

connected with the location of the insured risk that

knew existed when contracts formed:

erns) (“IPC v. Aetna’).

parties

Missouri law gov-

Defenses involving challenges to the formation of the

contract ordinarily will be evaluated according to the law

of the state in which they were negotiated and formed.

See Memorandum of January 8, 1987 at 4

Which negotiation and formation of

Florida has most substantial

govern nondisclosure defense).

(as state in

contract occurred.

interest in having its law

Defenses relating to either the formation or the inter-

pretation of the policies that designate New York law

will be evaluated under New York law. New York

will control the appl

law

ication of these policies unless there

is a fundamental] conflict between New York

that of Missouri. Se. IPC v.

law and

Aetna, 654 F.Supp. at 1357

26a

(choice-of-law provisions will be given effect unless in

fundamental conflict with Missouri law). For each of the

defenses plaintiffs allege have been waived, the court

will review the law of the relevant jurisdiction with re-

gard to notice and waiver of defenses. Formation de-

fenses will be considered first, followed by defenses based

on interpretation of the policy.

Ill. Formation Issues

Plaintiffs assert that if a choice of law analysis is

necessary, that Florida law should govern those defenses

involving the formation of the policies and the waiver of

those defenses. These defenses would include: (A) pri-

mary insurer INA’s failure-to-disclose defense,® (B) ex-

cess insurer Unigard’s misrepresentation of material

facts defense; (C) excess insurers American Home, Lex-

ington & ISOP’s nondisclosure with respect to 1975 poli-

cies defenses; and (1D) U.S. Fire’s fraud and misrepre-

sentation of material facts defenses.

American Home, Lexington & ISOP “contend that the

Court need not engage in a choice of law analysis with

respect to the waiver issue since there is no conflict be-

tween Missouri and Florida law on the facets of that is-

sue which are dispositive here.’”’ Instead, defendants sug-

gest that the court should decide this case according to

‘uniform state law.”

® This court has already ruled that Florida law controls INA’s

defense of nondisclosure and its waiver. Memorandum of January

8 1987, at 3-5 (‘“‘Florida, the state in which negotiation and forma-

tion occurred, has the most substantial interest in seeing its laws

applied to the conduct of parties negotiating for insurance in its

jurisdiction.”) and at 11 (“Because the question of waiver is so

entwined with the issue of nondisclosure, and because Florida has

such a strong interest in that issue, see supra, § II A, [discussing

choice of law for nondisclosure issue] Florida law must apply to the

question of waiver as well.”).

27a

The court disagrees. There are important differences

between the laws of Missouri and Florida that make it

impossible for the court to decide these issues under any

concept of “uniform state law.” Florida has statutory

law relevant to these issues that has no comparable coun-

terpart in Missouri law—specifically, Fla. Stat. § 627.409

(1981), which plaintiffs argue bars defendants

from as-

Serting this defense.

The court has already ruled that “the

disclosure in negotiating and forming a contract is appro-

priately resolved according to the law of the state in

which negotiations took place and the contract was

formed.” Memorandum of January 8, 1987 at 4. The

court found that INA’s policies were

formed in Florida and that Florida law would govern its

defense of nondisclosure. /d. Defendants American

Home, Lexington, ISOP, Unigard and U.S. Fire have not

contested plaintiffs’ assertion that their policies were

formed in Florida. Although many of the contacts leading

up to the policies’ formation were between brokers, the

instructions for coverage and final approval came from

Jacksonville, Florida, headquarters of COC and TCC.

issue of non-

negotiated and

The court concludes that Florida h

as the most sub-

stantial interest in havin

g its law applied to the “forma-

tion” issue of nondisclosure under the policies of American

Home, Lexington, ISOP, Unigard and U.S. Fire. U.S.

Fire’s policies incorporate language from underlying

policies which specifically state, however, that they “shall

be construed and in force in accordance with and gOV-

erned by the internal law of the State of New York.” 7

* See, e.g., Plaintiffs’ Appendix Of }

In Plaintiffs’ Statement Of Points And Authorities In Opposition

To Defendants’ Seven Motions For Partial] Summary Judgment

On The Punitive-Damages Issue, And Plaintiffs’ Rule

ment In Support Thereof. Tab & (CIRCL

821)

-olicy Provisions Relied Upon

108(h) Stat

policy number CHAF

(“Plaintiffs’ Appendix of Policy Provisions on P

unitive Dam-

ages Issue’’).

28a

The application of New York law to U.S. Fire’s nondis-

closure defense and waiver issues will be discussed follow-

ing an analysis of the issues that are to be decided by

Florida law: the defense of nondisclosure and its waiver

under the policies of INA, American Home, Lexington,

ISOP and Unigard.

A. INA’s De f nse of Nondisclosure

As defendants argue that the obligations of a carrier

under an excess insurance policy are different from its

obligations as a primary insurer, the court will first dis-

iss INA’s position as a primary insurer of plaintiffs and

as a carrier of plaintiffs’ excess insurance. INA is

of policies at issue here.

Under Florida common law, if an insurer intends to

ssert a defense to its bility on a policy, the insurer

should inform the insured of that defense as soon as

practicable after the basis of the defense is known.

Tiedtke v. Fidelity & Casualty Co. of New York, 222

So.2d 206. 209 (Fla. 1969): Bergh v. Canadian Universal

Insurance Co., 216 So.2d 436, 441 (Fla. 1968). More-

over, a Florida statute requires that an insurer comply

with specific notice requirements in responding to an in-

sured’s claim, or risk losing the ht to assert that

defense.

Fla. Stat. § 627.426(2) states that:

(2) A liability insurer shall not be permitted to

deny coverage based on a particular coverage defense

unless:

(a) Within 30 days after the liability insurer

knew or should have known of the coverage defense,

written notice of reservation of rights to assert a

coverage defense is given to the named insured by

——— ad nda

29a

registered or certified mail sent to the last known

address of the insured or by hand delivery; and

(b) Within 60 days of compliance with paragraph

a) or receipt of a summons and complaint naming

the insured as a defendant. whichever is later,

but in

no case later than 30 days before trial, insurer:

1. Gives written notice to the named insured by

registered or certified mail of its refusal to defend

the insured:

2. Obtair

f sured a nonwaiver agree-

ment following fu ire of the specific facts and

policy provis the coverage defense is

asserted and th: YS gations, and liabilities of

the insurer ng the pendency of the

subject litig

3. Retains independent insel which is mutually

agreeable to the parties. . .

See A uto Own rs Insuranc: Co. Vv, Salvia, 472 So.2d 486,

488 (Fla. Dist. Ct. App. 1985) (holding insured’s lack of

cooperation would not excuse insurer from strict com-

pliance with one of three available

$ 627.426 (2) (b).

options under

Plaintiffs have moved for summary judgment declaring

that INA has waived its defense of nondisclosure by not

compiying with these requirements of Florida law. In its

July 23, 1985 Answer, INA asserts that in applying for

insurance policies for the period 1980-1982, plaintiffs

failed to disclose information about the first series of

dioxin-related claims that had been filed against them.

Plaintiffs assert that information about these claims was

provided on July 19, 1983 at a major presentation made

by plaintiffs to all defendants except one.* At this meet-

» American Home, although invited to attend the |

resentation,

chose not to send a representative,

30a

ing, plaintiffs notified defendants of all claims that had

been filed to date, including the claims on which INA now

bases its nondisclosure defense. Two years later, when

answering the complaint in this case, INA advised plain-

tiffs of its intention to assert this defense.

The court previously addressed the issue of INA’s

waiver of its nondisclosure defense in its January 8,

1987 Memorandum. Plaintiffs had argued that INA

waived its nondisclosure defense by not asserting it

shortly after receiving a December 16, 1982 letter from

plaintiffs notifying it of Bliss’ activities and the exist-

ence of lawsuits filed by individuals and horse stables

against IPC and Bliss. The court found that the

“sketchy one-paragraph summary of a pre-1980 dioxin-

related litigation contained in the December, 1982, letter’’

was insufficient to show as a matter of law that INA

had the requisite knowledge to trigger the notice require-

ments of the Florida statute. Memorandum of January

8, 1987 at 12-13. |

Unlike the December 16, 1982 letter, however, which

the court noted “gives no dates or specific underlying

facts about those lawsuits,” the July 19, 1983 meeting

contained presentations specifically intended to describe

the history and status of the first series of claims, whose

earlier nondisclosure is the basis of INA’s statutory non-

disclosure defense.

Florida statute § 627.409(1) states that an insured’s

failure to disclose information material to insurer’s deci-

sion to insure, in response to a request for that informa-

tion, bars recovery on the policy. See Memorandum of

Jan. 8, 1987 at 6. Continental Assurance Co. v. Carroll.

185 So.2d 406, 409 (Fla. 1986). Where the undisclosed

information was never requested, however, the statute

does not apply. Roe ss UV. ot: Paul Fire and Ma) ine Insur-

ance Co., 383 F.Supp. 1231, 1236 (M.D. Fla. 1974).

3la

Absent an insurer’s request, the common law defense

of intentional materia] nondisclosure, or fraud, is avail-

able. See id. at 1237 (“where no inquiry is made about

matters alleged to have been concealed, the insurer may

avoid the policy only by proving that the concealment

was in fact material and. further, that the withholding

of such information was intentional and fraudulent”).

[INA claims that plaintiffs failed to disclose informa-

tion on the dioxin-related claims filed in the five years

before plaintiff entered into negotiations for coverage

from INA. These claims have come to be known as the

“first series of claims.”

Plaintiffs assert that “the history and status of the

first series of claims” was presented as part of a “de-

tailed explanation of the history of the Missouri dioxin

claims,” as well as a part of a separate “detailed de-

scription of the first series of cases.” Plaintiffs add that

INA was informed of the dates on which these claims

were filed by an attachment to the June 28, 1983 letter

that invited INA to the July 19, 1988 meeting.”

INA does not deny that this information on the first

claims was presented at the July 29, 1983 meet-

ing. Instead, INA argues that its nondisclosure defense

series 0]

Is based on a fact that it learned in discovery: that while

Pree.

Pralnuuts were applying for insurance during 1980-82,

tney were also pursuing indemnification from various

Insurers for one or more of the claims within this first

series filed during the 1975-79 period. This fact, INA

contends, refutes plaintiffs’ explanation that the first

aims had not been disclosed to INA because

they had been assigned to policy years prior to 1975-79.

series of «

INA did not need this information, however, to estab-

lish a prima facie nondisclosure defense under the Flor-

Ida tatute hecause no showing of fraud or the intent

ae) CON 9] 1S reg ired. See & rroll. 185 S0.2d at 109.

32a

INA’s common law defense of intentional nondisclosure

or fraud requires this additional element of intent. Plain-

tiffs have not suggested that they revealed any informa-

tion at the July 19th meeting that would have put INA

on notice of the applicability of this common law de-

fense. The court concludes, therefore, (1) that the

July 19, i983 meeting provided INA with sufficient basis

to assert a statutory nondisclosure defense but (2) that

plaintiffs have not shown that they are entitled to a

judgment barring INA from asserting its common-law

intentional nondisclosure or fraud defense.

INA, along with other defendants, argue that the in-

formation presented by plaintiffs at the July 19, 1983

meeting cannot form the basis of a waiver of rights by

INA or these other defendants. This conclusion, they

assert, is compelled by the public policy favoring settle-

ment embodied in federal rule of evidence 408. Rule 408

states, in part, that “Evidence of conduct or statements

made in compromise negotiations is [|] not admissible.”

Fed. R. Evid. 408.

Plaintiffs counter that Rule 408’s prohibitions are lim-

ited to situations in which settlement discussions are

used to prove liability, not where factual information

presented during such discussions negates a claim of ig-

norance or lack of notice. See Breuer Elec. Mfq. Co. v.

Toronado Systems of America, Inc., 687 F.2d 182, 185

(1982) (concluding “ ‘settlement’ evidence was properly

presented below to rebut defendants’ assertion that they

had not been aware of the issues until the suit was

filed”: Council for the National Register of Health Serv-

ice Providers in Psychology v. American Home Assur-

ance Co., 632 F.Supp. 144, 146 n.l (D.D.C. 1985) (al-

lowing evidence relating to settlement negotiations to

negate claims of bad faith on the part of the insurer) ;

NAACP Legal Defense and Education, Inc. v. United

States Dep’t of Justice, 612 F.Supp. 1143, 1146 (D.D.C.

1985) (concluding Rule 408 limits admission of settle-

33a

ment negotiation evidence only where used to prove li-

ability at trial; doesn’t form basis for broad FOIA dis-

covery privilege). The court agrees with plaintiffs.

INA, along with other primary insurer defendants,

argues further that the Interim Agreement they en-

tered into with plaintiffs contains a reservation of rights

provision that specifically precludes plaintiffs’ waiver

argument. This provision, quoted at length above,’ in-

cludes the statement “except as otherwise specifically

provided herein, no waiver cr estoppel shall arise as a

result of this Interim Agreement, or any delay in its

having been undertaken, nor shall any exclusion or other

limitation be considered waived.”

Plaintiffs argue that this language does not act retro-

actively to cure a waiver that had occurred during the

six to seven month period between the July 19, 1983

meeting and the effective date of the agreement, Febru-

ary ] 1984, They note that the Agreement is titled a

Standstill” arreement.

Defendant INA emphasizes the provision’s specific

statement that no waiver or estoppel should result from

any delay in reaching this agreement. INA contrasts

this language in the agreed-to version with an earlier

proposal by plaintiffs that was not accepted, which would

have reserved “the rights and obligations of the parties

the date of this Agreement.” ! The clear implica-

— under INA’s reading, is that in this agreement

plaintiffs agreed to forego their right to the claims of

waiver wl estoppel ;

»t

issue here.

The Court concludes that this reservation of rights provi-

sion does not prevent Florida statute § 627.426(2) from

barring INA’s stat utory nondisclosure defense where IN A’s

failure to satisfy the statute’s requirements did not result

from the time delay in reaching the Interim Agreement.

" See supra part I (“Factual Background”

‘t Attachment A to Plaintiffs’ Waiver Motion. Exhibit

anne”

34a

The Florida statute § 627.426(2) (b) may be satisfied, as

one of three options, where the insurer “[o]btain[s] [|]

from the insured a nonwaiver agreement following full

disclosure of the specific facts and policy provisions upon

which the coverage defense is asserted... .” Fla. Stat.

§ 627.426(2) (b) (2). Under the circumstances of this

case, this procedure, like any of the three options, must

be carried out no later than 90 days from the time the

insurer knew or should have known of the coverage

defense.

The Interim Defense Agreement became effective Feb-

ruary, 1984, approximately six months after INA was

provided the information necessary for it to determine

the existence of a statutory nondisclosure defense. That

nonwaiver agreement, however, was not preceded by

INA’s full disclosure of the facts and policy provisions

upon which it intended to base its nondisclosure defense.

That defense itself was not disclosed until July, 1985.

Because of its failure to fully inform plaintiffs of its

defenses before obtaining the reservation of rights

nonwaiver agreement, INA has not satisfied this statu-

tory requirement.

Nor has INA complied with the terms of the other

two options available under § 627.426(2). One of these

options allows an insurer to retain “independent coun-

. ~e . 1? . ‘ > ‘ » . ‘9 s)

sel which is mutually agreeable to the parties.” Fla.

‘4 ror o ‘ ] jé rT rt > - ;

Sta 627.426(2) (b) (3). The Interim Agreemen

] } ~ 4 4+] ‘ : . . . .

clearly indicates that defense counsel is not independent.

Under the agreement, defense counsel is appointed by and

ad e . .

171] ith « ‘ ‘ ) . ,¥Y)) ] . ;

cOnSUITS W1tN a Management Committee made up of rep-

. ‘ . la} ++ ,OlY mNCIIWAY ] 1;

resentatives of plaintiffs and their insurers, including

INA. Management Committee decisions, moreover. aré

generally decided by majority vote, with ties being de-

—.

cided in fIavor or the

representatives,

35a

A final option allows the insurer to give written notice

of its refusal to defend. Fla. Stat. § 627.426(b) (2) (1).

INA did refuse to defend plaintiffs by letter of April 29,

1983." This notice, however, did not assert the nondis-

closure defense as a basis for denying coverage. As a

prerequisite to properly denying coverage under the stat-

ute, the insurer must first provide written notice of a

reservation of rights to assert that defense. The need

for specificity is fairly discernible from the Statute’s

language regarding subdivision (a) :

(2) A liability insurer shall not be permitted to

deny coverage based on a particular coverage defense

unless:

(a) Within 30 days . .. written notice of

reservation of rights to assert a coverage de-

fense is given

Florida Stat. § 627.426(2) (emphasis —: Subse-

quent to its denial of coverage, moreover, INA effective ly

revoked that denial and assumed a role in the re fense by

entering into the Interim Agreement. Only much later,

in July of 1985, did INA provide written notice of its

intent to assert a defense of nondisclosure.

This discussion makes clear, then, that “primary in-

surer INA has failed to satisfy the statute’s require-

ments under any-of the three options. This failure is not

due to any delay in undertaking the Interim Agreement

but results from the lack of specific notice of the non-

disclosure defense in that agreement or any other INA

communications with plaintiffs prior to July 23, 1985.

The statutory prohibition that a liability insurer shall

>] |

rance Lon ny ot Nort} An I < LUO Plai I ff \ ( T Tor

5 I l J agment i inst Certain Defendants Wit? Res ect to

t \\ Cl! ol Vetle St it standst | ] rim De renst \g ree

» 4

Attachment A to Plaintiffs’ Waiver Moti n, Exhibit &

36a

not be permitted to deny coverage based on a particular

coverage defense unless the statutory requirements are

satisfied, cannot be avoided by the nonwaiver provision

of the Interim Agreement.

INA argues that plaintiffs have shown no actual preju-

dice or detrimental reliance to justify applying the equi-

table doctrine of waiver to its defenses. Plaintiffs’

motion, however, is not based on general equitable princi-

ples but is grounded in a statute which contains no

explicit reference to the need for prejudice before its

sanctions will be triggered.

The legislature’s decision to set up several alternative

procedures that meet the statute’s notice requirements,

and to establish specific time periods in which to satisfy

them, suggests that it is complete and includes no such

implied condition. Cf. Salvia, 472 So.2d at 488 (requir-

ing strict compliance with time limits of § 627.426(2) (b)

(3) because statute gave insurer two other ways to sat-

isfy requirements of subdivision (b)). INA has suggested

no reason that such a condition should be read into the

statute. Absent some reason to believe that the legislature

intended prejudicial reliance to be-an implied condition

to the statute, the court will not read such a requirement

into it.

The court concludes that no material issue of fact ex-

ists as to INA’s knowledge of the existence and history

of the so-called “first series” of claims, as of the July

19, 1983 meeting. The information, the court finds, is

sufficient to establish that INA knew or should have

known of the existence of its statutory nondisclosure de-

fense on or shortly after that July 19, 1983 meeting. The

parties do not dispute that INA first raised that defense

in its Answer to Plaintiff’s First Amended Complaint,

on July 23, 1985. The court concludes, as a matter of

law, that Florida statute § 627.426(2), bars INA from

denying coverage under its primary insurance policies

on the basis of this statutory nondisclosure defense.

ola

Plaintiffs’ motion for summary judgment to this effect

is granted.

b. Excess Insurance Policies

In addition to its primary insurance policies, INA also

provided excess insurance coverage to plaintiffs The

court’s analysis of plaintiffs’ waiver argument varies in

several respects as applied to these excess policies. The

INA excess policies follow the form of the Corporate In-

surance & Reinsurance Company Limited (CIRCL) First

Excess Casualty Policies, which state that “this Agree-

ment shall be construed and in force in accordance with

and governed by the internal law of the State of New

York.” (emphasis added.) This contractual choice of law

will be honored by the court unless it is in fundamental

conflict with the law of Florida, which the court has

found otherwise would have the most substantial interest.

See IPC v. Aetna, 654 F.Supp. at 1357 (contractual

choice of New York law applies because not in funda-

mental conflict with law of Missouri): Restatement (Sec-

ond) of Conflict of Laws, § 187 (1971) (law of state

chosen by parties may not apply where “contrary to a

fundamental oo of a state which has a materially

greater interest”

Both Florida and New York have statutes requiring

insurers to notify insureds promptiy of any basis they

intend to assert in denying cover age.

The New York statute, N.Y. Ins. Law § 3420(d) (Me-

Kinney 1985) (formerly § 167(b)) states in pertinent

part:

If under a liability policy delivered or issued for

delivery in this state, an insurer shall disclaim lia-

bility or deny coverage for death or bodily inj

arising out of a motor vehicle accident or any other

type of accident occurring within this state, it shall

give written notice as soon as is reasonably

poss1oile

aa nn

38a

of such disclaimer or liability or denial of coverage

to the insured and the injured person or any other

claimant.

The statute applies to comprehensive general liability

policies as well as automobile policies. See Kutsher’s

Country Club Corp. v. Lincoln Insurance Co., 119 Mise.

2d 889, 465 N.Y.S.2d 136, (N.Y. Sup. Ct. 1983). If no-

tice of a coverage defense is not given within a reason-

able period of time, the insurer will not be allowed to

assert it in seeking to avoid liability. Hartford Insur-

ance Co. v. County of Nassau, 46 N.Y.2d 1028. 389 N.E.

2d 1061, 1062, 416 N.Y.S.2d 39 (1979).

The Florida statute similarly requires that “A liabil-

ity insurer shall not be permitted to deny coverage based

on a particular coverage defense unless” (1) it gives its

insured “written notice of reservation of rights to assert

a coverage defense” within 30 days after it knew or

should have known of the defense, and (2) within the

next 60 days either (a) gives written notice of its re-

fusal to defend the insurer; (b) obtains a nonwaiver

agreement after full disclosure of the factual and policy

grounds of the coverage defense asserted, as well the in-

surer’s duties, obligations and liabilities both during and

following the litigation; or (c) retains independent coun-

sel agreeable to both parties. Fla. Stat. § 627.426(2). Se

Auto Owners Insurance Co. v. Salvia, 472 So.2d at 488.

The manner in which these statutes apply to excess

insurers is in question here. As the discussion that fol-

lows will explain, the court finds no fundamental con-

flict between New York and Florida law on this issue.

It is settled law in New York that the notice statute

applies to excess insurers as well as to primary insurers.

Zappone v, Home Insurance Co.., 55 N.Y.2d 131, 432 N.E.

2d 783, 447 N.Y.S.2d 911, 913 (1982) (citing Preisch v.

.D.2

Continental Casualty Co., 55 A ).2d 117, 389 N.Y.S.2d

39a

700 (N.Y. App. Div. bode mot. for lv. to app. den., 41

N.Y.2d 802, 362 N.E.2d 626, 393 N.Y.S.2d 1026 (1977).

An excess insurer’s aan te Nee under that statute are

not triggered, however, merely by the insurer’s knowledge

of a claim and its defenses.

As a general matter, an excess insurer has no obliga-

tion to defend or indemnify its insured until the primary

insurer’s coverage has been exhausted. Thus, New York

courts have held that an excess insurer’s obligations un-

der the notice statute begin only at that time. See All-

city Insurance Co. v. Sioukas, 51 A.D.2d 525, 378 N.Y.2d

711, 712 (N.Y. App. Div. 1976) (“since it did not have

a policy affording coverage to the respondent until the

primary coverage had been exhausted, it had no duty to

serve a notice of disclaimer’), aff'd on mem. below, 41

N.Y.2d 872, 362 N.E.2d 623, 393 N.Y.S.2d 993 (1977);

Zappone v., Hom Insurance Co., 447 N.Y.S.2d at 915-16

& n.l (citing Preisch v. Continental Casualty Co. as

“holding that a duty arises to give notice once the pri-

mary carrier has fulfilled its obligation”). Since the pri-

mary insurers’ coverage has not been exhausted; as an

excess insurer, INA is not yet subject to the require-

ments or the consequences of the notice statute. This con-

clusion is fully consistent with Florida law, as interpreted

below in the court’s analysis of the Nondisclosure De-

fense of American Home, Lexington & ISOP.

The court concludes that, even though INA was or

should have been aware of its statutory nondisclosure

defense with regard to its excess policies as much as its

primary policies, INA’s excess policies suffer no loss of

defenses under Fla. Stat. § 27.426(2) because their no-

tice obligations had not ” begun. Plaintiffs’ motion for

summary judgment barring INA from defending against

coverage under its excess policies on grounds of nondis-

closure is denied.

40a

B. American Home, Lexington & ISOP Nondisclosure

Defense

In February 1986 defendants American Home, Lex-

ington and ISOP sought leave to file an Amended An-

swer,'* including in that pleading a defense of nondisclo-

sure. This nondisclosure defense was raised for the first

time in the Joint Opposition to Plaintiffs’ Motion for

Partial Summary Judgment, filed on September 16, 1985.

In their answers to interrogatories, dated June, 1986,

these three defendants cite as grounds for this defense

that even plaintiffs “knew as early as 1974 that Rus-

sell Martin Bliss had sprayed numerous horse arenas and

roads in Missouri with waste oil which contained dioxin,”

plaintiffs had failed to disclose this information when ap-

plying to purchase their 1975 policies from these defend-

ants.’

Plaintiffs contend that by waiting until 1985 to assert

this defense, when they knew the essential facts under-

lying it in 1983, these defendants have not complied with

the notice requirements of Fla. Stat. § 627.426(2) and

so have waived their right to contest liability on this

ground. American Home, Lexington and ISOP assert

that the time requirements of the Florida statute should

not begin to run against them, as excess insurers, until

the underlying primary coverage has been exhausted. As

this has not yet happened, under defendants’ interpreta-

tion the statute’s requirements would not yet have been

triggered with regard to them.

The court agrees with defendants. Although no Florida

state court has yet addressed the issue, the central pur-

pose of the statute and the principles of established Flor-

ida common law convince this court that the statute’s

14 The Amended Answer was filed on May 19. 1986.

15 Attachment J to Plaintiffs’ Waiver Motion at 21 (American

Home); Attachment K at 17 (ISOP); Attachment L at 18 (Lexing-

LGN )

4la

notice requirements are not triggered with respect to

excess insurers until the underlying primary coverage

has been exhausted.

The United States District Court for the Southern

District of Florida recently examined this issue, reach

ing a similar conclusion. See Pepper’s Steel & Alloys,

Inc., v. United States Fidelity and Guaranty Co., 668

F.Supp. 1541, 1543-44 (S.D. Fla. 1987). In that case as

well as here, the plaintiffs sought a defense from their

primary insurers, conceding that their excess insurers

had no duty to defend. The court, therefore, found the

statute inapplicable to excess insurers because it “is de-

signed to address problems arising from disputes regard-

ing whether, how and under what circumstances and con-

ditions a defense will be provided for an insured pursuant

to a defense provision of an insurance contract.” Jd. at

1544,

Under this interpretation, the statute would operate

consistently with established principles of Florida com-

claiming

mon law estoppel. In general, an insured

estoppel because of a delay in disclaiming liability mus

show that its rights were prejudiced thereby.” Phoenix

Assurance Co. of Ne Ww York U. Hendry Corp., 267 So.2d

92, 94 (Fla. Dist. Ct. App. 1972) cert. dismissed, 277

So.2d 532 (Fla. 1973); Centennial Insurance Co. v. Tom

Gustafs Industries, Inc., 401 So.2d 11438, 1144 (Fla.

Dist. Ct. App. 1981), petition for rev denied, 412 So.2d

471 (Fla. 1982). Because an insured ordinarily does not

rely on an excess insurer for its defense, at least until

the primary coverage is exhausted, it would not be preju-

diced by delay in the excess insurer’s assertion of cover-

age defenses.

It is true of course, that as an enactment of the Flor-

ida legislature, section 627.426(2) is not necessarily

bound to common law precedents. Cf. Auto Owners I[n-

surance Co. v. Salvia, 472 So.2d at 488 (requiring strict

compliance with statute). This fact, however, does not

42:

require the court to apply the statute in disregard of long

established principles of Florida insurance law.

Plaintiffs would have the court read the statute’s

notice obligations as applying to excess insurers exactly

as they would be applied to primary insurers. Plaintiffs

concede, however, that its excess insurers have no present

duty to defend. Nor do excess insurers have any con-

tractual obligation to indemnify plaintiffs until the un-

derlying primary coverage has been exhausted. Metro-

politan Property and Life Insurance Co. v. Chicago In-

surance Co., 479 So.2d 114, 116 (Fla. 1985) (primary

policy must be exhausted before excess policy can be

reached); Gulf Insurance Corp. v. Continental Casualty

Co., 464 So.2d 207, 210 (Fla. Dist. Ct. App. 1985) (ex-

cess insurer’s policy “not invoked” when claim settled

within primary coverage limits).

It seems unlikely that the Florida legislature intended

to impose notice requirements on excess insurers that

have no relation to their contractual obligations to defend

or indemnify insureds. Unlike the court in Pepper’s Steel

& Alloys, however, this court

ute wholly inapplicable to excess insurers. Instead, the

ute Wholly INapplicable to excess insurers. instead, the

does not consider the stat-

court understands an excess insurer’s obligations under

he statute to be triggered at the same time its con-

tractual obligation to defend is activated.

Plaintiffs seek to limit the applicability of Pepper’s

Sieel by arguing that its holding was restricted to sub-

section (2) (b) of the statute and that defendants are

still bound under subsection (2) (a) to supply a written

reservation of rights to assert a defense, within 30 days

of the time they knew or should have known of that

defense. The court, however, finds the reasoning of

Pepper's Steel to apply to the notice requirements of

both subsections as the court understands this statute to

e an integrated statement of an insured’s notice re-

sponsibilities, once they are triggered.

43a

The Court of Appeals of New York State, which has a

comparable statute,"® has construed its obligations on ex-

cess insurers in a similar manner. See Zappone v. Home

147

N.Y.S.2d 911, 915-16 (1982) (“since an excess carrier

‘did not have a policy affording coverage to the respondent

Insurance Co., 55 N.Y.2d 131, 482 N.E.2d 783,

until the primary coverage had been exhausted, it had no

duty to serve a notice of disclaimer;’”’ quoting with

uate

proval Allcity Insurance Co. v. Sioukas, 51 A.D. 525,

N.Y.S.2d 711, 712 (N.Y. App. Div. 1976), aff'd 41 N.Y.2d

872. 362 N.E.2d 623, 393 N.Y.2d 993 (1977)).

la, ro

The court finds that these excess insurer defendants’

obligations under the Florida statute have not yet been

triggered and concludes that as a matter of law that

plaintiffs are not entitled to a judgment barring defend-

ants American Home, Lexington and ISOP from assert-

ing their nondisclosure defense.

ia Uniqard Misrepre sentation of Mat rial Fact Detense

In its Answer of July 23, 1985, Unigard contends tl

plaintiffs’ rights under its excess insurance policy for

1973 “are unenforceable due to breach of warrant, mis-

take, misrepresentation and/or omission of material fa

by plaintiffs “3 Plaintiffs contend that Unisar

waived its misrepresentation of material fact defense by

failine to assert that defense within the time period re-

quired under the Florida statute. Unigard acknowledge

that it learned in mid-1983 the information it alleges

improperly omitted or misrepresented and which form

the basis of this defense: (1) that IPC knew in 197

tl IPC was being sued as a result of Bliss’ act

and (2) that the Center for Disease Control was

—

[3 hard @,

SY fe

A, ¢

1)-

‘

44a

gating dioxin contamination resulting from Bliss’ activi-

ties."* This information then, clearly was adequate to

have allowed Unigard to assert a statutory nondisclosure

defense under Florida law in 1983.

Kven if defendants had sufficient information to have

notified plaintiffs earlier, this court has held that exce

insurers’ obligations under the Florida statute are not

triggered until primary coverage has been exhausted. As

this has not yet occurred, Unigard has not breached the

statute’s requirements. Plaintiffs are not entitled, as a

matter of law, to a judgment barring excess insurer Uni-

gard from asserting its misrepresentation-of-material-fact

defense.

1). US. Fire Misr pre S¢ ntation and Fraud D f¢ nSeS

Karlier in this case, the court stated that contracted for

choice-of-law provisions would be given effect unless the

law of the state chosen was in fundamental conflict with

the law of the state that otherwise has the most substan

tial interest. See IPC v. Aetna, 654 F.Supp. at 1357

(New York law applies because not in fundamental con-

flict with. Missouri law). The U.S. Fire policies follow

the form of the CIRCL policies which state that “this

Agreement shall be construed and in force in accordance

with and governed by the internal law of the state of New

York.”

In its Memorandum of January 8, 1987, the court de-

termined that Florida has the most substantial interest in

having its law applied to INA’s defense of nondisclosure

and its waiver. The court finds that, if it were not for the

parties’ choice of New York law, Florida’s interests would

also be predominant regarding U.S. Fire’s misrepresenta-

tion and fraud defenses. For U.S. Fire’s defenses, just

as for INA’s defense of nondisclosure, “the place of con-

tracting and the place of negotiation of the contract emerge

18 Attachment G to Plaintiffs’ Waiver Motion at 12-13

——— eee

+ " "

perrormance,

as far more significant than the place 0

tter of the contract, or place 01

’

location of the subject m:

business of the parties.” Jd. at 4 (citations omitted

As in the case of INA’s dealing with Charter, the neg

tiations leading up to the issuing of the policie

egy :

ein were

place largely in florida and the po

plaintiffs there

T N v5 ‘ , > L, ; Soares he « \ . V 5

U.S. Fire agrees with this analysis and that New Yor

law regarding waiver, as applied to the defense rn"

representation and fraud, is not contrary to a f

mental policy of Florida law. Plaintiff uggest that

Mlorida law should control but acknowledges that Nev

York law will apply if the court finds that express choice

of law provisions govern. New York and Florida ea

have a statute that requires insurers to notlry eir

wreds promptly if they intend tg deny coverage 1}

their policies. The application of each of the e statutes to

excess insurers has been discussed earlier b he

The court determined that the obligatior of bot!

Florida and New York statutes do not apply to

carriers until the under!ying primary covet re |

exhausted and that New York law posed no confi

any fundamental! policy of Florida law.

U.S. Fire did not assert its defense id

false swearing’ and “concealment and or ! ’

tion” until July 22, 1985, when it filed At

First Amended Complaint. Plaintiff now contend

should be barred from asserting those « fense yen

knew all of the information necessary to ass

defen

et as lll CC LL LOL A

—_—— --

46a

coverage. Among other reasons, U.S. Fire contends that

its delay in asserting defenses is reasonable under the

circumstances of this case, especially because as an excess

insurer, U.S. Fire is not required to notify plaintiffs of

its coverage position until the primary coverage has been

exhausted.

The court concludes that it is not necessary to deter-

mine whether plaintiffs have shown that U.S. Fire had

sufficient information to assert its fraud and misrepre

sentation defenses in 1983. The analysis of the New York

statute’s application to excess insurers, offered earlier

with regard to INA’s obligations as an excess insurer,

clearly indicates that U.S. Fire similarly is not barred

under that statute from asserting these defenses, The

court concludes therefore that even if plaintiffs are able

to show that U.S. Fire had sufficient knowledge to notify

them of its fraud and misrepresentation defenses, plain-

tiffs are not entitled—as a matter of New York law—to a

judgment barring U.S. Fire from asserting these defenses

i 4 ;

IV. Contract Inte rpre tation Tssues

In an earlier decision in this case, the court concluded

that the contract issue of the appropriate trigger-of-

coverage under the policies is governed by Missouri law.

IPC v. Aetna, 654 F.Supp. at 1356-57. In determining

the principal location of the insured risk, the court noted

that although two of the plaintiffs were located in Florida.

éé in on 4

it is even more significant that all defendants knew tha

Florida plaintiffs [COC and TCC] were holding com-

panies of plaintiff IPC and that IPC was engaged in

terminaling and marketing various petrochemical] prod-

ucts in Missouri.” Jd. at 1357. The court found the

trigger-of-coverage issue to be “strongly connected with

the location of the insured risk,” as it “speaks to whether

defendants are liable for indemnification to plaintiffs

when injury or property damage is shown in the unde)

lying dioxin-related suits.” Jd.

a eo . 2

47a

Based on the court’s prior rulings in this case, plain-

tiffs contend that Missouri law should control issues of

waiver regarding interpretation of the insurance policies.

These include: (A) INA’s Mitigation Defense, (B)

Aetna’s Pollution Exclusion Defense, (C) Hartford’s Pol-

lution Exclusion Defense, (D) Hartford’s Conduct in Dis-

regard of Law Defense, (E) American Home, Lexington

& ISOP’s Pollution Exclusion Defense, and (F) Harbor’s

Pollution Exclusion Defense. All of these defenses center

on the issue of defendants’ liability to indemnify plaintiffs

on the underlying claims. They are all, therefore, strongly

connected to Missouri—the location of the insured risk

and the damages resulting from Bliss’ activities. Defend-

ants do not dispute plaintiffs’ reasoning. These choice of

law principles are applied to each issue below.

A. INA Mitiaati // De TCYvISE

INA has asserted as a defense that plaintiffs failed to

mitigate damages resulting from dioxin spraying in Mi

sourl. This defense addresses the activities and omissions

of plaintiffs to minimize damage in Missouri from dioxin

to the land of that state. This defense then, has a very

strong connection to Missouri as the location of the it

sured risk and is properly decided according LO Missouri

In its July 23, 1985 Answer, INA claims that even

after learning that Bliss had sprayed dioxin as a dust

suppressant on roads and horse stables in Missouri, plain-

tiffs failed to mitigate. minimize or avoid damagces from

resulti uoxin claims. Plaintiffs assert that adequate

information was provided at the July 19, 1983 meeting

concerning governmental Investigations and detection of

the dioxin, the resulting claims, and piaintiff’s defense

team, tha INA hould have known of the existence of a

b for a failure-to-mitigate defense Because it knew

of and cid not assert this defense, plaintiffs argue, INA

has waived its right to assert it as a ground for

AI TER ENA PAA CIF MH OM PN MOVIE GLTET yy POR:

. + ad “ 4

1Sa

INA argues that plaintiffs have not shown that the

July 1983 meeting revealed that plaintiffs had known, in

the 1970's, of Bliss’ spraying dioxin-contaminated waste

|! as a dust suppressant and the presence of dioxin in

this land posed severe risks to persons and property. INA

implies that this information was learned only through

discovery in this case. Although their detailed listing of

matters discussed at the July 1983 meeting suggests other-

wise, plaintiffs have not specifically asserted that in fact

they communicated the facts of their knowledge in the

1970's of the nature and danger of Bliss’ activities to INA

before this case was filed. This is equally true, of course,

with respect to both INA’s primary and excess insurance

policies.

The court finds that plaintiffs have failed to establish

that before the start of this case, INA possessed sufficient

information to enable it to assert its failure-to-mitigate

defense, either with respect to its primary or excess poli:

cies, At this point then, plaintiffs are not entitled to

judgment barring INA from asserting this defense.

RB. Ae fra pP I] hon Revel r90N De ft ¢ rSe

Aetna has asserted as a defense that the underlyine

‘ . > ? 4 } | . > °

‘dioxin-related claims are based upon allegations of the

‘discharge,’ ‘dispersal’ and ‘escape’ of ‘toxic chemicals’ and

‘waste materials or other irritants, contaminants or pol-

lutants into or upon land,’ and therefore the pollution

exclusion is prima facie applicable to those claims.”

Aetna noted further in its response to plaintiffs’ inter-

rT 2 : ] t}

rogatoryv that dliscovery is not complete as to whether

}

the discharge, dispersal or escape was ‘sudden and acci-

dental’ within the meaning of the exclusion. nor have the

a : ain — ' 1. +h} . 1e |} . mitoinan 3%

pacts necessary O resoive NS SSue een ascertained

chment F to Plaintiffs’ Waiver Motion at 34 (R

, } + ‘¢

TM A

Yr Orvrer sy

e ‘ vw wise = ~ a 2

Wesyor ¥v Trg PT hen ¥

49a

the underlying cases.” The pollution exclusion defense and

its Walver ure closely connected with Missouri. the loca-

tion of the insured risk, because that is where the “pol-

lution” is alleged to have occurred. Missouri law appro-

priately should control whether plaintiffs are to be indem-

nified from the consequences of their activity in that state.

ollution exclusion defense for the

rst time in its Answer of June 23. 1985. Plaintiffs

rgue that this defense should be barred since informa-

juate to assert this defense was known to Aetna

no later than the July 19, 1983 meeting. Plaintiffs point

o a letter dated September 14, 1978 in which they noti-

. a Fag 41 ~~ . ~ ¢ Y «

explained. ems from the alleged disposal of waste

materials containing the toxic substance dioxin bv using

tnem | { C In certain horse arenas and staples,

=y 4 } > aft " ] : a 1} nwt |

ne letter noted further that the suit alleged dioxin had

Aetna retained counsel and investigated the Drinkard

a. i ae? one ‘ ded : aa

claim. the July 19, 1983 meeting provided Aetna with

+ M + . + +} «ft . f } 1; ; ] " :

excensive Intormation on the nature of the dioxin claims

‘ . ye4 . £ Into Ky +} rm °O A et ~« mrYrr ) txr79 +}

asserted O date. urtnermore, Aetna corresponde Witn

Ins +, 47 ‘ " . } : , am : . P wes Oo” 1h ‘)*)

plaintiifs on a number of occasions from 1978 to June 23.

LJSo, reserving its rignts o} denving coverage, but solely

] . ] ‘ ] « )} . . P . : —

rround at the alleged damages did not occ)

‘uring one of its policy periods. It was not until its

7. +4 »)oO ( a L, - , + | ] sont soe

Answer on June 23, 1985 that Aetna notifie plaintiffs

? ? , ] ? 1, Y) \ ) y mY," ] y ? Yr) ] } Y)

‘4 . ‘ ‘ St'< | ‘ t cA t Ui Cie] t ’ 4

S1O0N YY y

; — .

\etn contends that piaintiffs “knew far more about

e extent of Russi Bliss spraving activities tnal I

’ 7 ] + + + . . >

reve | 5s 19S 1 ce letter, and tha Careru

a “ae : .

n LOTS ‘notice It the extent of the alleged dioxin

Attacl t A to Pl ffs’ W r Mot Ex) 12, at © 44

50a

contamination to ‘certain horse arenas and stables.’” ”

Aetna emphasizes the continuing uncertainty about facts

essential to a determination of whether the discharge was

“sudden and accidental.”

There is no dispute, however, that by July 19, 1983

Aetna had extensive information on the manner in which

Bliss was alleged to have disposed of the dioxin. This

information included the allegations of the ‘discharge,’

‘dispersal,’ and ‘escape’ of ‘toxic chemicals’ and ‘waste

materials or other irritants, contaminants or pollutants

into or upon land,’ the grounds pointed to by Aetna in its

Response to Interrogatory 25,*° asserting that the pollu-

tion exclusion was prima facie applicable.

The court finds that Aetna knew or should have known

by this point of the existence of grounds for asserting a

pollution exclusion defense. Although new information

may have been uncovered in discovery, and factual ques-

tions remain, this information was not necessary before

plaintiffs could be notified of Aetna’s intention to assert

the defense. Aetna’s suggestion to the contrary is under-

mined by the fact that it asserted the defense in its

Answer of June 23, 1985, before substantive discovery

began. The court must now evaluate plaintiffs’ claim

that by failing to assert this defense promptly, Aetna

has waived it and is barred from asserting this ground

to avoid liability on the underlying claims.

Plaintiffs argue that under Missouri case law, when

an insurance company has denied coverage on a specific

ground, it may not later assert a different ground for

denying coverage, citing Aetna Casualty & Su ty Co. v.

Haas, 422 S.W.2d 316, 321 (Mo. 1968) (stating that

insurer may not assert a later gas exclusion basis for

denying liability after initially denying coverage for

22 See Plaintiffs’ Waiver Motion at 10 (quoting Letter from

J.H. Hill to Aetna (Sept. 14, 1978) ).

23 Attachment F to Plaintiffs’ Waiver Motion.

5la

house explosion on sole basis that property was in cus-

tody and control of insured exterminator): Stone v.

Waters, 483 S.W.2d 639, 645 (Mo. Ct. App. 1972) (hold-

ing defense that automobile not listed in policy schedule

barred because liability initially denied on other ground) ;

and State Farm Mutual Automobile Insurance Co. v. Cen-

tral Surety and Insurance Corp., 405 S.W.2d 530 (Mo.

Ct. App. 1966) (denying insurer’s su pplemental defense

that insured was not driving car on business. after in-

surer initially denied liability for anything more than

excess coverage). The pollution exclusion defense should

be barred in this case, they assert, because between 1978

and 1985 Aetna consistently denied coverage, or a

its rights, on the sole ground that the alleged dama

occurred outside of the policy periods.

Although the Missouri courts cited above made use of

the summary black letter formulation that the assertion

of one grounds for defense precludes later assertion of

different grounds, a broader view of Missouri law sug-

gests that this principle must be subject to the principle

of waiver and estoppel law. Defendants argue that the

Missouri doctrine of waiver of insurance defenses re-

quires that in the absence of an affirmative intention by

the insurance company to waive the defense, at. least

some element of estoppel must be present. See Grafe v.

Fidelity Mutual Life Insurance Co., 84 S.W.2d 400, 404

(Mo, Ct. App. 1935) (discussing waiver ne to failure to

assert defense when initially denying liabi > Doe v.

National Fire Insurance Co. of Hart arg 218 Mo. 266.

285 S.W. 961, 963-64 (Mo. 1926) discussing waiver due

to insurer instructing insured on how to make a state-

ment and too of loss); Bartleman v. Humphrey, 441

S.W.2d & 343 (Mo. 1969) (discussing waiver of for-

feiture ian unpaid pica lum, due to insurer treating

check as payment and 1 del: ng presentment of check for

payment).

Plaintiffs have not shown any direct evidence that

Aetna intended to waive its right to assert a pollution

exclusion defense. Indeed the record clearly suggests that

it did not. Although Aetna’s 1983 letters denied coverage

on the basis that the claims involved damages outside the

policy periods, each letter added that this denial was

“without waiver of any other policy conditions or de-

fenses.”” The Interim Agreement, signed by Aetna and

the plaintiffs, also included a statement that “no waiver

or estoppel shall arise as a result of this Interim Agree-

ment, or any delay in its having been entered, nor shall

any exclusion or other limitation be considered waived.”**

Nor have plaintiffs shown a sufficient “element of

estoppel” to support denying its defense. Plaintiffs assert

that the “trouble and expense” of bringing this action is

sufficient prejudice to justify barring Aetna from as-

serting its pollution exclusion defense. See State ex rel.

Shelter Mutual Ins. Co. v. Crouch, 714 S.W.2d 827, 828

(Mo. Ct. App. 1986) (‘no Missouri case has required

any more than a very slight degree of prejudice to the

claimant in this situation, it being held that the mere

trouble and expense of bringing suit is enough;” quoting

Morris v. Reed, 510 S.W.2d 234, 240 (Mo. Ct. App.

1974) ). It appears that the trouble and expense of this

suit would have been necessary in any case, however, as

Aetna denied coverage on a separate ground as well and

other defendants also have asserted pollution exclusion

defenses.

The court concludes that the “prejudice” asserted by

plaintiffs is insufficient as a matter of law to justify bar-

ring Aetna from raising its pollution exclusion defense.*®

Summary judgment would be inappropriate here even

absent this conclusion, however, based on a second ob-

jection to the application of this waiver rule here.

*4 Partial Joint Opposition to Plaintiff’s Waiver Motion, Attach-

ment at 5.

75 An analysis that supports this conclusion more thoroughly is

set out below in part IV.D (Hartford’s Conduct in Disregard of

Laws Defense).

53a

The Missouri courts have held that the doctrines of

waiver and estoppel will not apply in such situations to

“create” coverage where it is not provided under the

policy. See Lawrence v. New York Life Insurance Co.,

649 5.W.2d 461, 465 (Mo. Ct. App. 1983) (defense that

double indemnity coverage did not apply to risk of gas

inhalation not barred by insurer’s failure to inform in-

sured promptly of extent of coverage); State Farm

Mutual Automohbil Insurance Co. v. Hartford Accide nt

& Indemnity Company, 646 S.W.2d 379, 381 (Mo. Ct.

App. 1983) (defense that Excludes J excludes coverage

of automobile purchased during policy period for which

other insurance is purchased not barred even if insurer

initially denied coverage on other ground): Martinelli

Security Insurance Co. of New Haven. 490 S.W.2d

127, 434 (Mo, App. 1972) (insurer not barred from as-

usion for business pursuits despite insurer’s

suggestion at earlier trial that claim covered).

Under these cases, it is inappropriate to allow certain

enses to be implicitly waived by the failure to notify

he insured timely of such defenses where the insured

1} reasonable expectation of coverage under the

Explicit policy exclusions, such as a_ pollution

n, clearly call for the application of this limita-

tion on walver and estoppel because their clear notice to

n — oll : tain ¢2 : 4 ~~

VI Sssourl courts have allt wed Certain Vpes of defenses

he implicitly “waived ” cuch : LY Pe Pe ee eehial .

} t iil Lid L\ \ alived, SUCT] aS LUILIC!I ire pr VISIONS.

. 7* ° | 5 |

These pre VISIONS are conditions under general] contract

] 4 ¥ + = |

Sut as the insureds Diugation to notify promptly

Insurer Of a potential claim, which if not met. excuse

isurer trom peritorming on the contract. See Bartle-

Humphre (, 44] S.W.2d at 343 (‘forfeiture of

nN insurance contract Tor nonpavme! Ot premlum 1s not

. ’

A ) ed In he LW ind ri¢ COU ‘ il’€ |) m QO Sé 7

? } . > tx] } nel an ] yy + _

( mst; es W ( ( e an ele ) Walve

54a

to be implicitly waived may be viewed as consistent with

the rule against creating coverage because unlike the

case of explicit exclusion, in a forfeiture case the insured

did contract for insurance covering the risk at issue,

justifiably expects coverage under the policy, and reason-

ably will act in reliance on that expectation unless noti-

fied by the insurer of some grounds for denying coverage.

The Missouri courts have characterized this distinction

as one between creating coverage and preserving pre-

existing rights. See Stone v. Waters, 483 S.W.2d at 646;

Blew v. Connor, 328 S.W.2d 626, 681 (Mo. 1959) (en

bane) (referring reader to Court of Appeals decision,

310 S.W.2d 294, 303-04 (Mo. Ct. App. 1958) for full dis-

cussion of this point).

Plaintiffs argue that the Missouri Supreme Court held

in Aetna Casualty & Surety Co. v. Haas that policy ex-

clusions can be waived by an insurer’s failure to promptly

notify the insured of its intent to rely on them. See

Haas, 422 S.W.2d at 321. The Haas case did not involve

an exclusion provision integrated into the description of

policy coverage, however, and does not conflict with this

court’s analysis.

The Missouri appellate courts cited above as, which

hold that insurance coverage could not be created by the

doctrines of waiver and estoppel, considered and distin-

guished the Missouri Supreme Court’s decision in Haas.

In State Farm Mutual Automobile Insurance Co. v. Hart-

ford Accident & Indemnity Co., the court noted that Haas

involved a “purported exclusion,” contained in an _ at-

tached “rating classification sheet” that was held not to

modify the policy. 646 S.W.2d at 382. As such, it offers

no guidance about how the Missouri Supreme Court

would treat an argument for the implied waiver of an

explicit exclusion such as a pollution exclusion.

Lawrence v. New York Life Insurance Co. pointed out

that the Haas court had already determined that the al-

leged exclusion did not modify the policy before it applied

55a

the general rule that a stated reliance on one defense will

preclude the later assertion of a different defense.

Lawrence concluded that this additional, closing rationale

of the Haas court’s decision “did not actually rule any

viable issue in the Aetna [v. Haas] case and is therefore

dictum.” 649 S.W.2d at 466.

in some cases, as where the basis for the defense alleged

to have been waived is neither a forfeiture condition nor

an explicit exclusion provision.2° Nonetheless the rule

surely prevents the waiver of an explicit exclusion such

as the pollution exclusion clause which specifically states

that the activities encompassed by the exclusion are not

covered under the policy. To bar Aetna from asserting

this defense, according to the reasoning of the rule, would

be to rewrite the policy to cover risks specifically excluded

from it. Plaintiffs have not presented sufficient reason in

law or equity to do so. The court finds that Aetna has not

waived its pollution exclusion defense.

C. Hartford Pollution Exclusion Defense

In Hartford’s Answer to plaintiffs’ First Amended

Complaint, filed July 26, 1985, Hartford denies for the

first time any obligation to plaintiffs for “property dam-

age or bodily injury caused by the discharge of pollution

unless the pollution was sudden and accidental.” 27 Plain-

tiffs assert that as early as 1975, they gave Hartford

notice of how Bliss had discharged the dioxin. enabling

Hartford to assert a pollution exclusion defense if it in-

tended to. In a letter dated October 27, 1975. plaintiffs

informed Hartford of the J rry Drinkard, et al. claim.

“8 See, e.g., Stone v. Waters. 483 S.W.2d 639 (Mo. Ct. App. 1972

holding defense that automobile not listed in policy schedule barred

because liability initially denied on other ground; ruling said not

to create coverage but preseerve insured’s pre-existing rights

‘ Attachment B to Plaintiffs’ Waiver Motion.

56a

This letter stated quite bluntly, “Our contractor, instead

of safely disposing of the [dioxin] material, used it to

settle dust in certain horse arenas and stables.” **

There is no dispute that plaintiffs provided Hartford

with substantial information concerning the nature of

Russell Bliss’ disposal activities, and allegations relating

thereto, at the meeting in July 1983. The court finds

here, as with Aetna, that at least by the time of that

meeting, Hartford had sufficient information to notify

plaintiffs of its intention to assert a pollution exclusion

defense.

Plaintiffs have not shown that Hartford affirmatively

intended to waive its pollution exclusion clause by not as-

serting it prior to 1985. Moreover, any inferences to be

drawn from Hartford’s actions must be drawn in favor of

Hartford. Matsushita Electric Industrial Co. Ltd. v. Zenith

Radio Corp., 475 U.S. 574, 106 S. Ct. 1848 (1986). Hart-

ford attempted to reserve its rights in numerous letters

to plaintiffs before and after 1983. Hartford signed the

Interim Agreement, as did plaintiffs, which purported to

reserve the rights of all parties. This defendant also

claims that plaintiffs knew of its intention to rely on a

pollution exclusion defense for many years prior to its

July 26, 1985 pleading, as a result of oral conversations

between counsel.

In addition to their inability to demonstrate defendants’

intent to waive, plaintiffs have made no greater showing

of prejudice from Hartford’s delay than the trouble and

expense of bringing this suit, an effort that most likely

would have been necessary even if this delay had not oc-

curred. As the court’s analysis in part IV.D below ex-

plains, this is insufficient “‘prejudice”’ as a matter of law.

Hartford, like Aetna, seeks to assert as a defense that

the underlying claims come within the terms of its pollu-

tion exclusion clause and so are not covered by its policies.

“8 Attachment A to Plaintiffs’ Waiver Motion (Exhibit 4

57a

As this exclusion indicates that these risks are not cov-

ered under the policies, defendant argues, this defense

cannot be waived by delay in asserting it. Under these

circumstances, and for the reasons set forth earlier in

part IV.B (Aetna Pollution Exclusion Defense), the court

agrees and finds that Hartford is not barred from as-

serting its-pollution exclusion defense.

D. Hartford Conduct in Disregard of Law Defense

Also in its July 26, 1985 Answer, Hartford for the first

time asserts as a defense that its policies do not cover

“liability arising out of [plaintiffs’] actions or conduct in

express disregard of their legal obligations under state.

federal or local laws and regulations.” ” Plaintiffs argue

that the Vickers claira, which they notified Hartford ef

on December 16, 1982, raised this issue. The Vickers com-

plaint alleged that “the sale, distribution, use and method

of disposal of said contaminated waste oil by the defend-

ants constitutes a violation of the Federal Hazardous

Substances Act....

’°

Hartford responded to the Vickers claim with a “pro-

visional response” stating that it was “fully preserving

[its] rights.” *® Following the July 1983 meeting, which

Hartford concedes provided it with sufficient information

to adequately evaluate its coverage defenses, Hartford

contends that it continued to take the position that it was

fully reserving its rights as to whether it would or would

not defend or indemnify plaintiffs, until it had “fully re

viewed the matter.” *' Plaintiffs note, however, that al-

“8 Attachment B to Plaintiffs’ Waiver Motion (Hartford Answer

at {] PF

Support of Hartford Accident and Ir

to Plaintiffs’ Motion for Partial Summary Judgment Against Cer-

tain Defendants with Respect to the Waiver of Defenses. (“Har

rd’s Opposition to Plaintiffs’ Waiver Motion”

39 Attachment 2 to Memorandum of Points and Authorities in

;

ndemnity Company's Opposition

31 Attachment 3 to Hartford’s Opposition to Plaintiffs’ Waiver

o8a

though Hartford stated in a February 24, 1983 letter

that it “has now reviewed these matters completely,” in-

cluding the Vickers claim, Hartford failed to assert the

conduct-in-disregard-of-laws defense until much later.

The court finds that the Vickers complaint’s assertion

of a violation of the Federal Hazardous Substances Act

was sufficient to put Hartford on notice of the potential

applicability of this defense. Hartford gives no persua-

sive reason why a reasonably prompt investigation did not

enable it to determine whether the disregard-of-laws de-

fense was viable. Hartford’s claim that it continued to

provide only provisional responses, even if accepted as

true, does not explain why an investigation did not make

a final response possible. Hartford’s contention that it

has discovered new information, not provided by plain-

tiffs, that supports its defense does not refute plaintiffs’

well-founded assertion that it possessed sufficient infor-

mation to assert that defense in 1983.

The court finds from the undisputed facts recounted

above that shortly after receiving notice of the Vickers

claim, Hartford had sufficient knowledge as a matter of

law to assert their conduct-in-disregard-of-law defense.

The court must now determine whether by failing to as-

sert that defense until 1985, Hartford has waived it.

The court finds that Missouri law should properly gov-

ern this issue as the interests of Missouri are strongly

implicated in the question of whether plaintiffs should be

indemnified for conduct which it is alleged was in express

disregard of local, state and federal laws and regulations.

This defense is based on conduct which is alleged to have

occurred in Missouri and which is alleged to have been in

disregard of Missouri law.

Hartford argues that the conduct-in-disregard-of-laws

defense cannot be waived because to do so would be to

create coverage not originally provided under the con-

ract, See Lai ‘TEMCE : Ne iv York Life Insurance Co.. 649

— . a

59a

S.W.2d at 465: State Farm Mutual Automobile Insurance

Co. v. Hartford Accident & Indenmity Company, 646

S.W.2d at 381: Martinelli »v. Security Insurance Co. of

New Haven, 490 S.W.2d at 434.

As the court discussed earlier,’*? however, under the

law of Missouri certain insurance coverage defenses ma’

be waived, under the proper circumstances, when cover-

age for the risk was originally provided under the policy.

A defense may be barred, the Missouri courts have said

when to do so would preserve pre-existing rights, rather

than create coverage. Compare Stone v. Waters, 43

S.W.2d at 645 with Lawrence v. New York Life Insur-

ance Co., 649 S.W.2d at 465. See also Blew v. Connor,

328 5.W.2d at 631 (citing discussion in Court of Ap-

peals’ decision, 310 S.W.2d at 303-04).

Unlike its pollution exclusion defense, Hartford’s de-

4 . ] 4 > 4 . i245 4 - : > } _

fense that plaintiffs are not entitled to coverage because

they acted without regard for the law is not based

in explicit exclusion in their policies. Rather, if success-

ful, it would act to prevent plaintiffs from realiz ( -

eran that othe rw f was els } nr clec| rf f

policies. This defense then, is closer in kind to for-

te ure pro 1S]0 wt ‘a } rs ti é rorce] Y QT -

existing rights under a poli an it is t un ¢

policy exclusion, which designates « n ;

outside the co erage } vided { the policies T lyt

concludes that in the proper circumstances, Hartford’s

defense of conduct-in-disregard-of-laws may be

under Missouri law.

. ~ \ ,

Both parties agree t inde Missou } 5

ance cases the intention to waive mus a

else the conduct relied upon as constituting ¥ ane

1 . ‘ . 1 99

Involve some element or estoppe . , - -

] > 4 >

hood OT A? LPI V Al sy \Io. 14 24 ™~ VU ;

) ) cone et .

‘,Q 1924 empnnasis rina f y +}

4 ’ Ty T

~ T [\ R \ t }

60a

they do not need to show Hartford’s intent to waive this

defense because Hartford’s knowledge of the defense and

their failure to assert it clearly establishes this. Absent

some element of estoppel, however, Missouri law require

that waiver be shown either by “express declarations [or

if| implied by conduct, there must be a clear, unequivocal,

and decisive act of party showing such purpose, and so

consistent with intention to waive that no other reason-

able explanation is possible.” DBartleman v. Humphrey,

441 $.W.2d at 3438. The circumstances of Hartford’s de-

lay in asserting this defense clearly do not meet thi

standard.

Plaintiffs assert again that the “trouble and expense”

of bringing this action satisfies the requirement stated

in Schwab that “the conduct relied upon as constituting

waiver must involve some element of estoppel.” Plaintiffs

cite Shelter v. Crouch, 714 S.W.2d &27, and Morris ».

Reed, 510 S.W.2d 234, to support this assertion. Hart-

ford argues that although these cases support the viev

that only a slight degree of prejudice is required for

waiver, the filing of this suit does not satisfy even that

minimal threshold. Unlike in Crouch, for example, there

is no indication that the delay in Hartford’s asserting it

disregard-of-laws defense caused any prejudice to plain-

tiffs ability to prepare to meet that defense.

In Crouch, the insurer was barred from asserting an

arson defense that it had failed to raise when it first

denied the claim. The court recognized the likelihood of

prejudice in preparing to meet an arson defense, if an

appropriate investigation is not made promptly after the

loss, stating “{ilf certain defenses can be raised later,

an insurance company can make it impossible for an in-

sured to know what the real defense is and thus mislead

an insured into not investigating that defense. When the

insured learns of the defense it may be too late for a

proper investigation.” 714 S.W.2d at 828.

a |

In Morris as well, the court found that the insured had

suffered substantial prejudice from the insurer’s delayed

assertion of certain defenses: “Much more trouble and

expense has been caused to this plaintiff than just the

normal filing of a lawsuit. The evidence shows that Home

and its representatives followed a course of conduct cal

culated to deflect plaintiffs from the insurance compa

as his target....”’ 510 S.W. at 241.

There is no indication that plaintiffs have suffered a:

prejudice, outside of this lawsuit, as a result of H

ford’s assertion of this defence in 19%5. Plaintiffs do not

claim, however, that this suit would have been unnec

sary if Hartford had asserted this defense in 1943 o1

earlier. The fact that plaintiffs must now litigate th

issue raised by this defense does not constitute a suffi

cient “element of estoppel,” in the view of this court, to

justify barring this defense.

The court find that plaintiff are not entitled

judgment barring Hartford from asserting its defe

conduct in disregard of lav

I. Ame rican Home. Le rington OM [SOP Pollutio I.

f lusion De ICnSE

On September 2, 19%6 excess insurers American Home

Lexington and ISOP notified plaintiffs’ counse!

of their intention to reserve their rights, based or

coverage defense including pollution «

f ( TI defense had not been raised in the def a

wer or Amended Answer, nor In any p

communications with plaintiffs. Plaintiffs have mover

fo) Imma) judgme! jay) ing the f cle f¢ j

raising a pollution exclusion defense. Plaintiff

} y {: no tO j ert ae defey é y y {

quiring tne Wy formation necessary to establish

n Home, Lexingtor nd JSO] alve (

exclusion defense

ly a ny ri? {f ( vy r ( y

determine whet! they } , lef

( ed +} ’ {oO rY y y ( ‘

exclusion defense prior to September 1986. Lexington a

ISOP acknowledge that they attended the July 19, 1983

]

informational meeting. American Home, 1U 1S undisputed,

a i. 5 on oe ] 4 1 > is ’ >

did not attend the meeting and objects to plaintiffs’ im-

plicit suggestion that knowledge of the substance of the

meeting should be imputed LO it hecaust \f its corporate

relationship to Lexington and ISOP. American Home’s

nowledge of what transpired at this meeting is at least

partially in dispute

None of the three defendants disputes that it received

copy of the Wehner complaint by letter dated April 14,

1983. The complain aagen that Bliss, working for IPC,

dust-control measure on

unpaved roadways in alias ‘eee towns.” Ex. 5

at 17-18. The Wehner complaint clearly spells out the

method by which dioxin found its way to the roadways

1. American Home can hardly

assert that this complaint was insufficient notice merely,

yrayed [dioxin-laden o

and horse arenas of Misso

; Le, _ : a 1} - . rm. 17

because the “facts” asserted were allegations. These alle-

}

gyrations were cearly sufficient to warrant a prompt

Even leaving time for investigation, the court finds that

. aa ee rh . ] o% : 3 > os

American Home knew or should have known of the exist-

ence of grounds for its pollution exclusien defense by

late 1983. It is clear also that Lexington and ISOP simi-

< i «cA

: > Re Pa EE > . . Te ‘>

irly had sufficient knowledge following the July 19, 1983

meeting to afin even earlier notice to plaintiffs of its

1) 4° . . ry — —— . , :

llution exclusion defense. The court must now deter-

: rl, lL, . , P 4 has S76) 1% | . — a , ~

mine whethe} defendat S nave Wal ed nelr rig! ) ASM

— Tlaat ly snAnN f hh, Pe » 4 P 4 4

a pollution exclusion defense by falilnge’ to asse

to 1986.

Defendants argue that as excess insurers, American

Home, Lexington and ISOP are now. ood rated Ul aAqdVIS¢

aintiffs of thelr coverage positiens until the underlving

primary insurers’ coverage is exhausted. The court need

63a

(1) have failed to show either an affirmative waiver or

some element of estoppel sufficient to support a finding

that defendants had waived their pollution exclusion de-

2) plaintiffs’ assertions of implied waiver

cannot create coverage explicitly excluded from the policy

> 4 llya4? . , .? ] .

by the pollution exclusion clause.

fenses and |

Plaintiffs base their argument for waiver on the black

letter rule that “an insurer, having denied liability on a

specified ground, may not thereafter deny liability on a

different ground.” Stone v. Waters, 483 S.W.2d at 645.

Although these defendants have not affirmatively denied

coverage on any ground, plaintiffs suggest that defend-

ants’ “inaction” should be treated as a denial. This con-

clusion is unwarranted by the facts and the law.

The court above has noted that the plaintiffs’ claim for

judgment must satisfy the conditions of Missouri law on

waiver and estoppel.** Missouri law regarding the waiver

of insurance defenses requires that “intention to waive

must plainly appear or else the acts or conduct relied

upon constituting waiver must involve some element of

estoppel.” Bartl nan OW, Humphre Y, 44] S.W.2d at 343

(citations omitted). Plaintiffs do not contest that these

defendant excess insurers have no present obligation to

defend or indemnify them. Nor do plaintiffs dispute that

they did not seek to have excess insurers presently defend

or indemnify them, or join in the Interim Agreement.

Within this factual context, these defendants’ failure to

notify plaintiffs of its coverage position prior to 1986

does not “plainly” suggest their intention to waive a

p lution exclusion defense. See also A. Windt, Insurance

Claims and Disputes, $2.18 at 52 (1982 (‘Insurer

should not be deemed to have waived its right later to

cle ny coverage simply by Virtue of its silence In a Sltua-

—

—s)

—

64a

Plaintiffs also have failed to show any prejudice from

defendants’ delay in asserting this defense, other than

the “trouble and expense” of bringing this suit. The

court has already determined above that the necessity of

filing this action does not constitute the “element of estop-

pel” required to establish a “waiver.” ** Plaintiffs have

not shown that they had even requested that defendants

defend or indemnify them, prior to the filing of this suit.

In Hunt v. State Farm Mutual Auto Insurance Co., 560

S.W.2d 280, 288 (Mo. Ct. App. 1977), the court held

that there was no estoppel when the insured had not

made a claim on the policy prior to the suit being filed.

This court finds that plaintiffs have not asserted sufficient

facts of waiver or estoppel to justify barring American

Home, Lexington and ISOP { from asserting their pollution

exclusion defenses.

The court notes also that the defense at issue here is

based on a pollution exclusion clause, which limits the

scope of the policy stating that risks coming within its

terms are not covered. The court concludes that based

on its earlier discussion of the Missouri rule against in-

surance coverage being created by the doctrines of waiver

or estoppel,*® plaintiffs are not entitled to a judgment

barring American Home, Lexington and ISOP from as-

serting its pollution exclusion defense.

F. Harbor Pollution Exclusion Defense

Excess insurer Harbor first asserted its pollution exclu-

sion defense in its Answer of August 12, 1985. In its

answers to interrogatories, Harbor states that it bases

its defense in part on the assertion that the dioxin con-

tained in the waste oil spread on Missouri lands “consti-

tutes ‘toxic chemical and/or waste materials,’ and/or ‘ir-

itants,’ and/or ‘contaminants,’ and/or ‘pollutants’ which

34 See supra part IV.D (Hartford Conduct in Disregard of Law

Defense).

35 See supra part IV.B (Aetna Pollution Exclusion Defense).

65a

were ‘discharged’ and/or ‘dispersed’ upon land by Russell

M. Bliss as an agent of the Plaintiffs.” ** Plaintiffs assert

that Harbor knew this information as of the July 1983

meeting. Harbor does not dispute this and acknowledges

that it did not provide plaintiffs with any information re-

garding its coverage position prior to its Answer in this

case on August 12, 1985. Plaintiffs argue that by failing

to inform them promptly of its intention to assert a pol-

lution exclusion defense, Harbor waived its right to that

defense.

Plaintiffs have shown no more evidence of waiver than

Harbor’s silence, in the face of plaintiffs’ extensive nego-

tiations with primary insurers—but not excess insurers—

for a defense agreement. The court has held above *’ that

with regard to excess insurers, where primary coverage

has not been exhausted, this showing is insufficient as a

matter of law to establish an intention to waive. Plain-

tiffs’ prejudice is similarly confined to the burden of

bringing this suit, which the court has also concluded is

inadequate as a matter of law to establish the necessary

element of estoppel.** The court finds that plaintiffs have

not shown sufficient evidence of waiver or estoppel, as a

matter of law, to warrant barring Harbor from asserting

its pollution exclusion defense.

The defense at issue, here, furthermore, is based on a

written pollution exclusion clause contained in the policy,

which states that the risks within its definition are not

covered under the policy. The court finds that because of

the Missouri rule avainst the creation of coverage by im-

plied waiver, plaintiffs are not entitled to a judgment

barring Harbor from asserting its pollution exclusion

defense.*®

36 Attachment M to Plaintiffs’ Waiver Motion at 40-41.

37 See supra part IV.E (American Home, Lexington and ISOP

Pollution Exclusion Defenses).

38 See supra part IV.D (Hartford Conduct in Disregard of Laws

Defense).

38 See supra part IV.B (Aetna Pollution Exclusion Defense).

66a

V. Summary

The court grants plaintiffs’ motion for partial sum-

mary judgment declaring that INA has waived its non-

disclosure defense with respect to its primary policies.

The remaining waiver motions are denied.

2. NONDISCLOSURE

Defendants INA and U.S. Fire have moved for sum-

mamr sadam Banta atum éhad eo a een . a

mary judgment declaring that their insurance policies do

> — > a > ~ » ¢ on — } 4 ] —

impose any obligations on them with regard to plain-

. . aI1o on bas e4

ioxin-related liabilit

on the ground that plaintiffs

Pas Asan . at- o> — sal mt a : rh . 2

failed to disclose certain material information wnen ap-

plying for insurance coverage for the vears 1981-1983.

. “e « lx, PAN ~ . 4 lat : . . eal

More specifically, defendants assert that plaintiffs should

have disclosed the existence of a number of dioxin-related

‘laims, known as the “first series” of claims, that were

filed during the period 1975-1979. This information was

called for, according to defendants, as part of plaintiffs

++ lnecaoc fn . , 27 tesa 70 22073 +1,

Statement orf losses f0) the e) od 1975-1979 be iuse tnese

la} St . . ; ] ; ] y ; °7

claims were expected to impact on the policies covering

this period.

Plaintiffs argue that they were under no obligation to

provide defendants with information of claims filed dur-

ing these years nor was this information requested. They

contend that although the claims in question were filed

during the 1975-1979 period, they were properly not in-

cluded in the loss histories of this period, which they

agree their applications and submission purported to pre-

sent. A less history, according to plaintiffs, only includes

claims or losses which have been paid or for which re-

serves have been set aside for a given policy year.

Defendants INA and U.S. Fire based their motions, al-

ternatively, on the statutory law of Florida or New Yor!

which they argue bars plaintiffs who have failed to dis-

close material information requested by a prospective in-

surer from collecting on any policies entered into subject

to this nondisclosure.

Plaintiffs assert that defendants’ allegations of non-

lisclosure do not satisfy several of the statutes’ require-

ments, including that the undisclosed information (1) was

requested by the insurer, or otherwise falsely represented

and (2) was material to the insurer’s decision to enter

into the contract. Plaintiffs argue that an earlier deci-

sion of the court concluded that these questions are fac-

tual and should be left to the jury, and that the logie of

that decision Pst here precluding summary judgment.

See Memorandum of January 8, 1987 at 8-10 (denying

INA primary po licy motion for summary judgment on

liga] 1} — 1+) Anni)? . Wlawd: Ohta “inallry

nondisclosure grounds; applying Florida law). Finally,

‘

plaintiffs claim that INA and U.S. Fire have waived their

nondisclosure defenses, as discussed in their waiver mo-

tion

The analysis below v first determine which state’s

aw ¥ rover?) his iss le, and then n exam) ine defe nd ints’

aims in the following order: (a) IN, A] iry policies:

b INA excess policies: and (Cc) U ow. F ire excess policies,

I. Choices of Law

‘he court has already determined that Florida law gov-

erns the issue of nondiscl losure for INA’s primary poli-

cies." The court also has ruled that where the policies

ling, and New

York law does not conflict with a fundamental poliey of

+ 3 : ] Iona N] , Tayle 1. r Qa +.

at Issue designate New York iaW aS contro

he nondisclosure

issue, New York law would govern.*! The excess insur-

ince policies of both INA and U.S. Fire state that New

York law should be applied.

ne state with the Preatest interest

In their pleadings on the present motions, both INA

and U.S. Fire have agreed that there is no conflict be-

tween New York and the law of Florida—the state with

L5-0; Supra section ] Waiver

68a

the greatest interest in the nondisclosure interest—but

argue that if such a conflict arises, Florida law should

control. Plaintiffs have agreed that there is no conflict

between the relevant law of New York and Florida and

acknowledge the primacy of Florida’s interest in the res-

olution of this issue.

The court agrees with the parties’ assessment that rele-

vant New York law presents no conflict with any funda-

mental policy of Florida law. The relevant New York

statute, N.Y. Ins. Law § 3105 (McKinney 1985),* and

case law reflect principles that are very similar to those

embodied in the relevant Florida statute, Fla. Stat.

§ 627.409 (1981) ,** and precedent.

In both New York and Florida, an insurer may avoid

coverage under its policies on grounds of nondisclosure

where the insured has (1) made a false representation or

failed to provide information requested by the insurer,

(2) which is material to the insurer’s decision to enter

42 See infra section 2 (Nondisclosure) part III (INA Excess

Policies).

43 (1) All statements and descriptions in any applicetion for an

insurance policy or annuity contract, or in negotiations therefor,

by or on behalf of the insured or annuitant, shall b2 deemed to

be representations and not warranties.

Misrepresentations, omissions, concealment of facts, and in-

correct statements shall not prevent a recovery under the policy

or contract unless either:

(a) Fraudulent; or

(b) Material either to the acceptance of the risk, or to the

hazard assumed by the insurer; or

the policy or contract, or would not have issued it at the same

premium rate, or would not have issued a policy or contract

in as large an amount, or would not have provided coverage

with respect to the hazard resulting in the loss, if the true facts

had been made known to the insurer as required either by the

application for the policy or contract or otherwise.

Fla. Stat. § 627.409 (1981).

69a

into the proposed contract. Compare Kulikowski v.

Roslyn Savings Bank, 121 A.D.2d 603, 503 N.Y.S.2d 863.

564 (N.Y. App. Div.) (applying § 3105), appeal dis-

missed, 69 N.Y.2d 705, 504 N.E.2d 691, 512 N.Y.S.2d

364 (N.Y. 1986) and Vande r Veer v. Continental Cas-

ualty Co., 34 N.Y.2d 50, 312 N.E.2d 156, 356 N.Y.S.2d

13, 14-15 (1974) (applying N.Y. Ins. Law § 149. precur-

sor to $3105) with Continental Assurance Co. v. Car-

roll, 485 So.2d 406, 409 (Fla. 1986) (construing

: 627.409) and Roess v. St. Paul Fire and Marine Ins.

Co., 383 F.Supp. 1231, 1236 (M.D. Fla. 1974) (inter-

preting § 627.409; discussing statute’s departure from

common law).

Even if a given case would have different outcomes in

these two jurisdictions, this variance between the law

of the two states does not present the kind of fundamental

conflict that would prevent the application of New York

law here. See Restatement (Second) of Conflict of Laws

; 187 comment g (1971) (“The forum will not refrain

from applying the chosen law merely because this would

lead to a different result than would be obtained under

the local law of the state of the otherwise applicable

law.) The court does not believe, moreover, that the

}° ° c — = F - " oraelrl . ly , 1 . .

application of Florida law would produce a different reso-

In light of the absence of conflict between the relevant

law and any fundamental policy of Florida

aw, the court will apply the choice of law made by the

parties at the time of contracting—New York law.

ae INA Primary Policies

The court has ruled above that INA is barred from

° ° 1° ; a “1 oe oie ‘ :

erting 1tS nondisclosure defense with regard to its Dri-

mary insurance poicies because of ItS ITaliure to promptly

notify plaintiffs of its intent to assert that defense, as

required by Florida statute section 627.426 (2) .*

Ill. JNA Excess Policies

With regard to INA’s excess insurance policies, the

court above has denied plaintiffs’ motion to bar a nondis-

closure defense on waiver grounds.** As the choice-of-law

discussion above indicates, INA’s excess insurance policy

nondisclosure defense will be governed by New York law.

The relevant New York statute reads as follows:

§ 3105 Representations by the insured

(a) A representation is a statement as to past or

present fact, made to the insurer by, or by the au-

thority of, the applicant for insurance or the prospec-

tive insured, at or before the making of the insur-

ance contract as an inducement to the making thereof.

A misrepresentation is a false representation, and

the facts misrepresented are those facts which make

the representation false.

(b) No misrepresentation shall avoid any contract

of insurance or defeat recovery thereunder unless

such misrepresentation was material. No misrepre-

sentation shall be deemed material unless knowledge

by the insurer of the facts misrepresented would have

led to a refusal by the insurer to make such contract.

N. Y. Ins. Law § 3105 (McKinney 1985).

Policy coverage may be avoided under this statute where

two essential elements are established: (1) a misrepre-

sentation, (2) which is material. Kulkowski, 503

N.Y.S.2d at 864 (applying § 3105). Each of these de-

44 Supra section 1 (Waiver of Defenses) part III.A.a (INA Non-

disclosure Defense—Primary Insurance Policies)

45 Supra section 1 (Waiver of Defenses) part IIIT.A.b (INA Non

disclosure Defense—Excess Insurance Policies

7la

terminations is ordinarily a question of fact, Leamy v.

Berkshire Life Ins. Co., 39 N.Y.2d 271, 347 N.E.2d 889.

383 N.Y.S.2d 564, 565 (1976) (applying § 149), although

where the evidence is clear and substantially uncontra-

dicted, the court may find these elements to be established

aS a matter of law. See Vander Veer v. Continental Cas-

ualty Co., 356 N.Y.S.2d at 14 (1974) (finding misrepre-

entation and materiality established as a matter of law:

applying § 149); Kulikowski, 503 N.Y.S.2d at 864

(“where the evidence concerning the materiality is clear

and substantially uncontradicted, the matter is one for

the court to determine’) (citations omitted).

A! houch an action for fraudulent conceaiment exists art

common law," INA’s claim for summary judgment i

} : . 1 1

based on statutory law, which Will apply even where the

i | ; ii i i

[ MELO Mutual Life /) 0 213 N y 26) { N.} >|

125, 126 (1937 ap] ! ] irance Lay ae ecurst

to 149 Kulilou 203 N.Y.S.2d at 864. Cf. Confti-

nenta | urance Co Carroll 1K5 SO >] al 1()* a}-

1) Ing Ila Stat 62) 109 l

INA Cialm LWo instance Or ? representatior h the

1) ntiff regarding the ame information The first *

the first series of dioxin claims wher responding to ques-

ion #14 in plaintiffs’ applications for excess insurance

“State loss record during past five years specifying: (a

Full deta of all clain whether insured or not I

excess of $10,000 ....” The second instance is said to

h: » resulted Trom piaintiffs representation a tne close

f ; hire ; } {F + ry ] ; + , ; ] + |

ractS wnicn mignt alte Underwriter lidgment when

7 l " —

4 Se 4 / ng I f Phey i; é Ty ( é 7 j AST)

os | 4 4 | | 5

Sou 42 i4 | io] 193] L Ghetor fad 7

4 y | ) ) ‘ \’ ) a | » s 4

12a

considering this application,” **? while failing to disclose

these dioxin claims.

In evaluating the first instance of misrepresentation

asserted, the court must determine what information was

requested in order to determine whether plaintiffs’ an-

swer can be said, as a matter of law, to constitute a mis-

representation. If plaintiffs have fully disclosed the in-

formation requested—based on a reasonable construction

of the question presented—then there is no misreprese n-

tation, even if the defendants’ construction of the ape ion

would be different. Compare Geer, 7 N.E.2d at 127-28

(nondisclosure resulting from reasonable construction of

question constitutes no suppression of the truth, and thus

no false representation) with Process Plants Corp. v.

Beneficial National Life Insurance Co., 58 A.D.2d 214,

385 N.Y.S.2d 308, 811-12 (N.Y. App. Div. 1976) (not-

ing that where application question requests an opinion,

if answered in good faith, mistaken response would not

constitute a misrepresentation, but concluding case at bar

not a situation in which applicant was asked to give

opinion), aff'd, 42 N.Y.2d 928, 366 N.E.2d 1361, 397

N.Y.S.2d 1007 (1977).

Plaintiffs argue that question #14 Pe megpeies a report

of incurred losses assigned to the 1975-1979 policy years.

Plaintiffs argue that it is their practice, as well as in-

rance’ industry custom, to supply accrued loss informa-

tion when applying for insurance coverage and that INA

knew or should have known that this is what was pro-

vided. Incurred losses, they continue, mean actual losses

paid or reserved against. The first series of dioxin claims

were not included in the loss summaries provided in re-

sponse to this ae plaintiffs explain, because these

claims had been assigned by their insurers to policy year

preceding the five-year period requested.

INA argues that question +14 called for the disclo-

ure of all claims ae or expected to impact the policy

‘7 Attachments 16 & 17 to INA Nondisclosure Motion

73a

years 1975-1979. INA offers the deposition testimony of

Thomas Terbrueggen, who was then assistant risk man-

ager for plaintiffs, to support its position that plaintiffs

purported to provide loss information that included all

claims expected to impact the relevant policy years.**

Implicit in INA’s argument is the assertion that plaintiffs

understood question #14 to request that information.

Terbrueggen’s acknowledgment, however, is insufficient

evidence of plaintiffs’ understanding to support a motion

for summary judgment. INA cites Terbrueggen’s affirma-

tive response to the question “is it your understanding at

the time that the list of losses . . . presented claims and

losses by the policy years such claims and losses would

impact?” Unfortunately, Terbrueggen was not asked,

nor did he volunteer, whether he was referring to all

“claims” or only claims for which funds had been re-

served. The court is not prepared to read this acknowl-

edgement as an adoption of INA’s position.

At most, INA presents a factual question of whether

plaintiffs understood question #14 to request loss infor-

mation on all claims that they expected to impact the

policy years 1974-1979, rather than just accrued losses for

this period. Without better support for INA’s assertion,

however, the court must accept plaintiffs’ version of the

facts for purposes of this motion.*”

48 Attachment 3 to INA Nondisclosure Motion (Dec. 9. 1986

Deposition of Thomas Terbrueggen). See also Attachment 5 to INA

Nondisclosure Motion at 2 (Letter from Ray M. VanLandingham to

Peter W. Kininmonth Nov. 30, 1983) (“As requested by this appli-

cation, this schedule presents claims and losses by the policy year

such claims and losses would impact.’’).

‘9 In its Memorandum Opinion of January 8, 1987, the court

similarly concluded that “It is up to the finder of fact to deter-

mine . . What the standard insurance industry practice is with

respect to the assignment of claims to policy years different from

the calendar years in which those claims are filed.”” Memorandum

Opinion of Jan. 8, 1987 at 8.

74a

Should a jury at trial find the facts consistent with

plaintiffs’ version, plaintiffs’ construction of question #14

would appear to be reasonable. INA does not contest

that plaintiffs provided full disclosure of all accrued

losses. This disclosure then, would not constitute a mis-

representation. Having failed to establish this essential

requirement, INA’s motion for summary judgment must

be denied.

INA also cites plaintiffs’ efforts to obtain coverage for

these early dioxin claims under its 1975-1979 policies as

evidence of their expectation that these claims would im-

pact these policy years.°” Under the analysis above, how-

ever, this information may not have been requested by

question #14, and so its nondisclosure would not consti-

tute a misrepresentation.

Although INA presents supporting testimony to dem-

onstrate the materiality of the claims information they

allege should have been disclosed,’ the court will not ad-

dress this second element as it relates to question +14

since summary judgment is precluded by the factual dis-

pute over whether the absence of the early dioxin claims

from the loss histories supplied to INA by plaintiffs con-

stituted a misrepresentation.™

INA alleges a second instance of misrepresentation

Within plaintiffs’ application for excess insurance. At the

“ See Attachment 29 to INA Nondisclosure Motion (Letter of

Jan. 2, 1980 from J.H. Hill, Jr. to Aetna): Attachment 28 to INA

Nondisclosure Motion at 600-03 (Deposition of Jennings H. Hill,

Jr. Nov. 6, 1986).

51 See Attachment 12 to INA Nondisclosure Motion at [4 (Affi

davit of Howard E. Tyrrell Feb. 12, 1987); Attachment 15 to INA

Nondisclosure Motion at "9 (Declaration of Clifton E. Harrison

Mar. 12, 1986).

Cf. Memorandum Opinion of Jan. 8, 1987 at 9 (“it should be

noted that the question of the materiality of IPC’s alleged nondi

closure ] an sue to be decided by a finder of fa t, not by the

court on a motion for summary judgment”’

75a

end of the applications, just before the signature line,

appears the representation: “We know of no other rele-

vant facts which might affect Underwriter’s judgment

when considering this application.” ** INA argues that

this statement was a material misrepresentation, as plain-

tiffs knew INA’s consideration of their application would

be affected by knowledge of the first series of dioxin

claims. INA supports its assertion with evidence that

plaintiffs were seeking coverage of the early dioxin claims

from its primary and excess insurance policies for

period including 1975-1979," indicating that plaintiffs

knew these claims had significance for future policy year

Plaintiffs explain that at the time of their applications

for excess insurance with INA, they did not anticipat

the potential for additional dioxin claims, and so did not

believe this information was material to INA’s decision.

The Lori Piatt suit, filed in 1979, was the last of the

first series of claims. This suit was delayed, according

to plaintiffs, because the claimant was a minor at the

time she allegedly came into contact with dioxin sprayed

by Russell Bliss in 1971. By 1979, only three people had

filed personal injury claims arising out of the sprayings

Consequently, plaintiffs assert, they reasonably did not

believe that knowledge of these claims would affect INA’

judgment on their application.

INA also offers the testimonial evidence of insurance

officials involved in the negotiating of plaintiffs’ policies

with INA. Howard E. Tyrrell, former Director of Risk

Management for plaintiffs, states in his affidavit: “The

information contained in the January 2, 1980 letter [noti-

fying Aetna of the Lori Piatt claim] should have been

disclosed by Charter to INA as part of the loss informa

tion supplied to INA in connection with Charter’s pur

3 See Attachments 16 & 17 to INA Nondisclosure Mot

4 See supra note 53

78a

Without repeating here the analysis set forth above in

the discussion of INA claims regarding its excess policies,

the court concludes that a question of fact remains as to

whether plaintiffs’ response or closing affirmation consti-

tute misrepresentations. Plaintiffs dispute U.S. Fire’s

contention that question +14 requested all claims that

were expected to impact the 1975-1979 policies. Plaintiffs

also dispute that they believed these claims to be mate-

rial to U.S. Fire’s assessment of their insurance appli-

cations.

These questions are not to be resolved here by sum-

mary judgment, but must await further fact-finding at

trial. Summary judgment not being available, the court

will not address the requirement of materiality, which

U.S. Fire must also establish at trial in order to avoid

its policy obligations on grounds of nondisclosure.

,V. Summary

The motions of INA and U.S. Fire for summary judg-

ment on grounds of nondisclosure are denied.

3. NOTICE

Fight excess insurers have filed motions ** for summary

judgment on the grounds that plaintiffs failed to timely

notify them of Bliss’ activities and the damage and claims

that resulted from it, as required under their policies.

Defendants’ policies cover the years 1972, 1975 and 1977.

Each policy contains a provision which requires plaintiffs

sponse to [question #14]. Attachment 1 to U.S. Fire Amended

59 Six excess carriers have filed a joint motion: American Home,

Lexington, ISOP, Employers Commercial Union Insurance Company

Employers Commercial Union), Continental Casualty Company

(CNA) and North Star Reinsurance Corporation (North Star).

Two other excess insurers, First State Insurance Company (First

State) and Harbor, have filed separate motions incorporating the

arguments of the main defendants’ moti

79a

to notify their insurer as soon as practicable after learn-

ing of an act or omission which involves injuries or

damages which they reasonably conclude are likely to

involve the insurer’s policy.

Defendants assert that they were first notified of Bliss’

activities, and claims springing from it, in 1983. De-

fendants argue that prior to 1983 plaintiffs knew or

should have known that Bliss’ spraying involved injuries

and damages likely to involve their policies. Consequently,

defendants argue, plaintiffs have failed to satisfy the

notice requirement of their policies, causing prejudice in

their exposure to future claims as well as their ability to

defend against them.

Defendants also note that their policies covering the

1972 policy year contain a so-called “no action” provi-

sion, which these defendants argue precludes coverage

where the insured fails to satisfy ail the conditions prece-

dent set out in the policy, including the requirement of

providing timely notice of occurrences implicating the

policy.

Plaintiffs maintain that the notice they provided to

defendants was reasonable under the circumstances and

so satisfies the requirements of the policy provisions.

They do not dispute that defendants actually first re-

ceived notice of Bliss’ activities, and resulting claims, in

1983. This notice was reasonable, plaintiffs contend, be-

cause it was only at this point that they reasonably be-

lieved Bliss’ activities involved injuries that were likely

to exceed the primary coverage.

Plaintiffs explain that throughout the 1970’s and early

1980's they believed that Bliss’ sprayings had been limit

to two stables and that the claims resulting from this

exposure would not exhaust the underlying primary poli-

cies. Plaintiffs insist that prior to 1983, they did not, nor

reasonably could they have, anticipated the subsequent

series of claims that have been filed, and which have in-

volved these defendants’ policies.

80a

I. Choice of Law

The court has indicated above that issues in this case

it require the interpretation of insurance policies wi

ordinarily be decided according to Missouri law.®° The

notice provision at issue here requires that defendant

insurance companies be kept informed of occurrences

involving injuries and damage which are likely to involve

the defendants’ policies. The relevant acts, as well as the

injuries and damage that have resulted, all have taken

place in Missouri. The resolution of this issue, moreover,

may determine whether coverage is available to compen-

sate Missouri citizens who may have been harmed by

these events. The court finds that Missouri has the most

substantial interest in having its law apply to the issue

LerisvLicadl

of whether plaintiffs have complied with the notice provi-

. . . . :

Defendar s’ excess Insurance policies cover the V S

1972, 1975 and 1977 Although there are son liffer-

See &s } sectlor Wa el yf ] el S I t [] ( I

Prin les

P ntiff cree t} XT . law : his

Ps te . ; ‘ — oe} |. i

ou? i } d it ? eo t + th ‘ P }

the ’ f M oul he other interested state 1)

ao ct r t I tnat n tne 1 ] ) Wi !

rer ed oO} } m e) ] hy } the ,

Missouri departs that of mai

( he { ( eS I . ly Se

tati Mi nil Cty} f RP P y ] te S}

P ; } / y Lily ] }

( r Notice { f ( j .

Sla

- a - ] ] ; : x ; a : y :

ences in the language oI tne notice provisions of these

> eT T h- +] ml lat. re rere ce Oo Ww . y n+

various policies, the rollowing provision 1S representa ve

ror purposes of this motion

6. Insured’s Duties in the Event of Occurrence;

(a) Whenever the insured has information from

which it is reasonable to conclude that an ac

or omission involves injuries or damages which

are likely to involve this policy, written notice

containing particulars sufficient to identify the

insured and also reasonably obtainable informa-

tion with respect to the time, place and circum-

ances 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

iny of its authorized agents as soon as prac-

ticable. Failure to notify the company of any

act or omission which at the time of its happen-

ing did not appear to involve this policy, but

which at a later date would appear to give rise

7 > . ] . ee . . ~~ ~ > : Z > . L

o claims hereunder, shall not prejudice sucl

Da oe

CialM

severa )] icles also contained the following two

yNrovisions

a | | } S nade or sult 1s brought agalnst +}

— ] 41 ee ] L, 1] : 1; + ley , ° .

sured, ne insured Shall immediately forward

mM} every demand, notice, SummMOons,

, } “. t , 1975 va red ’ thy

ssued | Ar can Home, ISOP Lexins 0 Harb

i ( t 7" ( . 4 Lois

CNA policy number RDU 922936. The 1972 pol of Ame}

( Home, Emplovers Commercial Union and North Star

( t his pe

H I Ty ( ~ ETT & (1 i rod ther ) ffi +

oO} tS age ( { { or rl (

| ] ;

i i a ‘ } {

82<

or other process received by him or his repre-

sentative.

* Ps

(7. Action Against Company: No action shall lie against

the company unless, as a condition precedent thereto,

there shall have been full compliance with all of the

terms of this policy.”

The 1972 policies were purchased by plaintiffs through

the Charter Insurance Agency (Charter Insurance), a

retail broker, which obtained the coverage through The

London Agency, Ine., a wholesale broker, which in turn

dealt directly with defendant insurers. The 1975 and

1977 policies were obtained through retail broker Marsh

& McLennan, which contacted defendant insurers directly.

Although plaintiffs do not dispute defendants’ claim

that they did not receive notice of Bliss’ activities or the

first series of dioxin-related claims prior to 1983, plain-

rey provided all of these defendants

with notice, through their insurance brokers, for two of

the five claims filed in the 1970’s.** Defendants state that

ey ‘ ~ ° ‘

tiffs assert that t

64 The court understands this subpart (b), requiring immediat

notice of claims filed, to incorporate the limitation expre ssed

subpart (a) that it applies to cases “likely to involve this policy

If this provision was read in isolation and applied literally, the

ae i

insured would be ul

r a continual obligation to advise ne\

" . » . _ 4 eer ’ ar Be — 4 . - -) ss

long-past insurers of every new claim that is filed regardless «

ite rvelatinn ¢t the veragce nrovided ar rit lear]

ItS reiation to ne coverage proviaed, a resuil ciearly

by the parties.

85 CNA policy number RDU 922936.

66 Plaintiffs claim to have provided notice to all of these defend

ants of the Lori Piatt claim, which was served on IPC on November

7, 1979, through Charter Insurance and Marsh & McLennan or

January 2, 1980. Plaintiffs indicate at one point that they notifi

all of these defendants of the Patricia Drinkard claim, which wa

cAilil

served on IPC on August 10, 1978, through Charter Insurance ar

Marsh & McLennan on September 14, 1978. At other times,

ever, plaintiffs suggest that they requested the excess insurers fo)

1971, 1972 and 1974 to be notified. Compare Plaintiffs’ 108(h) fo.

83a

they began receiving notification of certain of the second

series of dioxin-related claims during the first six months

of 1988.

The parties agree that it was and is the custom in the

insurance industry for notification of claims and occur-

rences to be made through the same chain of communica-

tion by which the insurance was purchased. The insured

notifies the retail broker, who in turn notifies the whole-

sale broker, who finally notifies the insurer.

B. The Spraying of Dioxin-Contaminated Waste Oil

In the early 1970’s, plaintiffs were engaged in the

business of terminaling and marketing petrochemicals in

Missouri. In late 1970 or early 1971, John Lee, an offi-

cer of IPC customer Northeastern Pharmaceutical &

Chemical Company (NEPACCO), approached Bud von

Gerichten, the IPC salesman in charge of the NEPACCO

account, about obtaining assistance in disposing of waste

generated in NEPACCO’s rms eturing process. In re-

sponse to this inquiry, IP er Greg

Browne contacted Russell |] ne see if he could dispose

of the NEPACCO waste.

NEPACCO had a plant in Verona, Missouri at which

it produced certain chemical products, including hexa-

hene (HCP). The manufacture of HCP left a

PC’s _ district manag

eh! 1Orop

they notified defendants whose policies covered 1972 of the

Drinkard claim, which was served on IPC on October 17, 1975,

through Charter ‘vena on October 27, 1975.

Defendants acknowledge that plaintiffs notified Marsh & Mce-

Lennan of the Patricia Drinkard and Lori Piatt claims. They

refer to plaintiffs as “allegedly” notifying Charter Insurance of

these claims, as well as the Jerry Drinkard claim, presumably be-

cause Charter Insurance’s records for this time period no longer

exist. In or about 1980, Charter Insurance was purchased by

Wilson Financial Corporation and became Whilden & Associates.

Following its policy of destroying documents from more than two

years past, Whilden & Associates destroyed all of Charter Insur-

ance’s pre-1980 records.

84a

by-product, referred to by NEPACCO as “still bottoms,”

which was collected in a holding tank at the Verona plant.

Although plaintiffs deny that these still bottoms contained

dioxin,® Patrick Phillips, who participated in the investi-

gation by officials of the federal Center for Disease Con-

trol (CDC) and the State of Missouri (Missouri) into

the dioxin situation, has testified that chemical testing of

samples from the still bottoms revealed ‘2,3,7,8 TCDD”,

an abbreviation for a form of dioxin.”

The parties are in dispute over the extent of IPC’s

knowledge in 1971 about the waste and what Bliss would

do with it. Defendants allege that plaint

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.