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OLIN CORPORATION v. CENTURY INDEMNITY COMPANY, 11-4579-cv. (2013)

Court: Court of Appeals for the Second Circuit Number: infco20130618085 Visitors: 12
Filed: Jun. 18, 2013
Latest Update: Jun. 18, 2013
Summary: SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENT
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SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment entered October 14, 2011 is AFFIRMED.

Defendant-Appellant Century Indemnity Company, successor to Insurance Company of North America, individually and as successor to Insurance Company of North America (hereinafter referred to as "INA"), appeals from the partial final judgment entered by the United States District Court for the Southern District of New York (Griesa, J.) on October 14, 2011, in favor of Plaintiff-Appellee Olin Corporation ("Olin") and at the conclusion of a bench trial.1 The district court entered judgment for Olin and against INA for third-party litigation costs and prejudgment interest relating to suits by California homeowners and residents alleging environmental contamination from the Morgan Hill Site formerly operated by Olin. On appeal, INA argues that: (1) the district court erred in holding that INA had a duty to reimburse Olin's defense costs when the homes at issue were constructed after INA's insurance coverage ended; and (2) the district court erred in holding INA responsible for 100% of the defense costs and declining to prorate those costs distinguishing between periods of coverage and periods of self-insurance.

"On appeal from a judgment after a bench trial, we review the district court's findings of fact for clear error and its conclusions of law de novo." Roberts v. Royal Atl. Corp., 542 F.3d 363, 367 (2d Cir. 2008). We assume the parties' familiarity with the underlying facts, procedural history of the case, and issues on appeal, which we reference only as necessary to explain our decision to affirm.

* * *

INA first argues that it has no duty to reimburse Olin's costs in defending the Morgan Hill lawsuits because the homes at issue in the lawsuits were constructed after the policies expired. Under New York law, "[a]n insurer must defend whenever the four corners of the complaint suggest—or the insurer has actual knowledge of facts establishing—a reasonable possibility of coverage." Int'l Bus. Machs. Corp. v. Liberty Mut. Fire Ins. Co., 303 F.3d 419, 424 (2d Cir. 2002) (quoting Cont'l Cas. Co. v. Rapid-Am. Corp., 609 N.E.2d 506, 509 (N.Y. 1993)). The complaints against Olin allege careless disposal of potassium perchlorate that contaminated the area's water supply and affected real property "situated above a highly toxic groundwater plume of potassium perchlorate, created as a result of forty years [1956-1996] of manufacturing highway flares which contained potassium perchlorate." On their face, the complaints do not specify when injury to individual homes or wells occurred but they do allege ongoing contamination of the groundwater plume beginning in 1956, which affected real property situated above it. Olin's policies with INA, moreover, were in effect from 1956 to 1970, during this period of ongoing contamination. In such circumstances, we conclude that the complaints' allegations are sufficient to establish a reasonable possibility of coverage and therefore that the district court did not err in determining that INA had a duty to defend as shown by the face of the complaints.

INA next challenges the district court's conclusion that INA has a duty to reimburse Olin for 100% of its defense costs and argues that the defense costs should be allocated between INA and Olin. The district court concluded as a matter of law that allocation of defense costs between insurer and insured when the insured was self-insured for a part of the period in which the harm occurred is unavailable, although the court recognized that this matter has not been definitively established as a matter of New York law. See Cont'l Cas. Co., 609 N.E.2d at 514 (noting that under New York law, "[t]he question whether the insured itself must contribute to defense costs . . . is appropriately deferred," and commenting on the division in courts to have considered the issue). In the alternative, the district court held that allocation is not appropriate in the circumstances here because the litigation between Olin and the California homeowners and residents did not establish when injury occurred to the properties at issue. The district court based this conclusion on the absence of any jury determinations as to when—if ever—negligent waste disposal occurred, as well as indefinitive expert testimony as to the pace of perchlorate migration or the dates of initial contamination. We do not reach the issue whether defense costs may be allocated between an insurer and insured for periods of self-insurance under New York law because, after reviewing the evidence, we find no error in the district court's alternative conclusion—that there was no reasonable means of prorating the costs between covered and non-covered items—for substantially the reasons stated by the district court. See Ins. Co. of N. Am. v. Forty-Eight Insulations, Inc., 633 F.2d 1212, 1224 (6th Cir. 1980) ("An insurer must bear the entire cost of defense when there is no reasonable means of prorating the costs of defense between the covered and not-covered items." (internal quotation marks and citation omitted)).

We have considered all of Defendant-Appellant's remaining arguments and find them to be without merit. For the foregoing reasons, the judgment of the district court is hereby AFFIRMED.

FootNotes


1. The claims tried before Judge Griesa and reviewed here are part of a larger set of claims between INA and Olin regarding the extent of INA's insurance coverage obligations for Olin's environmental liabilities relating to operating facilities across the country. Neither party challenges the district court's decision to enter partial final judgment and, reviewing for abuse of discretion, see Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 10 (1980), we find no error in the district court's determination.
Source:  Leagle

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