KATHERINE B. FORREST, District Judge:
This environmental insurance coverage action was commenced in April 2012 by Travelers Indemnity Co. and various affiliated companies (together, "Travelers") against Northrop Grumman Corp. and Northrop Grumman Systems Corp. (together, "Northrop" or, during discussions of historical points, "Grumman"), and Century Indemnity Co. ("Century"), eventual successor in interest to Insurance Company of North America ("INA"), as nominal defendant, Together, Travelers and Century issued insurance policies to Northrop spanning a period from 1950 to 1985.
In this motion, Travelers argues that the statutory pollution exclusions effective for its policies issued between 1972 and January 1, 1983, along with pollution exclusions included in policies it issued between 1983 and 1985, are applicable to precisely the type of coverage claims that Northrop asserts with respect to the Bethpage Facility.
In addition, Travelers argues that summary judgment is separately warranted based on both late notice and violation of the so-called "voluntary payments" provisions in each of the policies at issue.
For the reasons set forth below, Travelers' motion as to the Bethpage Facility is GRANTED.
The area known here as the Bethpage Facility encompasses a 600-acre parcel of land on which Grumman commenced manufacturing operations in the 1930s. (Northrop Grumman's Response to Travelers' "Statement of Undisputed Material Facts Pursuant to Local Rule 56.1 in Supp. of Travelers' Mot. for Summ. J. Regarding Bethpage Facility" ("NGC 56.1") ¶ 4.) For purposes of this motion, it does not include the 18-acre parcel that Grumman donated to the Town of Oyster Bay in 1962. The Bethpage Naval Weapons Industrial Reserve Plant ("NWIRP") was located on the grounds of the Bethpage Facility but operated by Grumman.
Grumman manufactured and tested airplanes, weapons and satellites at the Bethpage Facility. In connection with its operations, it used and stored contaminants such as trichloroethylene ("TCE"), a liquid used as a degreaser for metal parts. (Id. ¶ 5.) TCE is "toxic by inhalation, by prolonged or repeated contact with the skin or mucous membrane, or when taken by mouth." (Calland Decl. Ex. 39, at Feenstra 005746; see also Calland Decl. Ex. 60, at Feenstra 005828.)
There is a large plume of groundwater contamination below the Bethpage Facility, and now extending beyond its boundaries. (NGC 56.1 ¶ 2.) More than 2000 acres on Long Island are now impacted. (Id.) This lawsuit concerns whether insurance policies issued by Travelers and Century (or Century's predecessor, INA), cover liabilities that Northrop has and may have relating to clean-up and remediation.
Grumman's use and storage of volatile organic compounds ("VOCs"), including TCE, at the Bethpage Facility, occurred particularly at plants #1, #2, #3, #5, and #12. (Id. ¶¶ 5, 8, 214, 215.) Grumman concedes that it began using TCE at the BF in the 1940s. (Id. ¶ 9.)
At least eight TCE degreasers operated in plant # 2 from the 1960s through the mid-1990s. (Id.) At least six TCE degreasers operated at plant # 3 at various times spanning the 1960s through the 1980s. (Id.) Plant #5 had at least one TCE degreaser between the 1960s and had two in the 1970s. (Id. ¶ 14.) In addition, plant # 2 also used degreasers outfitted with spray wands that used TCE. (Id. ¶ 13.) Spray wands were used to degrease large parts, such as wings of planes. (Id.) To perform his task with a spray wand, a Grumman operator would stand on a platform along the side of the degreaser. (Id.)
Grumman's operations included painting airplanes. It had paint shops on the grounds of the Bethpage Facility for this purpose. (Id. ¶ 15.) TCE was used to clean the paint guns used in the paint booths. (Id.) To do this, the paint gun would be aimed at the paint curtain and discharged. (Id.) A "waterfall" in a paint shop was intended to keep sprayed paint from escaping. (Id. ¶ 16.) Water circulated through a closed system and cascaded down the sides of the paint shop to catch paint overspray; water also circulated through troughs on the floor of the paint shop and then back through the waterfalls. (Id. ¶ 17; see also Calland Decl. Ex. 3, at 146:04-21.) The paint shop consisted of one room and three waterfalls. (NGC 56.1 ¶ 17.) Grumman's practice was to clean each spray booth re-circulating tank weekly; the water residue would be pumped to the tank truck and taken to Grumman's on-site waste treatment plant. (Calland Decl. Ex. 42, at Feenstra 000101; Calland Decl. Ex. 48, at Feenstra 000113.) Sludges collected in the bottom of the tank were pumped into big vats. (NGC 56.1 ¶ 18.)
Sludges from both the paint booths and the paint shop were treated in plant # 2; "remaining sludge" was cleaned from the floor of the paint booths using rags. (Id. ¶ 18.) Smaller parts were also cleaned at plant # 2 using rags and TCE. (Id. ¶ 20.)
John Cofman, a Northrop Grumman employee, testified that plant # 2 had a system to distill TCE, which was dirty with oil because it had been used in degreasers and for cleaning, so that the company could reuse the TCE. (Calland Decl. Ex. 4, at 372:20-373:08.) According to a schematic, Grumman used concrete foundations for TCE storage tanks. (Calland Decl. Ex. 63.)
On September 8, 1948, Fred J. Biele of Grumman received a letter "recommend[ing] that tests be made of [sludge] to determine whether same is in fact insoluble in water such as rain water and therefore will not pollute the ground water of the Island." (Calland Decl. Ex. 43, at Dewling 000946.) On November 5, 1949, Biele sent a letter to Stanley T. Barker of NYSDOH notifying him that Grumman was "having tests made to determine the chromium strength of the discolored paint liquor," and that samples had been taken for analysis. (Calland Decl. Ex. 48, at Feenstra 000113.) On November 21, 1949, Grumman received a permit to discharge sewage or wastes into New York state waters "in a manner which will not contaminate any ground or surface water supplies or injure fish life." (Calland Decl. Ex. 49, at Feenstra 000116.)
Grumman dug "recharge basins" directly into the ground throughout the Bethpage Facility, which it used at least in part to dispose of wastewaters. (NGC 56.1 ¶ 21.) The discharge basins were designed to allow the wastewater to infiltrate back into the ground and return it to groundwater. (Id. ¶ 22.) There were at least a dozen recharge basins across the Bethpage Facility at various points in its operational history. (Id. ¶ 23.)
When the discharge basins became clogged and water could no longer percolate into the ground, Grumman would use bulldozers to scrape the basins. (Id. ¶ 28.) The scrapings obtained from these discharge basins were then used to fill in other low-lying areas on the premises of the Bethpage Facility. (Id. ¶ 29.)
Until 1949, Grumman also used wastewaters containing chromium, a contaminant, generated through manufacturing operations at the Bethpage Facility, in recharge basins. (Id. ¶¶ 30, 198-200.) In December 1947, the New York State Department of Health ("NYSDOH") contacted Grumman regarding a detection of chromium in the local municipal water supply well. (Id. ¶ 31.) In its letter, the NYSDOH stated that it required Grumman to take action to prevent chromium wastes from being discharged into the waters of the State without proper treatment for the removal of chromium. (Id.) Three off-site wells were subsequently and permanently closed—one at which the chromium had been detected and two others. (Id. ¶ 32.)
In 1949, Grumman built an Industrial Wastewater Treatment Facility ("IWTF") or Industrial Wastewater Treatment Plant ("IWTP") at plant # 2 to remove chromic acid wastes from industrial wastewater. (Id. ¶ 33.) The IWTF did not treat wastewater for TCE contamination. (Id. ¶ 34.) Before 1981, water treated at the IWTF to remove chromium was directed to plant # 2 recharge basins. (Id. ¶ 35.)
One byproduct of the water treatment at the IWTF was sludge containing hexavalent chromium, which was further treated to become trivalent chromium; the sludge containing the trivalent chromium was then pumped into covered holding tanks outside of the IWTF. (Id. ¶¶ 36, 37.) This sludge was then further transported to areas within the 18-acre parcel that was transferred to the Town of Oyster Bay in 1962 and that became the Bethpage Community Park. (Id. ¶ 38.)
Grumvnan contends that state and county regulators were aware of and had approved its sludge drying process and the location of its sludge disposal areas. (Id.) Grumman also contends that regulators considered the sludge non-toxic. (Id. ¶ 39.)
Starting in 1970, Grumman used a 4,000-gallon aboveground tank at plant #2 to store TCE. (Id. ¶ 43.) At some point, Grumman discovered that the tank was leading and replaced the tank. (Id. ¶¶ 44, 48.) Grumman does not know the number of years that TCE had been leaking before it was discovered, but Grumman knew that it had unexplained "loss" of TCE for an estimated two or three years prior to discovery of the leak. (Id. ¶¶ 44-46.) Grumman replaced that leaking tank after it had already discharged "a lot" of TCE. (Id. ¶ 48.) A former Grumman employee testified that when the tank was removed, the tank was "rotted out on the bottom." (Travelers' Reply to Grumman's Response to Travelers' Rule 56.1 Statement ("Travelers' Reply 56.1") ¶ 3; Cannella Decl. Ex. 77, at 62:25-63:2.)
Starting in the early 1950s and continuing to 1982, Grumman maintained a drum marshaling area east of plant # 3. (Id. ¶ 51.) Various solvents, including cyanide wastes and cadmium, were in these drums. (Id. ¶ 52.) The ground under the drams was cinder-covered. (Id.) Grumman kept the drums on the site until they could be treated or disposed of, including off-site. (Id.) By 1981, Grumman had added a "bermed concrete pad" and stored "drams on skids." (Id. ¶ 53.)
Grumman also stored halogenated and non-halogenated waste solvents on a 100foot-by-100-foot storage area from the early 1950s through 1969. (Id. ¶ 60.)
Three autoclaves for heating and hardening parts were installed before the mid-1960s; at least one was installed as early as 1955. (Id. ¶ 61.) Two of the three autoclaves used Therminol as a heat transfer fluid; 97-98% of Therminol consisted of PCBs. (Id. ¶ 62; Amended Statement of Undisputed Material Facts Pursuant to Local Rule 56.1 ("Travelers 56.1") ¶ 62.)
In 1962, Grumman transferred an 18acre parcel of land to the Town of Oyster Bay. (Id. ¶¶ 64, 65.) After 1962, Grumman therefore no longer owned the 18-acre parcel and performed no operations on the parcel.
In approximately 1973, Grumman's manager of environmental protection, John Ohlmann, learned of taste and odor problems at a newly-opened well at the Bethpage Facility, and reported these issues to NCDOH. (Id. ¶ 71.) One former Grumman employee testified that after he would drink the water he would burp, and that his burp smelled like TCE. (Travelers 56.1 ¶ 68; NGC 56.1 ¶ 68.) This employee reported his experience to his supervisor in the 1970s. (Id. ¶ 69.)
In 1975, Grumman detected "in their own analysis [of the groundwater onsite]. . . the presence of three hydrocarbons. . . methane, ethylene and either methylpropane or propadiene." (Id. ¶ 72; Cannella Decl. Ex. 43, at NGINS000210674.)
In May 1975, the Bureau of Water Resources for the NCDOH prepared a "Preliminary Report, Groundwater Contamination, Grumman Aerospace Corporation." (Cannella Decl. Ex. 1.) In the "Summary and Conclusions," the report states:
(Id. at NCDOH-0011455). A portion of the report labeled "Sources of Contamination" states:
(Id. at NCDOH-0011463.) In its "Discussion of Results," the report states:
(Id. at NCDOH-0011464.) This report was shared with Grumman. (See, e.g., NGC 56.1 ¶ 76.)
Hooker Chemical Corp. was a business unrelated to Grumman and had a facility adjacent to the northwest piece of the Bethpage Facility. In 1975 and 1976, Hooker Chemical Corp. was also considered a source of the groundwater contamination. (Cannella Ex. 1, at NCDO0011464; NGC 56.1 ¶ 77.)
A November 5, 1975 "Summary of Groundwater Quality" states that a "most serious instance of Magothy aquifer contamination is now evident at the Grumman Aerospace Corporation." (Calland Decl. Ex. 86, at NGINS000619195.)
In June 1976, a groundwater consulting firm hired by Grumman, Geraghty & Miller, sent Grumman a memorandum that stated that it had "interpreted from the available data the ground-water quality situation at Grumman as resulting from one of two possibilities." (Cannella Decl. Ex. 3, at NGINS001899582.) The first was a "slug" of contamination that had gathered in the shallow aquifer underlying at least part of the Bethpage Facility and that was moving southeast, "following the regional pattern of the ground-water flow." (Id.) The second possibility was "the same as the first" except that the "water has moved vertically downward and affected water quality in portions of the intermediate and deep aquifers on the site." (Id.)
On November 30, 1976, the NCDOH issued a written "Synopsis of [the] Well Contamination Problem at Grumman Aerospace Corporation Facilities in Bethpage." (Cannella Decl. Ex. 4.) The paper states that practices at both Hooker Chemical Corporation and Grumman may be contributors to the pollution:
(Id. at NCDOH-0002943.) The paper also stated that sampling results showed TCE at wells no. 1, 5, 8, 14, and in a Grumman basin, and tetra chloroethylene at wells no. 5, 8, 14, and in the basin. (Calland Decl. Ex. 95, at NCDOH-028205.)
On December 13, 1976, Francis V. Padar of the NCDOH presented a comprehensive public statement on the presence of trace organic chemicals in groundwaters, in which he stated that the Hooker Chemical Company was implicated at that time "as the major, if not the total source, of the vinyl chloride and the chloroethylenes." (Calland Decl. Ex. 98, at NCDOH-0002993-NCDOH-0002994.) However, Padar stated that the "Grumman industrial operations . . . use similar chemical compounds which may be contributing to the problem." (Id. at NCDOH-0002994.) That statement also noted that the "general groundwater movement is southerly at a rate of movement in the Bethpage area of one to two feet per day." (Id. at NCDOH-0002996.)
In December 1976, Grumman attended a meeting at which 11 local, state and federal agencies were represented regarding the contamination of the well water. (NGC 56.1 ¶ 82.) NYSDOH was one of the agencies with a representative at the meeting. (Id. ¶ 83.) There were a number of news articles in November and December 1976, which Grumman clipped and maintained in its files, discussing the groundwater contamination issue at Grumman's wells. (Cannella Decl. Ex. 6.)
In 1977, the New York State Department of Environmental Conservation ("NYSDEC") requested that Grumman test water on its site; it suggested that Grumman have the samples tested for, inter alia, TCE. (Id. ¶ 87.) Samples reflected a presence of TCE. (Id. ¶ 88.) In one instance, water that had been "recharged" and returned to the ground was
On January 5, 1978, Geraghty & Miller provided Grumman with the results of a three-day "intensive monitoring program" it had performed at the Bethpage Facility. (Cannella Decl. Ex. 8, at NGINS000768958.)
(Id. at NGINS000768975.) At least one of the wells with elevated levels (well no. 16) was upgradient from Hooker Chemical's plant: the water flow was southeast, but Hooker was to the west of Grumman. (See Cannella Decl. Ex. 3, at NGINS001899582; Scanlon Decl. Ex. 5 (Langseth Decl.) ¶ 4.) Thus, the contamination in that well could not have come from Hooker.
On January 26, 1979, as part of an environmental permitting process, Grumman presented the results of the three-day study to NYSDEC. (Cannella Decl. Ex. 11, at NGINS000619272.) The report "discussfes] the control technologies by which Grumman proposes to reduce or eliminate contaminants from" certain sources, including TCE. (Id. at NGINS000619272.) Specifically, Grumman set forth various ways to reduce the listed chemicals in its "effluents." (Id. at NGIN8000619273.) The report continues, "[a]s discussed in our first report, several sources of potential discharge exist in our plants. . . . The sources we listed previously are: 1. Well water' supply; 2. Paint booth wastes (water curtain type); 3. Open plant drains and sinks." (Id.) In terms of paint booth wastes, the report states that
(Cannella Decl. Ex. 11, at NGINS000619275-76.)
The report lists several courses of action, including:
(Id. at NGINS000619276-77.) The report then summarizes, "The additional technologies described above . . . will substantially eliminate the problem of intermittent spills of chemicals within our plants." (Id. at NGINS000619278.)
In 1979, the EPA gave NYSDOH a mandate to assess water supply programs and to assess surface disposal sites, including Grumman's Bethpage Facility. (NGC 56.1 ¶ 95.) The NYSDOH found that Grumman's "ground-water pollution potential" was "slightly higher than average." (Id. ¶ 97.) The NYSDOH then took and tested sludge samples. (Id. ¶ 98.)
In 1979, Grumman agreed to perform a "sludge teachability test" for NYSDEC. (Id. ¶ 100.) By 1980, NYSDEC and NDOH had reviewed the results of testing. (Id. ¶ 94.) The results were sent to the EPA, which deemed the Bethpage Facility a "low priority for further EPA involvement at [that] time." (Id.)
In June 1980, the NYSDEC, in cooperation with the NYSDOH, published a report naming Grumman's Bethpage Facility as among active hazardous waste disposal sites and assigning it the "Site Code 130003." (Id. ¶ 93; see also Cannella Exs. 15, 16.) Notably, this was more than 18 years after the 18-acre parcel that became the Bethpage Community Park had been transferred to the Town of Oyster Bay. (See NGC 56.1 ¶ 65.) There is no indication that the Site Code intended to capture and name as a hazardous waste disposal site what was then being used as a community park. This is further confirmed by the fact that the report describes the Bethpage Facility as an "active industrial site." (Id. ¶ 93; see also Cannella Ex. 15, at
The June 1980 report addresses a number of hazardous waste sites in New York State. (Cannella Decl. Ex. 15.) A summary at the beginning of the report states, "Vigorous state programs are needed to bring about remedial action or to recover the costs of needed remedial actions at uncontrolled hazardous waste sites from the responsible parties." (Id. at NGINS002895565.) The State identifies three courses of action: to negotiate with the responsible party, to take administrative action to order responsible parties to clean up an old dump site, and/or to go to court. (Id. at NGINS002895567.) The report recommends support of a federal "Superfund" to assist in remediating certain sites. (Id. at NGINS002895569-70.)
In September 1980, the Bethpage Facility was listed in a NYSDEC Registry of Hazardous Waste Disposal Sites. (Cannella Decl. Ex. 16.) The report states that the wastes are from, inter alia, "metal cleaning operations." (Id. at C-1-3.)
A NYSDEC 1983 report also lists Site 130003 as a Hazardous Waste Disposal Site. (NGC 56.1 ¶ 103.)
On December 6, 1983, the NYSDEC sent Grumman a "potentially responsible person" letter (the "PRP Letter"). (Id. ¶ 104.) The PRP Letter initiated a formal, adversarial proceeding against Grumman for environmental contamination at the Bethpage Facility "and its environs." (Id.) Grumman sent the letter to its broker; in late January 1984, the broker subsequently sent the letter to "Travelers" at an address that was not a business or other address for Travelers. (Travelers 56.1 ¶ 163.) A January 20, 1984 letter from Travelers to J.A. Morgese of Frank B. Hall and Co. regarding "New York State v. Toivn of Oyster Bay, et al." (a lawsuit related to the Old Bethpage Landfill) set forth the address that Grumman's broker later used to send the 1983 PRP Letter to Travelers. (See NGC 56.1 ¶ 162; Calland Decl. Ex. 139, at TRAV00570.) However, there is no record evidence that Travelers ever received the 1984 letter enclosing the 1983 PRP Letter. (Travelers 56.1 ¶ 164.) No Travelers witness has any recollection of seeing the 1984 letter or the 1983 PRP Letter. (Id. ¶ 167.) The 1984 letter also does not appear in Grumman's files. (NGC 56.1 ¶ 165.) No Grumman witness recalls having seen this letter prior to this litigation. (Travelers 56.1 ¶ 168; NGC 56.1 ¶ 168.) A claims handler at INA (a predecessor company to Century) did receive a copy of the letter, which is how it came to be part of the materials in this litigation. (NGC 56.1 ¶ 165.)
The 1984 cover letter refers to "Grumman Corporation, New York State v. Toivn of Oyster Bay, et al." (Travelers 56.1 ¶ 170.) The lawsuit to which the letter's caption refers is related to the Old Bethpage Landfill. (Id.) The lawsuit relating to the Old Bethpage Landfill concerned a sludge drying bed no longer in use. The text of the cover letter also states, "[E]nclosed is additional information on the above captioned for your files." (Id. ¶ 171.) The complaint in the Old Bethpage Landfill lawsuit was sent to Grumman on December 9, 1983. (Cannella Ex. 19, at NGINS002909700.) It was reported to the Grumman board on January 19, 1984. (Cannella Ex. 21, at NGINS001892952.) The Old Bethpage Landfill claim concerned sludge taken from a sludge drying bed at the Bethpage Facility to the Old Bethpage Landfill.
The body of the 1983 PRP Letter references Site 130003. (NGC 56.1 ¶ 170.) The letter also refers to a claim for damages to natural resources "at and around" the Bethpage Facility and its "environs." (Id.)
In a memorandum dated January 11, 1984, Grumman states that the 1983 PRP Letter covers damage "attributable to GAC's on-site sludge drying bed, identified as site # 130003." (Travelers 56.1 ¶ 173.) On January 24, 1984, a letter authored by a Grumman insurance manager states that the "site in question is no longer in use." (Id. ¶ 174.) In its Board of Directors meeting minutes and its 10-K, Grumman described the 1983 PRP Letter as "related to a disposal site which was located within the property boundaries of [the] . . . facility in Bethpage, New York." (Id. ¶ 175.)
A letter from Arthur Gibson, Grumman's former employee, dated April 10, 1984, refers to Site 130003 as "the GAC sludge beds." (NGC 56.1 ¶ 178.) At his deposition, Gibson stated that he believed at the time he wrote the letter that Site 130003 "pertained to the sludge beds but [was] not limited to the sludge beds." (Id.) An Initial Assessment Study performed in 1986 also states that the 1983 PRP Letter related to the "sludge drying beds." (Travelers 56.1 ¶ 179.)
John Ohlmann, John Ball (a Grumman lawyer), and David Miller (Grumman's environmental consultant) attended a meeting with NYSDEC on December 11, 1986. (NGC 56.1 ¶ 105.) In a memorandum dated December 12, 1986 that summarized the meeting, Ohlmann and Ball wrote to Dean Cassell of Grumman that NYSDEC had requested a field investigation that "could be the first step leading to a very serious and expensive liability of Grumman for possible cleanup costs, if it were determined Grumman contributed contaminants to the groundwater and a cleanup of some kind was required." (Id. ¶ 107.) The memorandum noted that the possible clean-up costs could "conceivably be in the 10-20 million dollar range" and that the NYSDEC request could be the "opening gun of a long drawn-out controversy about the matter." (Id. ¶ 108.) At this time, Grumman did not provide Travelers with notice of this field investigation or its views as to potential monetary exposure.
Beginning in 1986, the U.S. Geological Survey ("USGS") and NCDOH conducted a cooperative study of the groundwater near Bethpage. (Id. ¶ 109.) By 1987, the USGS and NCDOH study identified a plume of contaminated groundwater partially beneath the Bethpage Facility. (Id. ¶ 110.) At this time, Grumman did not provide Travelers with notice of this finding.
Gibson, a former Grumman employee, has stated that, as Grumman accumulated data following receipt of the 1983 PRP Letter and various studies were conducted thereafter, Grumman realized that plant # 2 on the Bethpage Facility was a likely source of TCE contamination. (Id. ¶ 111.) However, Grumman continued to believe that Hooker Chemical Corp. also contributed to the contamination. (Id.) There is no evidence in the record that Grumman notified Travelers of this finding with respect to plant # 2 at or even near the time at which the finding was made.
On December 6, 1987, NYSDEC reclassified the Bethpage Facility as a "Class 2 Site," or a site posing a "[significant threat to the public health or environment" and requiring remedial action; it also noted that groundwater standards had been contravened. (Id. ¶ 113.) On the same day, NYSDEC informed Grumman that a "full scale [Remedial Investigation/Feasibility Study] is required at the Grumman Bethpage Site." (Id. ¶ 114.) Grumman did not notify Travelers of this reclassification or the full-scale investigation and study at
In July 1988, Geraghty & Miller provided a remedial investigation/feasibility study ("RI/FS") work plan for the Bethpage Facility. (Cannella Decl. Ex. 38.) In a section entitled "Ground-Water Contamination," the work plan states:
(Id. at NGINS000674266-67.) In a section entitled "Environmental and Health Concerns," the report states:
(Id. at NGINS000674267-68.) In terms of TCE handling, the report states:
(Id. at NGINS000674279.) The report bases its recommendations upon analytical data from 1970 onwards. (See, e.g., id. at NGINS000674281, NGINS000674346 (showing test results for trichloroethylene dating from the mid-1970s).) A "Chronological Record of the Bureau of Water Resources' Investigation of Groundwater Contamination, East Central Nassau County" was included as an appendix to the Geraghty & Miller work plan. (Id. at NGINS000674402.) That chronology sets forth issues dating from 1973 relating to contamination of drinking wells on site. (Id.)
Grumman submitted the Geraghty & Miller work plan to NYSDEC. (NGC 56.1 ¶ 122.) Grumman did not provide written notice to Travelers that these communications in 1987-88 had occurred or that negotiations with NSYDEC were ongoing. (Id. ¶ 124.)
A former Grumman employee has testified that, at a meeting with Travelers in 1989, representatives of Travelers and Grumman discussed the NYSDEC request orally. (Id. ¶¶ 124, 180.)
On October 25, 1990, Grumman entered into a consent order with NYSDEC that required Grumman to conduct the investigation and study at the Bethpage Facility. (Id. ¶ 125.) In 1990 or the immediate years thereafter, Grumman did not inform Travelers that it had entered into this consent order.
NYSDEC issued Records of Decision ("RODs") in 1995 and 2001 relating to the Bethpage Facility. (Id. ¶ 127.) These RODs set forth remedial measures Grumman was required to implement to cure
In 1990, Grumman submitted an appendix to NYSDEC titled "Information on Reported Spills, Leaks and Releases at the Grumman Aerospace Corporation and U.S. Naval Weapons Industrial Reserve Plant, Bethpage, New York." (NGC 56.1 ¶¶ 135, 136; Cannella Decl. Ex. 43, at NGINS000210735.) The appendix included a certification, signed under penalty of perjury, stating that:
(NGC 56.1 ¶ 136.) The appendix identifies a few isolated spills, but there is no evidence that any involved TCE. (Travelers 56.1 ¶¶ 138, 139.) Steven Scharf, the NYSDEC designee, testified that he was not aware of any explosions, fires, abrupt releases, or accidents at the Bethpage Facility, nor did NYSDEC have any record of any reports of the same. (Id. ¶¶ 134, 135; Travelers 56.1 ¶¶ 134, 135.)
In a 2012 letter from Northrop to Travelers, Northrop estimated that it had spent $40,600,000 to date, but stated that those estimates did "not take into account all potential cost[] contingencies." (NGC
By the mid-1990s, Grumman had entered into an informal "handshake agreement" with the U.S. Navy relating to allocation of costs regarding the Bethpage Facility remediation and cleanup. (Id. ¶ 144.) Grumman did not inform Travelers of this agreement when it occurred or even in the immediate years thereafter.
Grumman merged with Northrop in 1994. (See id. ¶ 147.) In 1999, Northrop initiated an effort "to assess the potential for significant cost recovery of company environmental remediation expenses from applicable insurance coverage." (Id.) In 2009 and early 2010, Northrop worked with outside legal counsel to evaluate and pursue insurance recoveries for environmental liabilities. (Id. ¶ 153.)
On February 1, 2012, Northrop sent a letter to Travelers requesting coverage for the Bethpage Facility. (Id. ¶ 57.)
Travelers issued a series of primary and excess liability policies to NGC's predecessors effective from January 1, 1968 through January 1, 1985. (Northrop Grumman's Responses to Travelers' "Statement of Undisputed Material Facts Pursuant to Local Rule 56.1 in Supp. of Travelers' Mot. for Summ. J. Regarding the Community Park" ("NGC BCP 56.1") ¶ 109.) All of the policies at issue on this motion require Grumman to provide Travelers with immediate written notice of a claim. They each contain the following language:
(NGC 56.1 ¶ 184.) All of the Travelers primary policies provide:
(Travelers 56.1 ¶ 185; NGC 56.1 ¶ 185.) The Travelers Catastrophic Umbrella policies prcvide:
(Id. ¶ 186.) The Travelers primary policies at issue prohibit the insured from voluntarily assuming obligations or expenses without Travelers' consent:
(Id. ¶ 188.) The Travelers policies in effect frcm January 1, 1968 through January
All insurance policies in effect in New York between January 1, 1972 and January 1, 1983, with the exception of Policy No. TREE-SLG-107T519-8-82, incorporate New York State's statutory pollution exclusion:
(Travelers 56.1 ¶ 181 (quoting N.Y. Ins. Law § 46(13) & (14) (McKinney 1981)).) The Travelers policies in effect between January 1, 1983 and January 1, 1985, contain a different form of pollution exclusion:
(Travelers 56.1 ¶ 182). Travelers' Policy No. TREE-SLG-107T519-8-82 contains this form of pollution exclusion. (NGC 56.1 ¶ 183.)
The mere fact that submissions on summary judgment are extensive (even requiring a small moving truck) does not mean that there is a genuine issue for trial. Such extensive submissions may mean that the record is simply a large one. The facts material to resolution of the motion may nonetheless be undisputed by competent evidence. The size of submissions may also be tactical—meant by the nonmovant to convey a sense that "there must be something that would preclude summary judgment in here!" Or the size may be due to something else entirely.
On this motion, the Court has carefully reviewed the parties' submissions, aided by their additional submission of DVDs with documents hyperlinked to the text of the submissions, allowing for easier reference. The submissions are—to put it mildly— extensive. But they do not contain a triable issue of fact that precludes granting Travelers' motion.
In reviewing the submissions of the parties, the Court has been careful to keep in the forefront the legal principles that on such a motion, it may not weigh the evidence or make credibility findings. See Jeffreys v. City of New York, 426 F.3d 549, 551 (2d Cir.2005). If there are competing inferences to be drawn from the evidence presented on the motion, the Court must draw any competing inferences in favor of the nonmoving party—here, Northrop. Dickerson v. Napolitcmo, 604 F.3d 732, 740 (2d Cir.2010). This Court can only grant summary judgment when, notwithstanding these legal principles, the moving party is able to demonstrate that based on admissible evidence, "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a).
Of course, contested facts unnecessary to resolution of this motion do not create triable issues. Here, the record is full of such facts. That this Court has not considered such facts is due to their legal irrelevance to resolution of the motion.
Whether summary judgment is appropriate based on the statutory or policybased pollution exclusions depends on the legal interpretation of both the phrase "sudden and accidental" and "expected or intended," as well as whether there is a triable issue of fact as to Grumman's actions as measured against those legal standards.
As the policyholder, Northrop Grumman bears the burden to show that any releases were "sudden and accidental," because the phrase "unless such discharge, dispersal, release or escape is sudden and accidental" functions as an exception from the statutory exclusion applicable to the Travelers policies issued between January 1, 1972 and January 1, 1983. See Northville Indus. Corp. v. Nat'l Union Fire Ins. Co., 89 N.Y.2d 621, 634, 657 N.Y.S.2d 564, 679 N.E.2d 1044 (1997).
For Travelers' policies issued between January 1, 1983 and January 1, 1985, Travelers bears the burden to show that any releases were not "expected or intended," because the phrase "if such emission, discharge, seepage, release or escape is either expected or intended" modifies the exclusion for pollution itself. See Northville, 89 N.Y.2d at 634, 657 N.Y.S.2d 564, 679 N.E.2d 1044.
The burden of obtaining summary judgment on insurance coverage is a high one and is borne by the movants. Travelers has the burden of showing that the statutory and policy exclusions clearly and unmistakably bar coverage on the undisputed facts. See Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d 377, 383, 763 N.Y.S.2d 790, 795 N.E.2d 15 (2003).
New York courts have repeatedly held that the "sudden and accidental" pollution exclusion is "unambiguously plain and operative." See Powers Chemco, Inc. v. Fed. Ins. Co., 74 N.Y.2d 910, 911, 549 N.Y.S.2d 650, 548 N.E.2d 1301 (1989); Technicon Elecs. Corp. v. Am. Home Assur. Co., 74 N.Y.2d 66, 71, 544 N.Y.S.2d 531, 542 N.E.2d 1048 (1989) ("Technicon II"); see also Northville, 89 N.Y.2d at 631, 657 N.Y.S.2d 564, 679 N.E.2d 1044.
In order to avoid summary judgment as to coverage despite the statutory exclusion, a policyholder must raise a triable
The statutory language and interpreting case law make clear that the factual question as to "what" must be sudden and accidental relates to the discharge, dispersal, or release of "any" pollutants, contaminants or irritants. N.Y. Ins. Law § 46(13) & (14); see also Travelers Indem. Co. v. Orange & Rockland Utils., Inc., 73 A.D.3d 576, 577, 905 N.Y.S.2d 11 (N.Y.App.Div. 1st Dep't 2010).
Courts have held that the word "sudden" has—as one would reasonably expect based on its plain-language meaning—a temporal element. Nortliville, 89 N.Y.2d at 632. 657 N.Y.S.2d 564, 679 N.E.2d 1044; see also Md. Cas. Co. v. Cont'l Cas. Co., 332 F.3d 145, 158 (2d Cir.2003); Ogdert Corp. v. Travelers Indem. Co., 924 F.2d 39, 42 (2d Cir.1991); Teclinicon Elecs. Corp. v. Am. Home Asswr. Co., 141 A.D.2d 124, 533 N.Y.S.2d 91, 99 (App.Div. 2d Dep't 1988) ("Technicon I"), aff'd, 74 N.Y.2d 66, 544 N.Y.S.2d 531, 542 N.E.2d 1048 (1989). To be sudden, an event must occur "abruptly, precipitantly or . . . in a short time." Northville, 89 N.Y.2d at 632, 657 N.Y.S.2d 564, 679 N.E.2d 1044. Discharges that occur over a period of time are, definitionally, not "sudden." See, e.g., Ogden Corp., 924 F.2d at 42; AMRO Realty, 936 F.2d at 1428.
In Nortliville, a company engaged in the distribution and sale of gasoline maintained both above- and belowground storage tanks as well as networks of connecting pipes. 89 N.Y.2d at 629-30, 657 N.Y.S.2d 564, 679 N.E.2d 1044. In 1986 and 1987, the company noticed that there had been a "fortuitous release" of gasoline from two of its facilities that had migrated underneath the neighboring properties. Id. at 630, 657 N.Y.S.2d 564, 679 N.E.2d 1044. Owners of the neighboring properties sued; the insurers denied coverage based on the "sudden and accidental" pollution exclusion. Id. The court stated that "there is no allegation in the underlying
Moreover, the court found that an onset is not "sudden" simply because a leakage event must commence at some point in time. See id. ("[T]he sudden discharge element of the pollution exclusion exception cannot be established merely by showing that the release of the pollutant had its onset at some particular point in time, and in that sense, the discharge cannot be said to have begun `abruptly.'").
In addition to being sudden, in order for a policyholder to overcome the statutory pollution exclusion on a motion for summary judgment, it must also and separately raise a triable issue as to whether the discharge, dispersal or release was "accidental." N.Y. Ins. Law § 46(13) & (14); see also Poivers Chemco, 74 N.Y.2d at 911, 549 N.Y.S.2d 650, 548 N.E.2d 1301. Case law has interpreted "accidental" as meaning neither intentional nor purposeful. Id.; AMRO Realty, 936 F.2d at 1427-28; Technicon I, 533 N.Y.S.2d at 101. The law is clear that "accidental" includes an incident occurring "by chaice." Northville, 89 N.Y.2d at 632, 657 N.Y.S.2d 564, 679 N.E.2d 1044.
As a matter of law, it is of no moment whether the damage was unintentional oi* accidental; the question is whether the act of discharge, dispersal or release was unintentional or accidental. See id. at 632-33, 657 N.Y.S.2d 564, 679 N.E.2d 1044; see also Technicon II, 74 N.Y.2d at 74-75, 544 N.Y.S.2d 531, 542 N.E.2d 1048. Where a discharge itself was deliberate, it was no" accidental. AMRO Realty, 936 F.2d at 1427. "Disposing" of something connotes a deliberate and intentional activity. See id. at 1428 (the fact that certain of the policyholder's employees did not know where drains led or where waste would end up made no difference, because its disposal was intentional and not accidental); see also EAD Metallurgical, Inc. v. Aetna Cas. & Surety Co., 905 F.2d 8, 11 (2d Cir. 1990). Lacking the specific intent to pollute does not make an intentional act of discharge "accidental." AMRO Realty, 936 F.2d at 1428.
While the statute uses the word "any" in reference to an excluded discharge, case law has held that the discharge must be sufficient to have "some potentially damaging environmental effect." Northville, 89 N.Y.2d at 634, 657 N.Y.S.2d 564, 679 N.E.2d 1044.
Neither the word "expected" nor the word "intended" is defined in the 1983-1985 Travelers' policies. As with contract construction generally, the Court can give terms their plain and ordinary meaning unless some other meaning is, from the context, intended. Both words have plain and ordinary meanings and the Court finds no basis to vary from those meanings here. They are used in the disjunctive
According to the Merriam-Webster Online Dictionary, the term "expect" means "to think that something will probably or certainly happen," and "intend" means "to plan or want to do (something)" or to have something "as a purpose or goal." "Expect," Merriam-Webster Online Dictionary, http://www.merriamwebster.com/ dictionary/expect (last visited Jan. 22, 2014); "Intend," Merriam-Webster Online Dictionary, http://www.merriam-webster. com/dictionary/intend (last visited Jan. 22, 2014).
The provision of the policies containing this exclusionary language also defines the "act" to which it refers to be the "emission, discharge, seepage, release or escape." (NGC 56.1 ¶ 182.) Put another way, the focus of the exclusion is on the act relating to the discharge, not whether it was expected or intended that the act would result in damage. See Olin Corp. v. Ins. Co. of N. Am., 762 F.Supp. 548, 561 (S.D.N.Y.1991), aff'd, 966 F.2d 718 (2d Cir. 1992); see also Emerson Enters., LLC v. Kenneth Crosby New York, LLC, 768 F.Supp.2d 484, 491 (W.D.N.Y.2011) ("Moreover, the terms `expected or intended' modify the initial `emission, discharge, seepage, release or escape' of pollutants, not the subsequent damage caused.").
At least one court has interpreted this language in the context of Travelers' policies and found that non-accidental pollution was expected or intended. See id. at 491-92.
In City of Johnstown, N. Y. v. Bankers Standard Ins. Co., 877 F.2d 1146 (2d Cir. 1989), the Second Circuit warned against taking the "expected or intended" exclusion too far, at least when an interpreting an occurrence provision. There, the state of New York had sued the City of Johnstown for the costs of studying and cleaning up wastes seeping from a City landfill into surrounding groundwaters. Id. at 1147. The City gave notice of the suit to various insurers who had issued the City various policies over the years; the insurers disclaimed coverage on a number of bases, including that the pollution was intended or expected. Id. at 1147-48. In particular', the insurer's argued that the City had had prior notice that pollutants from the landfill were leaking into the groundwater. Id. at 1149. The district court agreed with the insurers that they had no duty to defend; the Second Circuit reversed. Id. at 1147.
In its decision, the Second Circuit used broad language in defining how "expected or intended" should be interpreted. Id. at 1150. The court noted that, while an "intentional" act may cause damages, it may still be considered "accidental" under New York law so long as the "total situation could be found to constitute an accident," Id, at 1150 (quoting McGroarty v. Great Am. Ins. Co., 36 N.Y.2d 358, 368 N.Y.S.2d 485, 490, 329 N.E.2d 172 (1975)). The court noted that insurance is intended to provide coverage against "mishaps," and ordinary negligence and taking a calculated risk do not amount to an "expectation" that would preclude coverage. Id. at 1150. The court reiterated that "expected" or "intended" excludes only those acts which are not accidental—and that courts have focused on whether an act is intentional, not the resulting damage. Id.
The Second Circuit stated, "Recovery will be barred only if the insured intended the damages or if it can be said that the damages were, in a broader sense, `intended' by the insured because the insured knew that the damages would flow directly
Importantly, City of Johnstown is distinguishable from AMRO Realty, a Second Circuit case decided two years later. City of Johnstown is inapposite to the instant circumstances because the court there was interpreting an occurrence provision. That is an important distinction, because in occurrence provisions, the "expected or intended language focuses on the damage or accident for which the insured seeks indemnification," whereas in pollution exclusions, those words modify the "discharge" itself. Agway, Inc. v. Travelers Indem. Co., No. 93 Civ. 557, 1993 WL 771008, at *16 (N.D.N.Y. Dec. 9, 1993) (emphasis added).
As set forth above, in AMRO Realty, which governs these circumstances, the Second Circuit stated that, if the disposal or discharge was intentional, the pollution exclusion is triggered. See 936 F.2d at 1427-28. There, a manufacturer had disposed of hazardous manufacturing waste in several places on the site in question, including a parking lot, sinks that discharged into septic systems, and drains that discharged through sewage pipe into a drainage ditch. Id. at 1427. The manufacturer's intentional disposal of waste— even without knowing that it would be released into the environment—was sufficient to trigger the pollution exclusion. Id. at 1428.
Under New York law, when multiple releases of pollutants are at issue, so long as at least one release was not sudden or accidental and contributed substantially to the contamination, coverage is not automatically barred by the pollution exclusion. See, e.g., New York v. Blank, 27 F.3d 783, 791 (2d Cir.1994) (finding that insurers had a duty to defend a CERCLA action when the underlying complaint did not foreclose the possibility that the "property damage was caused, even if in part, by the `sudden and accidental' discharge of pesticides"); Petr-All Petroleum Corp. v. Fireman's Ins. Co., 188 A.D.2d 139, 142-43, 593 N.Y.S.2d 693 (N.Y.App.Div. 4th Dep't 1993) (finding that, if leaks occurred abruptly but continued for a period of time, they could fall within the "sudden and accidental" exception). Northrop refers to this as the "concurrent causation rule." (Northrop Grumman's Mem. of L. in Opp. to Travelers' Mot. ("NGC Opp.") 29.)
Travelers also asserts receipt of late notice as a total defense to Northrop's claims for coverage with respect to the Bethpage Facility. The parties' dispute in this regard is less as to the applicable legal standards and more as to whether notice was
Timely notice is a condition precedent to coverage. Am. Ins. Co. v. Fairchild Indus., Inc., 56 F.3d 435, 438 (2d Cir.1995). In Fairchild, an insured party, Fairchild, appealed from the district court's directed verdict in favor of the insurer on the ground that the insured's notice of claim was untimely as a matter of law. Id. at 438. The Second Circuit affirmed, stating that an "assertion of possible liability, no matter how baseless, is ... all that is needed to trigger a notice of claim provision." Id. at 439, 441. The court explained that it was clear long before notice was given that Fairchild and NYSDEC were negotiating over the remediation of a contaminated basin and a plume. Id. at 440-41. A memorandum that the areas in question would "most likely" be reclassified to a level 2 hazardous waste site was sufficient for Fairchild to know that NTDEC was asserting liability and was enough to trigger the notice-of-claim provision. Id. at 441. Because Fairchild gave notice only after reclassification had already been ordered, its notice was late as a matter of law. Id, The court stated that timely notice allows for a prompt investigation and early control of the direction a claim might lead; notice of a claim focuses on the actions (that is, a claim) made by third parties—and it may be triggered by a third parties' unreasonable and even sanctionable assertion of liability. Id. at 439.
When an insurance policy requires immediate notice of a claim, courts have held even short delays to be unreasonable. See M.Z. Discount Clothing Corp. v. Meyninger. 23 F.Supp.2d 270, 272 (E.D.N.Y.1998). Some courts have held delays of fewer than 54 days to be untimely as a matter of law. See Am. Home Assur. Co. v. Republic Ins. Co., 984 F.2d 76, 78 (2d Cir.1993) (collecting eight cases in which delays of fewer than 54 days had been held untimely as a matter of law).
Under New York law, an insurer need not demonstrate prejudice to successfully invoke a defense of late notice. See AXA Marine & Aviation Ins. (UK) Ltd. v. Seajet Indus., Inc., 84 F.3d 622, 624-25 (2d Cir.1996); Argo Corp. v. Greater NY. Mid, Ins. Co., 4 N.Y.Sd 332, 339-40, 794 N.Y.S.2d 704, 827 N.E.2d 762 (2005).
The insured bears the burden of showing any delay was reasonable under the circumstances. Security Mut. Ins. Co. v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 441, 340 N.Y.S.2d 902, 293 N.E.2d 76 (1972); see also State of New York v. Ludlow's Sanitary Landfill, Inc., 50 F.Supp.2d 135, 138 (N.D.N.Y.1999). In Ludlow's, SMC had been disposing of various wastes by having Ludlow's haul them to a landfill site that Ludlow's operated. Id. at 136. SMC had used a contaminant that was in the fill that Ludlow's hauled away, but had ceased using the particular chemical in 1972. Id. In February 1983, the NYSDEC investigated the Ludlow's landfill and sent a letter to SMC regarding its use of chemicals in fill that had been sent there. Id. In December 1983, the NYSDEC sent SMC a PRP letter. Id. SMC then hired counsel and began an investigation. Id, It did not provide notice to its insurers until October 1984. Id. at 137. The insurers declined coverage on the basis of a 10-month delay in providing notice; SMC responded by stating that it had a bona fide belief that it was not the responsible party at the site. Id. at 137. The court agreed that notice was untimely, relying in part on the fact that SMC had known shortly after receiving the PRP letter that New York State viewed it as one of two primary contributors of industrial waste to the landfill. Id. at 139.
A good faith belief in non-liability is not a defense to a failure to provide notice of a claim. Fairchild, 56 F.3d at 439; but see Reynolds Metal Co. v. Aetna Cas. & Sur. Co., 259 A.D.2d 195, 201, 696 N.Y.S.2d 563 (N.Y.App.Div.3d Dep't 1999).
In the context of the question when notice of an occurrence is due, however, a good faith belief in non-liability may excuse some delay. Argentina v. Otsego Mid. Fire Ins. Co., 86 N.Y.2d 748, 750, 631 N.Y.S.2d 125, 655 N.E.2d 166 (1995); Reynolds, 259 A.D.2d at 199-200, 696 N.Y.S.2d 563 ("[A]n insured's goodfaith belief in non-liability, when reasonable under the circumstances, may excuse a delay in notifying an insurer of an occurrence or potential claim."). Whether or not a policyholder has a good faith belief in non-liability is normally a question of fact. Id. at 200, 696 N.Y.S.2d 563; see also Argentina, 86 N.Y.2d at 750, 631 N.Y.S.2d 125, 655 N.E.2d 166.
In Reynolds, the plaintiff sued its insurers for coverage related to environmental actions by the NYSDEC, the EPA, and Mohawk Tribe. 259 A.D.2d at 197, 696 N.Y.S.2d 563. In December 1983, it had received a letter similar to that which Grumman here received, naming it as a "potentially responsible party." Id. at 198, 696 N.Y.S.2d 563. Plaintiff had been aware of issues with respect to its Massena site; the letter made no specific reference to another area, but referred to "its environs," including "the natural resources of the State of New York at and around the referenced site." Id. at 199, 696 N.Y.S.2d 563. Plaintiff did not understand this language to be referring to damage to the St. Lawrence River or property of third parties. It did not provide immediate notice to its insurers and later claimed that based upon its good faith belief in nonliability, it was not obligated to. Id. at 199, 696 N.Y.S.2d 563. The court there agreed. Id. at 201, 696 N.Y.S.2d 563.
In this regard, the court found persuasive the fact that when it received the PRP letter in 1983, Reynolds was unaware of any releases to the contaminated river and believed that any contamination came from other confirmed sources. Id. at 202-03, 696 N.Y.S.2d 563. In 1985, plaintiff needed to obtain a new permit from the NYDEC for the landfill and to build a new lagoon. Id. at 202, 696 N.Y.S.2d 563. As a condition of granting this new permit, the NYSDEC required that Reynolds enter into a consent order. Id. Reynolds entered into a consent order in which it agreed to conduct an investigation if any inactive hazardous waste sites were discovered; but no specific remediation was ordered and no investigation was required. Id. at 203, 696 N.Y.S.2d 563. Shortly after entering into the consent order, Reynolds received another "potentially responsible party" letter from the EPA. Id. This letter referred specifically to the St. Lawrence-Grasse River System. Id. Reynolds sent this second PRP letter to its insurers. Id. The insurers asserted a late notice defense on the basis that the first PRP letter encompassed the damage to the St. Lawrence River—and thus failure to provide notice of that letter to the insurers meant that the 1987 notice was untimely. Id. In the context that Reynolds found itself in— that is, not knowing of the contamination in December 1983 that eventually resulted in the second PRP letter in 1987—the Court found that a good faith belief in nonliability could excuse delay and reversed a grant of summary judgment. Id. at 204-05, 696 N.Y.S.2d 563.
Each policy imposes a separate contractual duty on the insured to provide
An insurer can waive—or be found to have waived—the notice provisions of its policy under certain circumstances. For instance, waiver of the notice provision can occur if an insurer unequivocally and across the board denies any coverage obligation. See Jacobson v. Metro. Prop. & Cas. Ins. Co., 672 F.3d 171, 176-78 (2d Cir.2012); see also H.S. Equities, Inc. v. Hartford Acc, and Indem. Co., 661 F.2d 264, 270 (2d Cir.1981). If, however, an insurer has not categorically denied coverage, the insured must comply with notice requirements. See Olin Corp. v. Ins. Co. of N. Am., 221 F.3d 307, 329 (2d Cir.2000) (notice requirements were not waived, because the insurer never categorically denied the duty to indemnify). An insured bears the burden of proving a denial of coverage by presenting sufficient facts that a trier of fact may determine whether and when such denial occurred. Cf. Texaco A/S (Denmark) v. Commercial Ins. Co. of Newark, N.J., 160 F.3d 124, 129-30 (2d Cir. 1998) (a fact issue as to whether an insurer had denied coverage required reversal of summary judgment).
Travelers argues that Grumman's practices spanning decades require a determination that the "sudden and accidental" statutory pollution exclusion or the "expected or intended" policy-based exclusion preclude coverage with respect to the Travelers policies issued between January 1, 1972 and January 1, 1983. This Court agrees.
Northrop spends a tremendous amount of space arguing two points: (1) the lawfulness of their practices during at least the bulk of the relevant period, and (2) that the pollutant potential of a primary contaminant at issue, TCE, was not understood at the time of Grumman's practices. Thus, taking these two points together, Grumman argues that it did not and could not reasonably know its operations, versus those of Hooker Chemical Corp., were polluting the groundwater. For purposes of this motion, the Court accepts as true the facts that Grumman has proffered in this regard. They do not change the outcome of this motion.
First, the law is clear that for the period from 1972 to January 1983, whether a discharge was "sudden and accidental" is based on whether the discharge, dispersal, or release was sudden and accidental. Here, it clearly was not. The lawfulness of Grumman's acts in discharging or disposing of its wastes is not at issue. Rather the relevant question is whether the act of discharge or disposal was intended, and it was. (See, e.g., NGC ¶¶ 21-23 (discussing the use of recharge basins); ¶ 29 (discussing the use of scrapings from discharge basins to fill in areas on the Facility); ¶¶ 43-48 (discussing the storage of TCE in a tank that leaked); ¶¶ 49-50 (discussing spraying of waste oil on roads in the Facility).)
This is consistent with the case law. For instance, in Northville, the insured's business involved the lawful storage and distribution of gasoline; the insured did not raise the lawfulness of its acts as a defense. See 89 N.Y.2d at 629-30, 657 N.Y.S.2d 564, 679 N.E.2d 1044. The court found that the defendant insurers w?ere not obligated to defend or indemnify against the insured's liability for discharges of that gasoline, hi. at 635, 657 N.Y.S.2d 564, 679 N.E.2d 1044. Similarly, in AMRO Realty, the Second Circuit found that where the discharge was deliberate (waste was placed into containers), that was sufficient to eliminate any "accident"; there, disposing of waste was found to be an intentional and deliberate act. AMRO Realty, 936 F.2d at 1427-28; see also Technicon II, 74 N.Y.2d at 75, 544 N.Y.S.2d 531, 542 N.E.2d 1048.
The Travelers policies issued between January 1, 1983 and January 1, 1985 contain specific language that this Court must interpret according to its plain meaning. The policies provide that excluded from coverage is "any emission, discharge, seepage, release or escape of any liquid, solid, gaseous or thermal waste or pollutant if such emission, discharge, seepage, release or escape is either expected or intended." (Travelers 56.1 ¶ 182.) The lawfulness of an act is therefore not at issue; the issue is whether the act of discharge was expected or intended.
Similarly, the pollution exclusions do not require that Grumman understood that TCE or PCBs would contaminate the soil or groundwater. The statute does not require an "intent to pollute" or even "knowing pollution." In AMRO Realty, the Court found that a lack of knowledge that the insured's acts were contaminating also die not make the release "accidental." 936 F.2d at 1428.
Grumman knew what it was doing with respect to its operations as set forth extensively in the fact section above. It intended to use TCE in its spray guns, and it intended for sludge containing TCE to be sent to the recharge basins, for the water containing TCE to be wiped up with rags, and for TCE to be placed into drums for recycling. All of these acts are undisputed and indisputably intended. In addition, Grumrran's own witnesses testified that they expected that welds on drums would fail and that spills would occur. (See NG 56.1 ¶¶ 313-14.) Moreover, the Geraghty & Miller report referred to Grumman's practices that led to contamination of TCE as "housekeeping" practices. (NGC 56.1 ¶ 90.)
This case is not like that in City of Johnstown. That case was in a far different procedural posture, involving a dispute of the duty to defend and indemnify—not ultimate coverage liability after the full development of a factual record. There, it is certainly true that faced with a city being left on the hook financially to remediate a landfill, the Second Circuit used broad language to state that an insured had to intend injuries or damage and that it was not enough that an insured took a calculated risk. 877 F.2d at 1150. However, that case was prior to the Second
Grumman regularly used TCE in its operations starting at least in the 1940s. (See, e.g., NGC 56.1 ¶¶ 5, 8, 214, 215.) Grumman's practices involved TCE on the ground, sprayed by wands, discharged into basins, and kept in drums. (See, e.g., id. ¶¶ 13, 21, 52.) All of these practices, as an external consultant stated in a 1978 report, involved "housekeeping" matters. (NGC 56.1 ¶ 90; Cannella Decl. Ex. 8, at NGINS000768975 (Geraghty & Miller report); see also Cannella Decl. Ex. 11, at NGINS000619275-77 (Special Report submitted to NYSDEC).) Put another way, it was the way that Grumman operated; Grumman's activities with respect to TCE were normal protocol. As a result, there was nothing "accidental" about normal discharges of TCE.
Northrop argues that, even if its practices (or some of them) caused nonsudden or non-accidental contamination, there is a triable issue as to whether that contamination merged with groundwater contamination caused by a third party, Hooker Chemical Corp. (NGC Opp. 24.) The fact that Hooker Chemical Corp. may have contributed to contamination at the Bethpage Facility does not relieve Grumman of responsibility, nor create coverage for Grumman that otherwise does not exist. There is no triable issue as to whether Grumman itself contributed to the contamination on the site: Grumman's own documents, and its admissions in its reply to Travelers' Rule 56.1 Statement, are clear that its long-term, historical practices created contamination. (See, e.g., NGC 56.1 ¶¶ 5, 8, 13, 14, 18, 20-23, 25, 28-31, 33-38, 214, 215.)
Northrop next argues that at least some of its own contamination was sudden and accidental and, again, that it therefore merged with the non-sudden and nonaccidental contamination. In this regard, it relies on its proposed experts, Drs. Bigoney and Langseth Bigoney. By a separate Memorandum Decision & Order, this Court has determined that the opinion proffered by Dr. Bigoney does not meet the standards set forth in Daubert v. Merrill, and has precluded her opinion. (ECF No. 529.)
Dr. Langseth's opinion is similarly flawed. He has proffered reports in which he opines that certain discharges of TCE were "likely" sudden and accidental. In particular, Dr. Langseth opines that a leak in a TCE storage tank at plant # 2, known as tank 10, was "sudden" because the TCE-contaminated water "would have spurted out of the tank ... in a sufficient amount within a short time to have contaminated all of the groundwater that requires remediation" at the BF. (NGC Opp. 28.)
William Kovarik, a former Grumman employee, provides the only percipient testimony related to tank 10. (See id. ¶ 310.) The parties disagree on the import of Kovarik's testimony. Kovarik testified at his deposition that, "in the early '70s, we had a problem that we were losing degreaser fluid," and "nobody knew why [they] were losing it." (Cannella Reply Decl. Ex. 77 (Kovarik Dep.), at 62:15-62:21.) Kovarik testified as follows:
(Id. at 62:22-63:9.) In response to the question, "Did you ever learn how much TCE they thought had leaked out over that period of time?", Kovarik responded, "There had to be a lot of it because they were complaining for quite a while, quite a few—I think about two, three years that they were losing it." (Cannella Decl. Ex. 77, at 147:7-13; see also Scanlon Decl. Ex. 5 (Langseth Decl), Ex. A (Langseth Rep.), at 73.) Later, Kovarik was asked, "[D]o you remember how soon they replaced the tank after the leak was discovered?" (Calland Ex. 13 (Kovarik Dep.), at 177:3-5.) Kovarik responded, "I really couldn't tell you because I don't know ... when they found it." (Id. at 177:06-08.)
According to Travelers, this testimony reflects that the tank had leaked "for years" and could not have been sudden and accidental. (Travelers 56.1 ¶ 48.) Northrop disputes this, and argues that Kovarik was speculating as to the amount of time; for which the tank was leaking, stating merely that "[i]t could have been leaking for years, but I don't know." (Kovarik Dep. 63:8-9.) It is true that Kovarik does not testify conclusively as to the exact amount of time during which the tank was leaking, but that is immaterial to resolution of the present motion. It is clear from Kovarik's testimony that the tank leaked over time. It is undisputed that the loss of degreaser fluid occurred "in the early '70s"—not at any one particular moment—and the bottom was rotted when the tank was replaced. Thus, this leak was in any event not "abrupt," and not sudden and accidental under the meaning of sudden and accidental under New York law. See Northville, 89 N.Y.2d at 633, 657 N.Y.S.2d 564, 679 N.E.2d 1044.
In Northville, an analogous case, the plaintiff discovered that a release of its gasoline into groundwater had occurred, thus affecting neighboring properties. 89 N.Y.2d at 629-30, 657 N.Y.S.2d 564, 679 N.E.2d 1044. The plaintiff brought a declaratory
At oral argument, Northrop argued that at least the initial release of TCE-contaminated water from tank 10 (even if not the entire leak from beginning to end) was "sudden" within the meaning of the exception. That cannot be. Every release has some instant of commencement. To read the word "sudden" to incorporate the initiation of every release would be to render that word meaningless. The Northville court confronted and dismissed precisely this question:
89 N.Y.2d at 633, 657 N.Y.S.2d 564, 679 N.E.2d 1044 (citation omitted). Thus, according to the Northville court, the temporal aspect of "sudden" is only met by a "discharge, abruptly or within a short timespan, of a significant quantity of the pollutant sufficient to have some potentially damaging environmental effect." Id. at 634, 657 N.Y.S.2d 564, 679 N.E.2d 1044. There is no triable issue of fact as to whether such a discharge occurred at tank 10.
Northrop argues that this Court must accept Langseth's testimony as to the sudden and accidental nature of the leak from tank 10 because, in a situation involving a "latent" harm or injury, it is impossible to proffer evidence that does not rely, at least to some extent, on inference and assumption. It is true that no percipient witnesses were present to see the leaking itself; indeed, the tank was underground. However, Travelers has in fact proffered percipient testimony. Kovarik, a former Grumman employee, testified that the bottom of the tank was "rotted out" and that he "was there" at the time that the tank was removed and replaced. (Cannella Ex. 77, at 62:25-63:2, 67:14-16.) That percipient testimony conflicts with Langseth's version of events. Moreover, there is also no percipient testimony to support Langseth's
Langseth also opined that "welds on the degreasers occasionally failed, resulting in substantial abrupt releases of TCE." (NGC 56.1 ¶ 313.)
Dr. Langseth cannot make a triable issue of "fact" out of his speculation that these events were sudden and accidental. There is no evidence in the record that the leakage from the storage tank at plant # 2 occurred in the colorful manner he describes, involving water spurting out of a tank. (See NGC Opp. 28.) Similarly, there is no evidence that the other incidents to which he refers in fact contained TCE or occurred in the manner he describes. Dr. Langseth is not a percipient witness; he cannot ex post facto opine on the temporal nature of that which he did not see, nor the state of mind of employees present at the time, to whom he has not spoken. The Court also notes that Langseth's use of the word "accident" (see, e.g., Langseth Rep. 75 (describing "accidental leaks")) goes to the ultimate issue of whether an exception to the pollution exclusion was met in this case. Thus, the Court could certainly not allow Langseth to testify without giving the jury cautionary instructions as to the use of this word. If courts accepted opinions stating whether exclusions to insurance policies applied, then parties would submit such opinions routinely—thus defeating the legislative intent to confine "sudden and accidental" to an exception to the exclusion, rather than the rule.
Rather, it is clear from Grumman's own recitation of its day-to-day operations— which involved active use of TCE—that all of these events were to be expected in one way or another. Grumman's own Response to Travelers' Statement of Undisputed Material Facts concedes as much.
Courts in New York have recognized that spillages occurring as a part of routine operations are not sudden and accidental. See Emp'rs Ins. Co. of Wausau v. Duplan Corp., 899 F.Supp. 1112, 1121 (S.D.N.Y.1995); Redding-Hunter, Inc. v. Aetna Cas. & Sur. Co., 206 A.D.2d 805, 807-08, 615 N.Y.S.2d 133 (N.Y.App.Div. 3d Dep't 1994) ("[W]aste discharges which are a concomitant of normal business activities are not `sudden' within the meaning of the exclusion...."); Technicon I, 141 A.D.2d at 126, 533 N.Y.S.2d 91.
All of the other leakages occurred in the context of routine operations in which leakage or spillage was known to occur and to be likely. As the evidence that Grumman itself cites in its Rule 56.1 Statement states, welds were known to fail and cause leakage on degreasing equipment prone to frequent use; such weld failures were expected; water picking up floor contaminants was part of routine operations; using forklifts with prongs to pick up drums was routine. (See NGC 56.1 ¶¶ 313-15; Langseth Rep. 62 (explaining that "the plume evolution over time has been affected by pumping and recharge that occurred as part of normal facility operations"), 76.) In short, none of the alleged "sudden and accidental" events is both sudden and accidental, as the law would require for the pollution exclusion not to apply.
On this record, Northrop has failed to raise a triable issue as to whether a "sudden and accidental" discharge occurred at tank 10, or anywhere else in the Facility.
Nor do these events place Grumman's discharges of contaminants outside the "expected" or "intended" category. Again, the discharge or dispersal of TCE was expected and intended, the use of TCE into discharge basins was intended, that it leached into the ground was expected, and that it was on the floor after routine operations was expected and intended—as were a host of Grumman's related activities involving TCE. (See, e.g., NGC 56.1 ¶¶ 20-22.) The analysis with respect to whether the contamination was sudden and accidental applies as well to the question of whether the contamination was expected or intended.
Indeed, the testimony of Steven Scharf, a NYSDEC designee, further confirms that the contamination was considered routine. Scharf testified that he was not aware of any explosions, fires, abrupt releases, or accidents at the Bethpage Facility, nor did NYSDEC have any record of any reports of such events. (Id. ¶¶ 134, 135; Travelers ¶¶ 134, 135.)
In addition, as set forth above, in 1990, Grumman submitted an appendix to NYSDEC titled "Information on Reported Spills, Leaks and Releases at the Grumman Aerospace Corporation and U.S. Naval Weapons Industrial Reserve Plant, Bethpage, New York." (NGC 56.1 ¶¶ 135, 136; Cannella Decl. Ex. 43, at
(NGC 56.1 ¶ 136.) That appendix identifies only a few isolated spills. (Travelers 56.1 ¶¶ 138, 139.)
Travelers' primary policies provide, "If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative." (NGC 56.1 ¶¶ 184, 380 (emphasis added).) Certain policies also require that the insured give written notice to Travelers "as soon as practicable" in the event of property damage. (NGC 56.1 ¶¶ 186, 376-79.)
Travelers argues that Grumman failed to provide timely notice with respect to the Bethpage Facility. There are three potentially relevant time periods: (1) whether there was a claim or property damage as to which Grumman should have provided notice prior to 1983; (2) whether Grumman should have and did provide Travelers with notice of NYSDEC's claim in December 1988/January 1984; and (3) whether, if Grumman did not fulfill its notice obligation in December 1983/January 1984, there is nonetheless sufficient evidence of Travelers' knowledge of the NYSDEC claim based on its attendance at an August 1989 meeting in which the Bethpage Facility claim was discussed and based on a internal memorandum reflective of its knowledge of such claim.
There is no triable issue that notice was due as to an occurrence by the late 1970s, and that Grumman was subject to a claim at least as early as December 1983, when the PRP letter initiated a formal proceeding against Grumman. However, according to Northrop, the 1983 PRP Letter should have put the world on notice of a claim at the Bethpage Facility. Thus, Grumman concedes that notice was due not later than what would be acceptable as to the 1983 PRP Letter.
Grumman argues that (1) it had a reasonable belief as to non-liability that excused late notice at least until receipt of the 1983; (2) that it sent the 1983 Letter to an address that Travelers provided and that since a policyholder must only "substantially comply" with the notice requirements, it has fulfilled it obligation; and (3) that Travelers knew in fact about the Bethpage Facility claim and cleanup efforts.
As an initial matter, a number of facts demonstrate that Grumman may have had an obligation to provide Travelers with notice by the late 1970s, based on "property damage" and acts resulting in
It is certainly true, and undisputed, that Hooker Chemical Corp. was considered to be a source of contamination in the 1970s. However, in light of the extensive contamination, the history of Grumman's own testing efforts and results, and the reports from its own environmental consultants, there is no triable issue as to whether it was reasonable for Grumman to assert a belief in non-liability to excuse late notice: a belief in non-liability was unreasonable based on the factual record.
Whether or not Grumman's efforts in sending the 1983 Letter constitute compliant notice, or otherwise excuse late notice, requires that this Court address (1) whether there is a triable issue of fact as to whether notice was received, and, if so, (2) whether the content of the notice was sufficient. Because there is no triable issue of fact as to whether Travelers received notice, the Court need not reach the question of whether its content was sufficient.
There is no basis in the record to find a triable issue as to Travelers' receipt of the 1983 Letter: it was indisputably sent to the wrong address; no Travelers witness recalls ever seeing it, not does any Grumman witness. (See Travelers 56.1 ¶¶ 163, 164, 167; NGC 56.1 ¶ 165.) The letter exists only because it was found in Century's
That Travelers received other mail addressed to the same erroneous address does not create a triable issue as to this particular letter. (NGC 56.1 ¶ 164.) There is no showing of the denominator of letters sent to this address compared to those received; if only .01% were received, that could hardly create a triable issue. Similarly, if 99% of all letters sent to that address were received, there would likely not be a triable issue. The record does not contain sufficient proof to make any such determination.
In a footnote, Northrop argues that Travelers should be precluded from relying on its non-receipt due to the wrong address because, if the letter was in fact not received, Travelers "materially contributed" to that error by providing the wrong address. (NGC Opp. 30 n. 16.) However, none of the cases that Grumman cites occurred in the context of an insurance coverage dispute, and each of the cases involved intentional behavior. See Ixe Banco, S.A. v. MBNA Am. Bank, N.A., No. 07 Civ. 0432(LAP), 2009 WL 3124219, at *4-6 (S.D.N.Y. Sept. 29, 2009) (requiring that a party "deliberately or arbitrarily frustrated" another party's efforts); Bank of N.Y. v. Tyco Int'l Group, S.A., 545 F.Supp.2d 312, 324 n. 81 (S.D.N.Y.2008); Kooleraire Serv. & Installation Corp. v. Board of Educ, 28 N.Y.2d 101, 106, 320 N.Y.S.2d 46, 268 N.E.2d 782 (1971); Holland v. Ryan, 307 A.D.2d 723, 762 N.Y.S.2d 740, 742 (App.Div. 4th Dep't 2003). There are no facts before this Court to suggest that Travelers provided an erroneous address to Grumman in order to avoid coverage obligations.
If this Court determines that notice was not timely as of December 1983/January 1984, the final question is whether notice was required as to other claims, and whether notice in 2012 was adequate.
It is undisputed that the Bethpage Facility was reclassified as a "Class 2 Site" or that NYSDEC and other regulators were involved in a site-wide investigation of the Bethpage Facility by 1986 and 1987 (see NGC 56.1 ¶¶ 104, 107, 113), and that Grumman believed that this was the opening volley in a potentially very expensive effort. (Id, ¶ 108.) Yet Grumman points to no facts suggestive of additional written notice to Travelers after 1984 until 2012. In Fairchild, the Second Circuit found that failure to notify an insurer of various communications between NYSDEC and the insured—even before reclassification to a `Class 2' site—triggered a late notice defense. See 56 F.3d at 437-38, 441. Classification as a `Class 2' site means that remediation will be required. See id. at 441.
Grumman argues that Travelers knew in fact about the NYSDEC proceedings. It cites an oral communication at the 1989 meeting with Travelers at which the Bethpage
In addition, the 1989 oral communication at a meeting cannot constitute adequate notice of a claim that existed at least by 1986 or 1987. A two-year delay in the context of this type of matter is untimely as a matter of law. See Fairchild, 56 F.3d at 440 ("Under New York law, delays for one or two months are routinely held `unreasonable.'"). Moreover, any oral statements by Travelers do not constitute waiver of the written notice provision in the policies. A waiver is not lightly to be presumed; it is the intentional relinquishment of a known right. See, e.g., Capitol Records, Inc. v. Naxos of Am., Inc., 372 F.3d 471, 482 (2d Cir.2004). Conduct constituting a waiver must therefore be knowing and "clear." Chicago Ins. Co. v. Kreitzer & Vogelman, 265 F.Supp.2d 335, 343 (S.D.N.Y.2003). Here, Grumman has not proffered a single fact supporting an inference that Travelers specifically and intentionally waived its right to receive written notice (along with the other information that the notice provision requires).
Nor can Travelers' own memoranda— also two years after when notice should have been provided—cure that untimely notice. The insured is to provide written notice either "immediately" or as "soon as practicable"; two years is neither.
Northrop's argument that Travelers' inaction following prior notice relieved it of further notice obligations is also unavailing. The clear language of the policy requires notice of "any" claim. In addition, the law provides that a policyholder is only relieved of a notice obligation when an insurer unequivocally refuses to fulfill its contractual obligations. See, e.g., Jacobson, 672 F.3d at 176-78. There are no facts here supporting any inference of unequivocal repudiation.
As a variation on this argument, Northrop argues that a reasonable jury could conclude that, when Travelers was orally briefed on the Bethpage Facility claim and failed then or even reasonably thereafter to assert a late notice defense, its conduct constituted a waiver. As support for this proposition, Northrop cites unremarkable New York law that an insurer who fails to timely assert a late notice defense may waive that defense. (See NGC Opp. 37.) See, e.g., Estee Lauder Inc. v. OneBeacon Ins. Grp., LLC, 62 A.D.3d 33, 35, 873 N.Y.S.2d 592 (N.Y.App.Div. 1st Dep't 2009). Those cases are inapposite, however. Northrop's argument, taken to its logical conclusion, would convert oral notice into the equivalent of written notice, shifting the burden onto the insurer to request written notice or waive its right to a timeliness defense. This is not the law. This Court could not instruct the jury that it is.
Finally, Northrop argues in its opposition to Travelers' Bethpage Community Park motion that, even if NYSDEC had asserted a new claim in 2002 concerning
It is true that "an insurer's across-the-board denial of coverage may excuse the insured party from providing notice of each individual claim." Texaco A/S (Denmark) v. Commercial Ins. Co., 160 F.3d 124, 129 (2d Cir.1998); see also H.S. Equities v. Hartford Acc. & Indem. Co., 661 F.2d 264, 270-71 (2d Cir. 1981) ("[A] repudiation of liability by an insurer on the ground that the loss is not covered by the policy operates as a waiver of the notice requirements contained in the policy.").
However, Northrop does not raise a triable issue of fact as to whether Travelers had indeed repudiated liability in the "blanket" and "across-the-board" manner contemplated by Texaco, 160 F.3d at 129, and H.S. Equities, 661 F.2d at 270-71. Rather, Travelers had only declined coverage on two prior occasions, in 1989 and 1994, in both cases based on an individual review of the claim. (See Scanlon Decl. Ex. 85, at TRAV004484; Scanlon Decl. Ex. 88, at TRAV013985.) Furthermore, Travelers did not deny all claims outright, but rather stated that, "[n]otwithstanding its position on defense," it would "investigate the facts and circumstances of these matters in order to determine the extent of its indemnity obligations." (Scanlon Decl. Ex. 85, at TRAV004484.) The Court is mindful that both letters to Grumman stated that Travelers would not cover "any claim for equitable relief," which would include RCRA. (See Scanlon Decl. Ex. 85, at TRAV004484; Scanlon Decl. Ex. 88, at TRAV013985.) However, under these circumstances, where Travelers agreed to continue to investigate its duty to indemnify Grumman, ongoing notice was required. See Olin Corp., 221 F.3d at 329 (finding that an insurer had "never categorically denied that it had a duty to provide indemnification and therefore did not thereby waive notice"); Nat'l R.R. Passenger Corp. v. Steadfast Ins. Co., No. 06 Civ. 6072(PAC)(GWG), 2009 WL 562610, at *13-14 (S.D.N.Y. March 5, 2009) (explaining that a "specific denial of coverage" did not "prevent[ ] an insurer from requiring notice when a new claim arises, based on new allegations and new defendants, that is outside the scope of the insurer's prior denial").
As set forth above, the Travelers primary policies at issue prohibit the insured from voluntarily assuming obligations or expenses without Travelers' consent:
(NGC 56.1 ¶ 188.)
It is undisputed that Grumman spent millions of dollars with respect to
Northrop argues that Travelers' conduct in refusing to participate in the process or to provide a defense eliminated the prohibition on voluntary payments—in effect, that Travelers waived its right to insist on compliance with this provision. This argument also lacks merit. As a threshold matter, there is no evidence that Travelers had received any notice, written or oral, prior to 1989. By that time, millions of dollars in payments had been made. However, more than that, as set forth above, for a party to waive a contractual right, conduct must be knowing and intentional. See Capitol Records, 372 F.3d at 482; Chicago Ins. Co., 265 F.Supp.2d at 343. There is no evidence in the record supportive of such an inference. For instance, there were many points in time— specifically and generally—when Grumman made payments; there is no evidence that Travelers was made aware of the purpose or amounts and waived its rights with respect thereto.
For the reasons set forth above, Travelers' motion for summary judgment as to the Bethpage Facility is GRANTED.
The Clerk of the Court is directed to terminate the motion at ECF No. 358 and to remove the Opinion & Order at ECF No. 545 from the docket.
SO ORDERED.
