The opinion of the court was delivered by: Keenan, District Judge.
On June 21, 1991, this Court issued an Opinion and Order
denying the motions of plaintiff and defendants for summary
judgment. Following that decision, the Court granted
defendants permission to file a motion to reargue. On August
26, 1991, as that motion was being submitted, a trio of
decisions was handed down by the Supreme Court of Michigan.
Defendants requested, and the Court granted, leave to file an
amended motion to reargue. Before the Court is the motion of
defendants, Royal Group, Inc., Royal Insurance Group, Royal
Insurance Company of America, and Royal Indemnity Company
(collectively "Royal") for reargument of the Court's June 21,
1991 decision in light of the August 26, 1991 decisions of the
Supreme Court of Michigan.
Recent judicial definitions of "sudden and accidental" are the
focus of this motion.
Plaintiff brought this action seeking a declaration that
defendants were required to reimburse plaintiff for costs
incurred in carrying out the EPA's mandate. Both plaintiff and
defendant moved for summary judgment. After concluding that
Michigan law applied to this dispute, the Court found that the
case involved disputed issues of fact that precluded summary
judgment. The Court denied both motions in their entirety on
June 21, 1991. June 21, 1991 Order at 10, 1991 WL 120366.
Defendants now seek reargument of their summary judgment
motion based on three recent decisions of the Supreme Court of
Michigan, announced on August 26, 1991, which discuss the
scope and applicability of pollution exclusion clauses
identical to the one at issue in this action. Defendants
contend that the three cases make it clear that, as a matter
of law, they have no obligations to plaintiff arising out of
the Otisville site, and that accordingly defendants' motion
for summary judgment should be granted.
Motions for reargument are governed by Local Rule 3(j) which
provides in pertinent part:
In making a motion to reargue under Rule 3(j), the movant may
not merely re-state its position to the Court. Rather, the
party may bring to the Court's attention "matters or
controlling decisions" which the Court overlooked in ruling on
the original motion. Weissman v. Fruchtman, 124 F.R.D. 559, 560
(S.D.N.Y. 1989); Carolco
Pictures, Inc. v. Sirota, 700 F. Supp. 169, 170 (S.D.N.Y. 1988).
As discussed in the Court's June 21 Opinion, Rule 56
"mandates the entry of summary judgment, after adequate time
for discovery and upon motion, against a party who fails to
make a showing sufficient to establish the existence of an
element essential to that party's case, and on which that
party will bear the burden of proof at trial." Celotex
Corporation v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548,
2553, 91 L.Ed.2d 265 (1986). A motion for summary judgment may
be granted under Fed.R.Civ.P. 56 if the entire record
demonstrates that "there is no genuine issue as to any material
fact and the moving party is entitled to judgment as a matter
of law." Anderson v. Liberty Lobby, 477 U.S. 242, 250, 106
S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). When viewing the
evidence, the Court must "assess the record in the light most
favorable to the non-movant and . . . draw all reasonable
inferences in its favor." Delaware & Hudson Railway Co. v.
Consolidated Rail Corp., 902 F.2d 174, 177 (2d Cir. 1990); see
Francis v. Coughlin, 891 F.2d 43, 46 (2d Cir. 1989). "Summary
judgment is appropriate if, . . . `no reasonable trier of fact
could find in favor of the nonmoving party.'" United States v.
All Right, Title & Interest in Real Property, etc.,
901 F.2d 288, 290 (2d Cir. 1990) (quoting Murray v. National
Broadcasting Co., Inc., 844 F.2d 988, 992 (2d Cir.), cert.
denied, 488 U.S. 955, 109 S.Ct. 391, 102 L.Ed.2d 380 (1988)).
In making this determination, the district court may not
resolve issues of fact; it may only ascertain whether such
issues are present. See Donahue v. Windsor Locks Bd. of Fire
Cm'rs, 834 F.2d 54, 58 (2d Cir. 1987). The non-movant, in
response to a properly supported motion for summary judgment,
may not rest on its allegations in the pleadings, but must
adduce "significant probative supporting evidence"
demonstrating that a factual dispute exists. Anderson, 477 U.S.
at 249, 106 S.Ct. at 2510.
Having set forth the legal standards governing this motion,
the Court will review the three Michigan cases that prompted
The Upjohn Company, et al. v. New Hampshire Insurance Company,
et al. (Defendants' Exhibit B)
Plaintiff Upjohn produced toxic liquid waste in the
manufacture of an antibiotic. The waste was pumped into
underground storage tanks maintained by the company. The level
of waste in the tanks was monitored daily by an Upjohn
employee, who recorded the level and turned the records over
to his supervisor. Each day's sheets were reviewed and the
tank levels compared with those of the previous day.
Prior to August 16, 1982, the tank level in one particular
tank had measured 475 gallons. On August 16, however, the tank
level was eighty gallons. Despite the discrepancy, Upjohn
continued to pump waste into the tank, which continued to show
levels lower than the amount of waste that was being pumped
in. As it turned out, there was a leak in the tank, and the
area around the storage tank became contaminated by the
In Upjohn the court, contemplating a pollution exclusion
clause identical to the one in this case, addressed two
questions: "(1) is the phrase `sudden and accidental' which
appears in the pollution-exclusion clause and which creates an
exception to the exclusion, unambiguous, and (2), if
unambiguous, what is the proper meaning of the phrase `sudden
and accidental.'" Upjohn, 438 Mich. at 200, 476 N.W.2d 392.
The Court held that "sudden and accidental" was not
ambiguous, and that therefore there was no need to look at the
drafting history of the contract. As to the definition of
those terms, the Court wrote:
We conclude that when considered in its plain
and easily understood sense, `sudden' is defined
with a `temporal element that joins together
conceptually the immediate and the unexpected.'
The common, everyday understanding of the term
`sudden' is `"happening, coming, made or done
quickly, without warning or unexpectedly;
abrupt."' `Accidental' means `[o]ccurring
unexpectedly and unintentionally; by chance.'
Id. at 207-208, 476 N.W.2d 392 (citations omitted).
Having defined "sudden and accidental" the court addressed
whether the facts of Upjohn brought the case within the sudden
and accidental exception. The Court concluded that the release
of the waste from the leaking tank could not possibly be
considered "sudden" "because the release of by-product from
[the tank] was not unexpected by Upjohn." Id. at 209,
476 N.W.2d 392. "Since the release of chemical by-product was not
unexpected, as a matter of law it cannot be `sudden and
accidental.' Therefore, the pollution exclusion clause does
apply, and the Upjohn Company is not entitled to coverage under
[the insurance] policy." Id. at 216-217, 476 N.W.2d 392.
Protective National Insurance Company v. The City of Woodhaven
(Defendants' Exhibit C)
Defendant municipality sprayed pesticides into the air as
part of a municipal insect control program. A third party
brought an action against the city for damages resulting from
exposure to the pesticides. The City sought coverage under its
insurance policy with plaintiff, Protective National.
The Supreme Court held that the policy did not impose on
Protective National a duty to indemnify or defend Woodhaven,
because the pollution exclusion clause applied to the
The discharge, dispersal, release, or escape of
irritants, contaminants, or pollutants to which
the pollution exclusion refers is that
discharged, dispersed, released, or permitted to
escape into the atmosphere. Likewise, the exception
to the exclusion does not apply unless such
discharge, dispersal, release, or escape to which
both the exclusion and the exception refer is the
initial discharge, dispersal, release, or escape
into the atmosphere and not the subsequent
migration. . . . [S]ince the release of the
pesticide by Woodhaven into the atmosphere was
intentional, it cannot, as a matter of law, be
Id. 438 Mich. at 161-162, 476 N.W.2d 374.
Polkow v. Citizens Insurance Company of America (Plaintiff's
Plaintiff was in the business of collecting used oil and
selling it to processors. The oil was kept in underground
tanks on plaintiff's property before delivery to processors.
The Michigan Department of Natural Resources began to suspect
that plaintiff's business was the source of contamination of
groundwater. The Department of Natural Resources ordered
plaintiff to undertake a hydrogeological investigation of his
property and to remove the source of the contamination,
including underground tanks and tainted oil. Plaintiff
contacted defendant and demanded coverage of the cost of
defending against the DNR charges and indemnification for the
cost of the studies. Defendant denied coverage, citing the
pollution exclusion clause in plaintiff's policy.
The Court held that the proper focus of its examination was
"not whether the contamination or damage is `sudden and
accidental' but whether the release is `sudden and
accidental.'" At 438 Mich. at 186, 476 N.W.2d 382. The Court
held that the lower court had improperly disposed of the case
on summary disposition, and remanded the case for further
proceedings. There had been no determination of whether the
contamination came from leaking tanks or from ground spillage.
"[W]ithout proof of the source of the discharge, the court
cannot determine whether the discharge falls within the sudden
and accidental exception to the exclusion clause. This
uncertainty creates doubt regarding coverage." Id. 180,
476 N.W.2d 382.
Position of the Parties
Royal argues that in light of the Michigan court's
interpretation of the pollution exclusion clause, as a matter
of law it cannot be found responsible for covering plaintiff
for cleanup at the Otisville site. Royal insists that under
Michigan law, if the Court finds that the discharge of waste
was either non-sudden or non-accidental, the inquiry ends and
Royal is entitled to summary judgment. Defendants insist that
such a finding is supported in this case by the undisputable
facts contained in the record of the motion for summary
judgment. Defendants' Memorandum at 10.
As to suddenness, they point out that "[plaintiff's] waste was
not released quickly, abruptly or without warning into the
environment at [the dump]; rather, it was released into the
environment over a period of several years, in the course of
a process which was gradual, long term and nonsudden."
Id. at 12. On the question of whether the discharge was
accidental, they argue that "[t]he uncontested record facts in
this case confirm that [plaintiff's] waste was routinely and
intentionally discharged into the environment at FWD." Id. at
Plaintiff argues that a determination of coverage under the
sudden and accidental exception has to focus not on the
release of waste into containment, but on how the waste was
released into the environment. Plaintiff contends that
defendants have not established how the waste got into the
environment, and therefore that defendants should be denied
summary judgment. Plaintiff also argues that it is entitled to
summary judgment on the issue of defendants' duty to defend
plaintiff, at least until it is shown that no coverage is
possible under the policy. Plaintiff's Memorandum at 10
(citing Polkow, 438 Mich. at 176, 476 N.W.2d 382).
The Court concludes that reargument and summary judgment in
defendants' favor is the inescapable result of the
interpretation of the pollution exclusion announced in
Upjohn, City of Woodhaven, and Polkow. The parties do not
dispute, and the record clearly indicates that a waste hauler
employed by plaintiff deposited waste into unlined earthen
lagoons at the site. The record also indicates that the waste
was not artificially contained, as in Upjohn, but that it was
dumped into earthen pits at the site. While plaintiff has
recently attempted to make an issue out of whether it has
conceded that the pits were lined or unlined, plaintiff failed
to put any evidence into the record to prove that the lagoons
were lined, and never disputed indications in the record that
the pits were unlined.
At argument and in written submissions, plaintiff has
endeavored to convince the Court that this case is similar to
Polkow. Plaintiff argues that the precise method by which waste
traceable to Heileman's predecessor entered the environment is
not established in the record, preventing a determination of
whether the discharge was sudden and accidental, and rendering
summary judgment inappropriate. The Court disagrees. In Polkow,
the court noted that there were several ways in which waste
could have been released from the control of the plaintiff, an
event which resulted ultimately in the contamination of the
groundwater. Polkow, at 180, 476 N.W.2d 382. In the instant
matter, in contrast, there is no dispute that waste from
Heileman's predecessor was dumped directly into the earthen
lagoons at the Otisville site. Common sense indicates that the
dumping of waste directly into the earth at the Otisville site
is more like the scenario considered in Upjohn than the facts
addressed in Polkow.
In sum, Woodhaven teaches that the Court is to focus on the
initial discharge of waste into the environment; here, that
discharge was the dumping of waste directly into pits in the
earth at the Otisville dump. The record indicates that the
discharge was not sudden, as that word was defined in Upjohn,
because waste was deposited repeatedly over an extended period
of time. The record also indicates that the discharge was not
accidental because the waste was deliberately dumped into the
earth. Accordingly, the pollution exclusion precludes coverage
in this case.
For the reasons set forth above, defendants' motion to
reargue is granted, and the underlying motion for summary
judgment is granted in favor of defendants. This action is
ordered removed from the active docket of this Court.
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