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MAESTRI v. WESTLAKE EXCAVATING CO

March 30, 1995

BERT MAESTRI, Plaintiff, against WESTLAKE EXCAVATING CO, INC. and ROBERT A. VALERINO, Individually and as President of WESTLAKE EXCAVATING CO., INC., Defendants; STAUFFER MANAGEMENT COMPANY, Plaintiff, -against- BERT MAESTRI, JOHN MAESTRI, ROBERT VALERINO, SOLVAY IRON WORKS, INC., and WESTLAKE EXCAVATING COMPANY, INC., Defendants.


The opinion of the court was delivered by: FREDERICK J. SCULLIN, JR.

 INTRODUCTION

 This matter is before the court on the Insurance Company of North America's ("INA") motion for interlocutory certification under 28 U.S.C. § 1292(b) and for a stay of the current proceedings and on Solvay Iron Works, Inc.'s ("Solvay"), Bert Maestri's and John Maestri's (collectively "the insured") motion for attorneys' fees.

 BACKGROUND

 I. THE UNDERLYING EVENTS

 In March 1972, Stauffer Chemical Co. ("Stauffer") entered into a contract with Solvay to remove drums of chemical waste from Stauffer's plant in Skaneateles Falls. Solvay subcontracted the work to Westlake Excavation Co. ("Westlake"). The main contract between Stauffer and Solvay contained insurance and hold harmless clauses. The hold harmless clause required Solvay to indemnify Stauffer for any loss attributable to Solvay's performance under the contract; the insurance clause required Solvay to have liability insurance to cover the indemnity.

 The removal commenced and most of the drums were deposited at another location. However, when Westlake trucks experienced difficulties, Westlake's President, Robert Valerino, sought to temporarily store the drums on Bert Maestri's land. Bert Maestri, who was an officer of Solvay, permitted the drums to be stored on his land temporarily. At the time the drums were put on Bert Maestri's land their contents were leaking.

 The drums remained on the ground until some time in 1973, when Bert Maestri buried them out of concern that the leaking drums would affect neighborhood children. Using a backhoe and bulldozer he buried the drums in a trench, breaking some open in the process.

 In 1985, the New York State Department of Environmental Conservation ("DEC") found Bert Maestri, Robert Valerino and Stauffer to be potentially responsible parties for the contamination at the site. Thereafter Bert Maestri made preliminary efforts at remediation, and, ultimately, Stauffer entered into a consent order with the DEC and agreed to remediate the site.

 II. THE PROCEEDINGS

 In 1990, Bert Maestri brought an action against Westlake and Valerino (90-CV-1155) claiming violations under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and various common law claims. Robert Valerino brought a third party action against John Maestri (Vice President of Westlake), Alfred Chemotti (officer and shareholder of Westlake) and Solvay. Westlake brought a third party action against INA. Later, in 1993, Stauffer brought an action against Westlake, John Maestri, Robert Valerino, Bert Maestri and Solvay (93-CV-316) also claiming violations of CERCLA.

 In 1992, Westlake moved for partial summary judgment in its third-party action against INA, seeking a declaration that INA must defend the action and must pay for independent counsel selected by Westlake. INA cross-moved for summary judgment for a declaration of no coverage as against Westlake. On November 17, 1992, the court, per Judge McAvoy, ordered that (1) INA had a duty to defend in the Maestri action (90-CV-1155) and must pay for independent counsel, and (2) INA's motion for summary judgment was denied with leave to renew after discovery.

 Discovery was conducted through 1994, and on September 27, 1994, INA renewed its motion for summary judgment against West lake and moved for summary judgment against Solvay and its directors and officers as well. INA's summary judgment motion sought a declaration that it had no duty to defend or indemnify Westlake or Solvay, or any of Solvay's officers or directors, under general liability policies INA issued to Westlake and Solvay. At around the time of INA's summary judgment motion, the parties stipulated (with court approval) to amend the pleadings under Fed.R.Civ.Proc. 15(b) "to include all parties, issues and claims with respect to coverage presented in the pending motion for summary judgment, including all issues relating to the insurance policies at issue]." See Stipulation dated August 14, 1994 (Docket # 81). Thus, even though there was no underlying declaratory judgment action or third-party action pending between INA and Solvay, or INA and Solvay's officers and directors, the motion was allowed to go forward to resolve all the outstanding insurance issues in accord with the parties' stipulation.

 Westlake, Solvay, Bert Maestri and John Maestri cross-moved for summary judgment seeking a declaration that INA is required to indemnify and defend in the underlying actions.

 III. RESOLUTION OF THE SUMMARY JUDGMENT MOTIONS

 The policies at issue in the summary judgment motions were a general liability policy issued to Westlake in 1972 and renewed in 1973; a general liability policy issued to Solvay in 1972 and renewed in 1973; and an excess policy issued to Solvay in 1972 and renewed in 1973 (6 policies altogether). In addition to general liability coverage, all of Solvay's policies contained coverage for contractual liabilities.

 On November 4, 1994, the court heard oral argument on the motions and rendered a decision from the bench. See Transcript dated November 4, 1994 (hereinafter "Bench Tr. at "). Five of the six general liability policies at issue contained a pollution exclusion clause which operated to deny coverage for pollution related occurrences that were neither sudden nor accidental. The court determined that the occurrences at issue were not sudden and thus that there was no coverage under those policies. See Bench Tr. at 17-19. As to the one general liability policy that did not contain a pollution exclusion clause, the court ruled that former New York Insurance Law § 46(14) (McKinney 1971) (repealed 1982, ch. 856) implied a pollution exclusion clause into the policy as a matter of law and, thus, similar to the other policies, coverage was excluded under it. See Bench Tr. 19-22.

 In addition to the above rulings, the court ruled on INA's duty to defend and indemnify under the contractual liability policies issued to Solvay. The court determined that there were genuine issues of material fact as to whether the pollution exclusion clauses present in the general liability policies were intended to apply to the contractual liability policies. See Bench Tr. at 24-25. The court also ruled that the contractual liability policies were not subject to the provisions of former New York Insurance Law § 46(14) (McKinney 1971) (repealed 1982, ch. 856). See Bench Tr. at 27, 31. Even though the court denied summary judgment with respect to the duty to indemnify under the contractual liability policies, it determined that INA had a duty to defend based on those policies. See Bench Tr. at 24-25.

 The bench decision was memorialized in an Order dated March 30, 1995. INA seeks certification of some the issues decided by that Order.

 DISCUSSION

 INA currently seeks interlocutory certification under 28 U.S.C. § 1292(b) of the issues underlying that part of its summary judgment motion that was denied by the court on March 30, 1995. Specifically, INA seeks to certify the following issues:

 
(1) Whether the pollution exclusion clauses found in the general liability policies apply to the ...

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