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UNIMAX CORP. v. LUMBERMENS MUT. CAS. CO.

November 21, 1995

THE UNIMAX CORPORATION and JFD ELECTRONICS CORP., Plaintiffs, against LUMBERMENS MUTUAL CASUALTY COMPANY and LIBERTY MUTUAL INSURANCE COMPANY, Defendants.


The opinion of the court was delivered by: DUFFY

 KEVIN THOMAS DUFFY, D.J.:

 In this insurance contract dispute, Plaintiffs seek indemnification for costs associated with the cleanup of hazardous wastes on a site in North Carolina. The following motions are currently pending:

 
1. Defendant Lumbermens Mutual Casualty Company's ("Lumbermens") motion for summary judgment based upon trigger of coverage;
 
2. Defendant Liberty Mutual Insurance Company's ("Liberty Mutual") motion for summary judgment based upon trigger of coverage; *fn1"
 
3. Plaintiffs' cross-motion for summary judgment on the duty to defend;
 
4. Defendant Lumbermens' cross-motion for partial summary judgment on the lost-policy issue;
 
5. Plaintiffs' motion to strike portions of Liberty's reply memorandum, or in the alternative for permission to file a sur-reply;
 
6. Defendant Liberty Mutual's motion for leave to file an amended answer to the complaint; and
 
7. Defendant Liberty Mutual's motion to strike paragraph two of the supplemental affidavit of Tom Scheinman.

 The following motions are unopposed and are therefore granted: Plaintiffs' motion to file a sur-reply; Liberty Mutual's motion for leave to file an amended answer to the complaint; and Liberty Mutual's motion to strike paragraph two of the affidavit of Tom Scheinman.

 For the reasons stated below, Defendant Lumbermens' and Defendant Liberty Mutual's motions for summary judgment are denied; Plaintiffs' motion for summary judgment on the duty to defend is granted in part as against Defendant Lumbermens, but denied as against Defendant Liberty Mutual; and Defendant Lumbermens' cross-motion for partial summary judgment on the lost-policy issue is denied.

 I. BACKGROUND

 Plaintiff Unimax is a corporation organized under the laws of Delaware with its principal place of business in New York. (AC at P 2). *fn2" Unimax was originally formed in 1965 as Riker-Video Industries, Inc., which on or about October 28, 1968, merged into a successor company, Riker Corporation. On or about April 1, 1969, Riker Corporation merged with Maxson Electronics Corporation and became the Riker-Maxson Corporation. In 1975 Riker-Maxson Corporation changed its name to The Unimax Group, Inc., and in 1980, The Unimax Group, Inc. changed its name to The Unimax Corporation ("Unimax"). (AC at P 3).

 Plaintiff JFD Electronics Corp. ("JFD") is a wholly-owned subsidiary corporation of Unimax, organized under the laws of Delaware. JFD does not currently operate any business, and does not have a principal place of business. (AC at P 4).

 In early September 1968, Unimax purchased for JFD a television antenna production business and related assets located on a parcel of land near Oxford, North Carolina (the "Oxford site"). (Lumb. Statement of Facts P 9). *fn3" From September 1968 to October 1979, JFD leased the Oxford site and operated the antenna production facility. (Lumb. Statement of Facts P 10).

 On or about October 15, 1979, JFD sublet the entire Oxford site to an affiliate of Ventura Electronics Corp. ("Ventura"), which assumed operation of the antenna production facility at that time. On or about July 15, 1980, JFD purchased the remainder of the Oxford site and simultaneously conveyed its interest in the land, assets, and business on the Oxford site to Ventura. Ventura is a predecessor-in-interest to Channel Master Satellite Systems, Inc. ("Channel Master"). (Lumb. Statement of Facts P 11).

 In March and April of 1986, volatile organic compounds were detected in groundwater monitor wells at the Oxford site. (Lumb. Statement of Facts P 14). On June 16, 1987, North Carolina, acting pursuant to an understanding with the United States Environmental Protection Agency (the "EPA") approved a proposed cleanup plan for the Oxford site, and the cleanup began on June 30, 1987. (Lumb. Statement of Facts P 15).

 The Amended Complaint in the underlying action alleges as follows:

 
4. . . . Prior to October 1978, defendant JFD[] conducted plating operations at the Oxford site which operations generated hazardous wastes that it disposed of on that site. At the time it disposed of the hazardous substances at the Oxford site, JFD was an "owner or operator" of the Oxford site, within the meaning of § 107(a)(2) of CERCLA . . . .
 
11. Unimax owned and operated the Oxford site facility on September 3, 1968 during which time hazardous substances resulting from Unimax electroplating and other television antenna production operations were generated and disposed of on the Oxford site. . . . During the time both Unimax and JFD[] disposed of hazardous substances at the Oxford site, defendant Unimax was a generator and an "owner or operator" of the facility, within the meaning of . . . CERCLA . . . .
 
21. Hazardous substances, as defined by § 101(14) of CERCLA, . . . were daily disposed of at the Oxford site before Ventura and Channel Master occupied the site.
 
22. At all times relevant hereto, there were "releases" or threatened releases of hazardous substances into the environment at the Oxford site . . . .

 Plaintiffs were notified by the EPA in the Fall of 1989 that they were potentially responsible parties under CERCLA for cleanup costs resulting from the alleged contamination at the Oxford site. (Lib. Mut. Statement of Facts P 12). Unimax and JFD claim that they first learned of the existence of the contamination at the Oxford site on August 2, 1988. (Lumb. Statement of Facts P 17).

 Plaintiffs notified Lumbermens and Liberty Mutual of the underlying action in August 1988. Both Defendants disclaimed coverage.

 On or about December 2, 1992, Plaintiffs filed this action against Defendants Liberty Mutual, Lumbermens, and The Travelers Indemnity Company, alleging that each insurer should defend and indemnify Plaintiffs with regard to the underlying action and with respect to the related claims asserted against Unimax by the EPA. (Lumb. Statement of Facts P 19). By stipulation, the complaint has been dismissed as to The Travelers Indemnity Company.

 Lumbermens' Policies

 Defendant Lumbermens issued to Unimax an umbrella comprehensive catastrophe liability policy (Policy No. 9CN 22522) (the "9CN policy") for the period from October 18, 1969 to January 1, 1971. (Lumb. Statement of Facts P 1-2). The policy was made and issued in New York (Lumb. Statement of Facts P 2), and it named both Unimax and JFD as insureds.

 Lumbermens' 9CN policy contains the following language:

 
The Company [i.e. insurer] agrees to indemnify the insured for all sums which the insured shall become obligated to pay as damages . . . by reason of liability . . . imposed on the insured by law . . . because of . . . property damage. . . caused by or arising out of an occurrence which takes place during the policy period anywhere in the world.

 (Lumbermens Policy 9CN 22522 at P I) (emphasis added). "Property damage" is defined in the policy as "physical injury to or destruction of tangible property . . . ." (Id. at P IV.) (emphasis added). The policy defines the term "occurrence" as "an accident, or a continuous or repeated exposure to conditions which results, during the policy period, in . . . property damage . . . neither expected nor intended from the standpoint of the insured." (Id. at Endorsement 6).

 Plaintiffs also allege, but Lumbermens disputes, that Lumbermens issued two primary policies covering the period from October 28, 1968 to January 1, 1972. (Lumb. Statement of Facts P 4-5).

 Liberty Mutual's Policies

 Liberty Mutual issued four successive policies of primary comprehensive general liability insurance to Unimax for the period from January 1, 1975 to January 1, 1979. (Lib. Mut. Statement of Facts P 2). JFD and Unimax are named insureds under those policies. (Lib. Mut. Counter-Statement of Facts P 3). The relevant conditions and provisions of each of Liberty Mutual's policies are functionally identical. (Id. P 4).

 Liberty Mutual's policies contain language similar to Lumbermens' 9CN policy:

 
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . property damage. . . to which this policy applies, caused by an occurrence, and the company shall have the right and the duty to defend any suit against ...

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