companies owe them a duty of defense and indemnification in Utica's first party-action. The GMI parties now move for summary judgment against two of those insurers -- The Travelers Indemnity Company of America ("Travelers") and North River Insurance Company ("North River") -- on the duty to defend. Travelers cross-moves for summary judgment dismissing the third-party complaint. I deny the GMI parties' motion and grant Travelers' motion.
I. Allegations of the First-Party Complaint
In the first party action, Utica, which now owns the Primoshield site, alleges that GMI and Cocquyt were owners and operators of the site when a significant portion of the contamination occurred. Compl. PP 18-21. At the time of the GMI parties' involvement, Primoshield, Inc. ("Primoshield") owned part of the site and leased the balance. Compl. PP 45, 48. Utica alleges that Cocquyt incorporated Primoshield in 1987 and that GMI and Cocquyt together owned 50 percent of Primoshield's stock. Id. P 46. Utica also alleges that Wilmot and Kramer were operators of the site and that all of the GMI parties were involved in management of the site and controlled or had the authority to control the disposal of hazardous wastes. Id. PP 18-21.
Primoshield, Inc. operated an electroplating facility at the site. Id. P 45. Utica's complaint alleges that in May 1984, Primoshield chemicals were spilled at the site. Id. P 49. Further, on June 25, 1985, a Primoshield employee notified the New York State Department of Environmental Conservation ("DEC") that Primoshield had spilled a significant amount of material on the facility grounds and disposed of eight hundred to a thousand gallons of chemicals per week down drains leading to a storm sewer. Id. P 73. After investigating the allegations, the DEC petitioned the United States Environmental Protection Agency ("EPA"), to perform an emergency clean-up and removal action on March 12, 1986. Id. PP 74, 79. In a letter dated March 26, 1986, the EPA notified GMI that the EPA intended to commence an emergency response and considered GMI a potentially responsible party. Id. P 84.
On December 27, 1989, Utica entered into a consent order with the DEC for clean up of the site. Id. P 90. On March 28, 1990, the EPA sent GMI a request for information pursuant to 42 U.S.C. § 9604(e). Id. P 92. By letter dated November 1, 1994, Utica's attorneys and the DEC advised the GMI parties that Utica and the DEC considered each of the defendants liable for the release and for the costs of the resulting clean-up. Id. P 98.
II. Insurance Coverage
Travelers issued GMI a special business policy including comprehensive general liability coverage with a $ 1 million aggregate and per occurrence limit effective from August 15, 1983 to August 15, 1986. Woodworth Aff. Ex. A ("Travelers' Policy"), Gen. 1-1 at 1, GL2-1. Travelers' policy covered GMI as well as its officers, directors and stockholders while acting within the scope of their duties. Id. at GL 5-1 at 2 (II(c)). North River issued GMI an excess policy - in effect from August 15, 1983 to August 15, 1984 - covering claims in excess of the coverage provided by other policies collectible by GMI or a self-insured retention of $ 10,000, whichever was greater. O'Shea Aff. Ex. A ("No. River Policy") at 1, 13(V).
North River's policy, which had a per occurrence/aggregate limit of $ 29 million, covered both GMI and its officers, employees, directors and stockholders while acting within the scope of their duties. Id. at 1, 12 (III(c)). The GMI parties also claim coverage under a policy issued to Primoshield by the Hartford Accident and Indemnity Company on the theory that Utica has sued the GMI parties as officers, directors, or shareholders of Primoshield. First Am. Third-Party Compl. PP 51-54.
III. GMI's Notice to Travelers and North River
Utica filed its first-party complaint on May 4, 1995. By letter dated May 18, 1995
, the GMI parties demanded defense and indemnification from Travelers. First Am. Third-Party Compl. P 28, Ex. C. The GMI parties claimed that time was of the essence because they were required to answer the complaint by June 30, 1995 and stated: "Any basis for disclaimer of coverage not raised explicitly with us on or before June 30 will be considered waived." Id. The GMI parties also enclosed the first-party complaint and a copy of the insurance policy, which Travelers alleges was incomplete. Id., Fritz Aff. P 2.
Travelers responded by letter dated June 14, 1995, and addressed to GMI's counsel.
Fritz Aff. P 6, Ex. 3. Travelers questioned whether the policy GMI had enclosed was intended to provide coverage for spills resulting from an electroplating operation because that policy "provided coverage for risks arising out of Genesee's business as 'Real Estate Management Corp'." Id. Ex. 3 at 1. Travelers invited the GMI parties to "explain why you believe that this contract should respond to this situation," and asked the GMI parties to supply any other policies that Travelers may have issued to GMI. Id. at 1-2. The insurance company noted that "once those contracts and any other information which you believe The Travelers should consider has been received and reviewed, The Travelers will be in a better position to determine whether it has any obligation to your clients or whether it requires additional information in order to do so." Id. at 2. Travelers closed its letter with the following language:
Finally, all policies issued by The Travelers policies (sic) incorporate a conditions section. The complaint clearly indicates that certain conditions have not been met. Therefore, should it be shown that this or any other contract issued by The Travelers is potentially applicable to this situation, The Travelers specifically reserves its right to disclaim coverage on that basis.