action and ultimately settling all claims against Jordan. The settlement required Jordan to pay $ 94,000.00 to the Commonwealth of Pennsylvania.
Centennial and Jordan brought this declaratory judgment action requesting that the Court declare that Lumbermens was obligated to defend and indemnify Jordan against the claims raised in the Wade CERCLA action.
II. Standard for Summary Judgment
A trial court may enter summary judgment if, after a review of all evidentiary material in the record, there is no genuine issue as to any material facts, and the moving party is entitled to judgment as a matter of law. Bank of America Nat. Trust and Sav. Ass'n v. Hotel Rittenhouse Associates, 595 F. Supp. 800 (E.D. Pa. 1984). Where no reasonable resolution of the conflicting evidence and inferences therefrom could result in a judgment for the non-moving party, the moving party is entitled to summary judgment. Tose v. First Pennsylvania Bank, N.A., 648 F.2d 879, 883 (3rd Cir. 1981), cert. denied 454 U.S. 893, 70 L. Ed. 2d 208, 102 S. Ct. 390 (1981).
The moving party must initially show an absence of a genuine issue concerning any material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970). The moving party's burden may be discharged by demonstrating that there is an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L.Ed 2d 265, 275, 106 S. Ct. 2548 (1986). Once the moving party has pointed out the absence of a dispute as to a material fact, the non-moving party must go beyond its pleadings and designate specific facts by use of affidavits, depositions, admissions or answers to interrogatories showing there is a genuine issue for trial. Celotex, at , 91 L. Ed. 2d at 274.
In this case, both parties have filed motions for summary judgment. Because I find that genuine issues of material fact do not exist in this case, summary judgment is appropriate where Lumbermens is entitled to recover as a matter of law.
Centennial and Jordan ask this Court to declare that Lumbermens had a duty to defend and indemnify Jordan in the Wade CERCLA action.
An insurer must defend an insured whenever the complaint filed by the injured party potentially states a claim within the policy's coverage. Pacific Indemnity Company v. Linn, 766 F.2d 754, 760 (3rd Cir. 1985); C.H. Heist Caribe Corporation v. American Home Assurance Company, 640 F.2d 479, 483 (3rd Cir. 1981); Techalloy Company Inc. v. Reliance Insurance Company, 338 Pa. Super. 1, 8, 487 A.2d 820, 824 (1984). The factual allegations of the complaint create the duty to defend which continues until the insurer can confine the claim to a recovery that is not within the scope of the policy.
Pacific Indemnity Company, at 760.
The allegations in the third party complaint against Jordan incorporated the allegations made against the defendants/third party plaintiffs in the government's third amended complaint in the Wade CERCLA action. To determine whether the allegations potentially state a claim within the insurance policy coverage, various questions of insurance contract interpretation must be resolved.
A. An Occurrence Within the Policy.
Lumbermens argues that it was not required to defend or indemnify Jordan because property damage was not caused by an occurrence within the policy period of August 15, 1976 to August 15, 1977. Lumbermens, instead, asserts that the occurrence that caused the underlying CERCLA claim was the February 2, 1978 fire that sparked the investigation into the Wade site.
The Lumbermens insurance policy states as follows:
"Occurrence" means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected or intended from the standpoint of the insured.
It seems unquestionable that an occurrence within the policy took place.
The general rule requires the Court to determine an occurrence by the cause or causes of the resulting injury. Appalachian Insurance Company v. Liberty Mutual Insurance Company, 676 F.2d 56, 61 (3rd Cir. 1982). The release of toxic industrial waste onto the land at the Wade site caused the property damage to the land at that location. The source of the harm was the dumping of the waste. The dumping of the waste is an occurrence within the policy because it was an accident from the insured's standpoint. The facts do not indicate that Jordan expected or intended illegal and harmful dumping of its toxic waste. Jordan hired ABM Disposal Company to dispose of its toxic waste during a period of time that it could not utilize the local authority's sewage system. Jordan naturally expected and intended that ABM would legally dispose of its waste.
The more difficult question that must be resolved in determining potential insurance coverage is when the occurrence arose triggering coverage. The rule in this Circuit is clear. "The determination of when an occurrence happens must be made by reference to the time when the injurious effects of the occurrence take place." Appalachian Insurance Company, 676 F.2d at 61-62.
In Appalachian, and also Riehl v. Travelers Insurance Company, 772 F.2d 19 (3rd Cir. 1985), the Court of Appeals held that the occurrence arose when the injuries first manifested themselves. Appalachian, 676 F.2d at 62; Riehl, 772 F.2d at 23. Lumbermens argues that the manifestation rule is applicable in this case, and that the injuries did not manifest themselves until the February 2, 1978 fire at the Wade site. Since its insurance policy expired August 23, 1977, Lumbermens claims that an occurrence did not arise during its policy period and no coverage existed.
Centennial and Jordan argue that an occurrence arose each time the toxic waste was dumped onto the Wade site.
Centennial and Jordan claim that on sixteen (16) separate occasions, between November 12, 1976 and December 21, 1977,
toxic wastes were released onto the Wade site causing property damage.
I agree with Centennial and Jordan. An occurrence arose each instance the wastes were released onto the Wade site. This is the time that the injurious effect took place because this is the time that the property was actually damaged. Appalachian and Riehl do not require a contrary result. These cases involved facts where the injurious effects were difficult to identify specifically in time. Appalachian involved a discriminatory 1965 employment policy in which the injurious effects began immediately upon its adoption in 1965 and continued until sometime in 1971. Riehl involved a toxic waste site where the record did not disclose when the dumping commenced, occurred or when the pollution was discovered.
The case at bar is clearly distinguishable. The dates of the pollution releases are reasonably identifiable. Each release caused property damage and each release, consequently, constitutes an occurrence as of the date of the release and the simultaneous damage.
Both state and federal courts have recently recognized this "actual damage" approach to the trigger of coverage analysis of an occurrence-type insurance policy. Continental Insurance Companies, 811 F.2d 1180, 1189 (8th Cir. 1987) rehearing granted 815 F.2d 51 (8th Cir. 1987) (Environmental damage occurs at the time that hazardous wastes are improperly released into the environment); Fireman's Fund Insurance Companies v. Ex-Cell-O Corporation, 662 F. Supp. 71, 76 (E.D. Mich. 1987) (Each exposure of the environment to a pollutant constitutes an occurrence and triggers coverage); Industrial Steel Container Company v. Fireman's Fund Insurance Co., 399 N.W. 2d 156, 159 (Ct. of App. Minn. 1987) (Rejects the argument that only one occurrence arises where property damage results from continuous or repeated conditions of exposure and adopts the actual injury rule).
I, therefore, hold that occurrences did arise within Lumbermens' policy.
B. The Pollution Exclusion
Lumbermens asserts that the pollution exclusion in its policy bars coverage even if the Court finds that an occurrence arose during its policy period. The language of the policy states,
it is agreed that such insurance as is afforded by this policy shall not apply to . . . property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, waste materials or other irritants contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.