The opinion of the court was delivered by: RICHARD P. CONABOY
Plaintiff, Gould, Inc., initiated this diversity based action on April 29, 1991, against several Defendant insurance companies seeking coverage and indemnification for the bodily injury claims of Dominick Zaccagnino. (not a party to the present suit). Currently the following motions are pending before the Court: (1) Plaintiff's motion for partial summary judgment; (2) Defendant's, United States Fire Ins. Co., cross-motion for summary judgment; (3) Plaintiff's motion for a Protective Order; and, (4) Defendants' joint motion to compel the production of documents. The Court will review and analyze all of the above motions in the present Memorandum and Order.
From approximately 1964 through May 1980, Marjol Battery & Equipment Company (hereinafter Marjol) operated a battery crushing and lead processing facility on Delaware Street in Throop, Pennsylvania. Marjol was wholly owned by Lawrence E. Fiegleman. In May 1980, plaintiff Gould, a corporation engaged in the business of electronics, purchased the Marjol property and assets from Mr. Fiegleman. After its purchase, however, Gould discontinued the lead processing operation and used the site solely for battery crushing and as a transfer point at which to accumulate batteries for transportation to other Gould facilities. (Doc.No. 86, p. 7). In approximately 1982, Gould ceased all operations at the Marjol site.
In February 1989, Dominick and Elizabeth Zaccagnino filed suit against Gould, claiming that Mr. Zaccagnino suffered bodily injury as a result of alleged exposure to lead in the course of performing services at the Throop site. Mr. Zaccagnino was a self-employed truck driver for an independent trucking company.
(Doc.No. 107, Exh. B, pp. 3-4).
Plaintiff Gould notified Defendant CNA, its primary insurance carrier, of the claims made by Zaccagnino and demanded that it provide a defense to Gould and indemnify Gould for all losses, damages, costs, and expenses incurred in the investigation, defense, and resolution of the lawsuit. (Doc.No. 86, p. 13). Defendant CNA, however, informed Gould that coverage is excluded because the claims arise out of environmental pollution which was not "sudden and accidental but gradual and ongoing from 1968 to the present."
(Dos.No. 107, Exh. D, p. 3). Gould then notified the other Defendant insurance carriers of the Zaccagnino's claims and made similar demands of them. The remaining Defendant insurance companies likewise refused Gould's requests for coverage and indemnification.
On January 3, 1991, Plaintiff Gould settled with the Zaccagnino's for an amount which this Court ordered confidential, except as necessary for Gould to assert a claim against its insurers. Plaintiff Gould notified the Defendant companies of the settlement. (Dos.No. 86, p. 13).
As a result of the Defendant insurance companies refusal to provide coverage and indemnification to Gould, Plaintiff Gould filed the present lawsuit in the District Court. Plaintiff Gould seeks the "full amount that it has been required to pay to date in connection with the Zaccagnino lawsuit, plus the costs and counsel fees it has incurred in pursuing its rights in the coverage dispute with the companies, including this action." (Doc.No. 86, pp. 14-15).
Initially, the Court is confronted with a choice of law issue, between the law of Pennsylvania, where among other things, the injuries resulting in the claim for which Gould seeks coverage occurred, and the law of Illinois, where Gould contends the policies issued to Gould were delivered and from where premium for such policies allegedly was paid. (Doc.No. 129, p. 12 n. 8). Although some of the remaining Defendants have places of business outside Illinois and Pennsylvania, those parties do not argue that the law of those states should be applied in the present action. As Courts generally decide only those issues raised by the parties, Winston v. Children & Youth Services, 948 F.2d 1380, 1385 (3d Cir. 1991); Beaver Valley Power Co. v. National Eng'g & Contracting Co., 883 F.2d 1210, 1217 n. 6 (1989), we accordingly confine our analysis to the question of whether Illinois rather than Pennsylvania law should govern.
Since this is a diversity case filed in the Middle District of Pennsylvania, we must apply Pennsylvania choice-of-law rules. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941); Armotek Industries v. Employers Insurance of Wausau, 952 F.2d 756, 760 (3d Cir. 1991). For a long time Pennsylvania was among those jurisdictions applying a "stiff" approach to determining the appropriate law to apply in a given case. So that in a tort case, the place of the injury (lex loci delicti) rule was followed, and in a contract matter the case was governed by the law of the state where the contract was made.
More recent opinion, however, is that these rules should be changed in favor of a more flexible rule which permits an analysis of the policies and interests underlying the particular issue before the Court. This approach has been described as more logical because "the merit of such a rule is that it gives the place having the most interest in the problem paramount control over legal issues arising out a particular factual context and thereby allows the forum to apply the policy of the jurisdiction most intimately concerned with the outcome of the particular litigation." Jewelcor Incorporated v. St. Paul Fire & Marine Insurance Company, 499 F. Supp. 39 (M.D. Pa. 1980) (Conaboy, J.) (quoting Babcock v. Jackson, 12 N.Y. 2d 473, 191 N.E. 2d 279, 240 N.Y. S. 2d 743 (1963)). See also Melville v. American Home Assurance Co., 584 F.2d 1306, 1313 (3d Cir. 1978).
While the contract between the Plaintiff and some of the Defendants was formed in Illinois, the Plaintiff's substantial business enterprise was in Throop, Pennsylvania, and the subject of the underlying lawsuit is entirely located in Throop, Pennsylvania. Additionally we find that the Commonwealth of Pennsylvania has a very substantial interest in protecting the rights of its corporate entities, as well as those with whom they do business. The Defendant companies in this case chose to do business within the confines of the Commonwealth of Pennsylvania, and the business of insuring against environmental pollution is one in which the Commonwealth has a very distinct interest.
Moreover, the Court notes that neither party has taken a firm position as to which law should apply. All parties, including the Plaintiff, cite and analyze, for the most part, Pennsylvania law. In light of this fact, as well as the Commonwealth's substantial interest in this case, the Court is convinced that Pennsylvania rather than Illinois law should be applied. We will therefore consider the pertinent policy provisions as construed under Pennsylvania law.
PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
Plaintiff Gould filed a motion for partial summary judgment on March 3, 1992, claiming that the insurance contracts between Gould and the various Defendants specifically cover bodily injury claims caused by continuous or repeated exposure to conditions. (Doc.No. 107 and Doc.No. 108, p. 5). Plaintiff bases its position on the following two contentions. (1) the pollution exclusion clauses contained in the insurance policies between Gould and the Defendants are meant to preclude coverage for environmental pollution -- i.e., pollution that extends beyond the source of the pollution (here, the worksite) and (2) even assuming that the language of the pollution exclusion is not clear, then, under well-established principles of insurance policy interpretation, the ambiguity should be construed against the Defendant insurance companies in order to provide coverage to Gould for the Zaccagnino's claims. (Doc.No. 108, p. 6). (emphasis in original)
The Defendants object to Plaintiff's motion on several grounds, the first being the contention that Plaintiff's motion is improper in that Plaintiff Gould is not a party "seeking to recover upon a claim, counterclaim or crossclaim" or even "to obtain a declaratory judgment" on its own claim. Rather, the Defendants contend, Plaintiff is a party seeking to dispose prematurely of a defense to its claim by moving for summary judgment before discovery has been completed and before Gould has proven the elements of the case to which the defense might be interposed. (Doc.No. 129, p. 12).
The Defendants also argue that the language of the exclusion clause means a claim that was otherwise covered (including a claim involving a "continuous or repeated exposure to conditions") will not be covered if the coverage sought is for bodily injury (or property damage) suffered as a result of the "discharge, dispersal, release or escape" of "contaminants" or "pollutants" upon land, into the atmosphere, or into the waster, unless that "discharge, dispersal, release or escape" is "sudden and accidental". (Doc.No. 129, p. 22). Therefore, the Defendants contend that a claim involving a "continuous or repeated exposure to conditions" may be either covered or not, depending upon, among other things, whether the pollution exclusion applies. (Doc.No. 129, p. 22).
A. The Appropriateness of Plaintiff's Motion For Partial Summary Judgment.
As to the Defendants initial objection regarding the appropriateness of Plaintiff's motion for summary judgment, the Defendants are correct in that summary judgement in favor of a claimant is appropriate only when he seeks "to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory judgment." Fed.R.Civ.P. 56(a). Therefore, summary judgment would not be proper in this instance because Plaintiff's motion addresses potential defenses as opposed to a presentation of its own claims. See Abyaneh v. Merchants Bank, North, 670 F. Supp. 1298 (M.D. Pa. 1987) (Nealon, C.J.).
The Court will, however, construe Plaintiff's motion as a request to rule on the availability of the defenses raised by the Defendants in their answers. Id. at 1300.
B. The Meaning of the Pollution Exclusion Clause.
The Court must next address the meaning of the standard pollution exclusion clause's exception for discharges that are "sudden and accidental."
The pollution exclusion clauses contained in the Defendants' policies, for the most part, read as follows:
This insurance does not apply:
(f) to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental. (Doc.No. 107, Exh. F).
The Plaintiff interprets the above exclusion to deny coverage only for those claims that involve "widespread pollution of the environment beyond the source of the pollution." (Doc.No. 108, p. 6). Gould's principal authority for the existence of this "worksite exception" to the contamination or pollution exclusion's applicability is a decision by Judge Abraham Gafni, Philadelphia Common Pleas Court Judge, in the case of Gould, Inc. v. Continental Casualty Company, No. 3529, June Term 1986 (C.P. Phila.). In Continental Casualty, Judge Gafni stated that the contamination or pollution exclusion is, in his opinion, "designed to apply to occurrences outside the workplace."
The Defendants argue that the factual premise in Gould, Inc. v. Continental Casualty, is distinctly different from the case at bar, in that the worksite exposure in Continental Casualty occurred at least in part indoors and involved a number of employees who worked only nominally in the outdoors. Furthermore, the Defendants contend that the claimants overexposure to lead and other harmful metals in Continental Casualty was the result of daily exposure to such substances while performing manufacturing operations at the plant. (Doc.No. 129, p. 35 and Doc.No., p. 24.). Zaccagnino, Defendants claim, was exposed to lead only after it was discharged or dispersed into the atmosphere around the Marjol plant and settled onto the "land".
Clearly, the factual premise in Gould, Inc. v. Continental Casualty is different from the present case. As the Defendants point out, the issue before Judge Gafni was whether the pollution exclusion clause acted to bar coverage for work-related employee claims arising out of exposure to toxic substances within the plant itself,
and not whether the ...