1992, the defendant initially took no position on the choice of law question since it believed it would prevail under either Illinois or Pennsylvania law. However, the defendant now contends that Pennsylvania law should be applied since the wrongful conduct occurred at a site situated in Pennsylvania.
A federal court exercising diversity jurisdiction must apply the choice of law rule of the forum state. Klaxon Company v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941); Shields v. Consolidated Rail Corp., 810 F.2d 397, 399 (3d Cir. 1987). Thus, Pennsylvania's choice of law rules will determine which state's substantive law will apply to this case.
The seminal choice of law case in Pennsylvania is Griffith v. United Airlines, Inc., 416 Pa. 1, 203 A.2d 796 (1964). In Griffith, the Pennsylvania Supreme Court abandoned the traditional lex loci delicti doctrine. That doctrine dictated that the law of the place of the injury be applied to tort cases. In its place, the Griffith court adopted a modified version of the flexible approach of the Restatement (Second) of Conflicts of Laws (1969). Under this flexible approach, a court must first determine whether a conflict actually exists between the jurisdictions which may have an interest in the dispute. Parker v. State Farm Ins. Co., 543 F. Supp. 806 (E.D.Pa. 1982). If the court finds a conflict exists, the court must perform a governmental interest analysis along with the significant relationships approach set forth in the Restatements (Second) of Conflicts of Laws. Myers v. Commercial Union Assur. Cos., 506 Pa. 492, 485 A.2d 1113 (1984); Parker, supra. Although the Griffith case involved a tort action, subsequent cases have extended the same rationale and approach to contract cases involving a choice of law question. See In re Complaint of Bankers Trust Co., 752 F.2d 874, 881-82 (3d Cir. 1984); Melville v. American Home Assur. Co., 584 F.2d 1306, 1312-13 (3d Cir. 1978) (construing In Re Hunter, 421 Pa. 287, 218 A.2d 764 (Pa. 1966).
On the issue in question here, what constitutes a "sudden and accidental" occurrence in the pollution exclusion language contained in the two policies, the court finds that Illinois law and Pennsylvania law do conflict. Under Pennsylvania law, "sudden and accidental" retriggers coverage under the pollution exclusion if the damages resulting from pollution discharges are both sudden, meaning abrupt and lasting only a short time, and accidental, meaning unexpected. See Lower Paxon Township v. United States Fidelity and Guaranty Company, 383 Pa. Super. 558, 557 A.2d 393, (1989); Techalloy Co. v. Reliance Ins. Co., 338 Pa. Super. 1, 487 A.2d 820, allocatur denied, 338 E.D.Allo.Dkt 1985 (Pa. Oct. 31, 1985); United States Fidelity & Guaranty Co. v. The Korman Corp., 693 F. Supp. 253 (E.D.Pa. 1988); American Mutual Liability Ins. v. Neville Chemical Co., 650 F. Supp. 929 (W.D.Pa. 1987). However, under Illinois law, "sudden and accidental" retriggers coverage under the pollution exclusion if the damages resulting from pollution discharges are unexpected or unintentional. See Outboard Marine Corporation v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 607 N.E.2d 1204, 180 Ill. Dec. 691 (1992). Since a conflict does exist between Illinois law and Pennsylvania law, the court must determine which state's law to apply.
In deciding which state's law to apply, the court will combine the most significant relationship approach set forth in the Restatement (Second) of Conflicts of Law with the governmental interest analysis. See Melville v. American Home Assurance Co., 584 F.2d 1306 (3d Cir. 1984). The Restatement recommends resolution of a choice of law question involving a contract dispute be based upon consideration of the following factors: (a) the place of contracting; (b) the place of negotiation of the contract; (c) the place of performance; (d) the location of the subject matter of the contract; and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties. Restatement (Second) of Conflict of Laws § 188 (1969). Section 193 of the Restatement deals specifically with fire, surety or casualty insurance contracts. Comment b to Section 193 states the principle that greater weight should be given to the state of the insured risk in making a choice of law determination. However, comment b states that this principle would be inapplicable to the facts of this case since the comprehensive general liability policy here was intended to insure the risks of business operations scattered throughout a number of states.
Applying the Restatement factors in this instance, the court concludes there are more contacts with Illinois than Pennsylvania. The insurance policies were negotiated and entered into in Illinois. See Exhibits A and B of Exhibits to Statement of Uncontested Facts. The place of performance, unless the policy explicitly provides otherwise, is where the premiums are received. See Armotek Industries Inc. v. Employers Ins. of Wausau, 952 F.2d 756 (3d Cir. 1991). The parties do not dispute that the place of performance for the two insurance policies in dispute was Illinois. When the parties entered into the contracts, the parties were either domiciled or headquartered in Illinois. See Defendant's Answer to Plaintiff's Complaint P 3; Veysay Aff. P 4 in Plaintiff's Exhibit to Statement of Uncontested Facts. The fact that the hazardous waste was located in Pennsylvania is the only factor which weighs in favor of applying Pennsylvania law. However, at the times the policies were issued, the plaintiff owned facilities throughout the United States which were covered by the same two insurance policies as the ones presently being disputed. Veysey Aff. P 5.
Having determined that Illinois has the most significant contacts, the court turns to the governmental interest of each state. In this instance, Pennsylvania no longer has a strong interest in this suit since remediation of the Pennsylvania site has been completed. However, Illinois still has a substantial interest in the interpretation of insurance contracts that were issued by an Illinois insurance company, performed in Illinois and negotiated in Illinois. See General Star National Ins. Co. v. Liberty Mutual Ins. Co., 960 F.2d 377 (3d Cir. 1992) (protection of insured parties is the primary public policy behind laws governing duties owed by an insurer to an insured; thus applied law of the jurisdiction where the insured resided and the policy was presumed delivered). Therefore, since Illinois has the most significant contacts and the most substantial governmental interest in this litigation, the court will apply the laws of Illinois.
I. SUMMARY JUDGMENT STANDARD
The requirements for summary judgment are provided in Rule 56(a) of the Federal Rules of Civil Procedure. Rule 56(a), in pertinent part, states:
[a] party seeking to recover upon a claim, counterclaim, crossclaim or to obtain a declaratory judgment may, at any time after the expiration of twenty days from the commencement of the action or after service of a motion for summary judgment by the adverse part, move with or without supporting affidavits for a summary judgment in the party's favor upon all or any part thereof.
Summary judgment is appropriate if there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Small v. Seldows Stationery, 617 F.2d 992, 994 (3d Cir. 1980). The moving party need not produce evidence to disprove the opponent's claim but does carry the burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In turn, the non-moving party must offer specific facts contradicting the facts averred by the movant which indicate there is no genuine issue for trial. Lujan v. National Wildlife Federation, 497 U.S. 871, 110 S. Ct. 3177, 3186, 111 L. Ed. 2d 695 (1990). If there are no genuine issues as to material facts, the court must determine whether the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c).
II. APPROPRIATENESS OF SUMMARY JUDGMENT
Count I of the plaintiff's amended complaint seeks monetary compensation in connection with the EPA mandated clean-up of the Henderson Road site. Count II of the plaintiff's amended complaint seeks a judgment declaring (a) that the defendant must indemnify the plaintiff for the clean-up of the Henderson Road site, and (b) that the defendant must reimburse the plaintiff for its legal fees in connection with the clean-up. In essence, the plaintiff seeks summary judgment as to count II. The defendant asserts that the plaintiff's partial summary judgment motion is inappropriate since it addresses the applicability of the pollution exclusion, which is a defense asserted by the defendant, to the facts of this case.
Neither the third circuit nor a court within this district has addressed the appropriateness of discussing defenses in a motion for summary judgment. Other courts have held that a court can properly entertain a motion for partial summary judgment that contains affirmative defenses. See Koch Industries, Inc. v. United Gas Pipe Line Co., 700 F. Supp. 865 (M.D.La. 1988); First National City Bank v. Kline, 439 F. Supp. 726 (S.D.N.Y. 1977). In this instance, the court finds no merit in the defendant's assertion. The plaintiff's partial summary judgment motion seeks declaratory judgment on the defendant's obligation under the policies it issued. In order to grant the plaintiff the relief requested, the court must address the pollution exclusion defense raised in the policies. Therefore, under the circumstances of this case, the court concludes that the plaintiff's summary judgment motion is appropriate.
III. THE INSURANCE POLICY PROVISIONS
In order for the court to determine the defendant's obligation to indemnify the plaintiff for the costs it incurred in connection with the remediation of the Henderson Road site, the court must examine and interpret the language contained in the comprehensive general liability policy.
The policy's coverage provision reads as follows:
The company [defendant] will pay on behalf of the insured [plaintiff] all sums which the insured shall become legally obligated to pay damages because of
A. bodily injury or
B. property damage
to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit it deems expedient . . .