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Pennsylvania Manufacturers' Association Insurance Co. v. Johnson Matthey, Inc.

Commonwealth Court of Pennsylvania

April 21, 2017

Pennsylvania Manufacturers' Association Insurance Company, Petitioner
v.
Johnson Matthey, Inc. and Pennsylvania Department of Environmental Protection, Respondents

          Argued: December 12, 2016

          BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ANNE E. COVEY, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge

          OPINION

          JAMES GARDNER COLINS, Senior Judge.

         This case is a petition for review filed by Pennsylvania Manufacturers' Association Insurance Company (Insurer) against Johnson Matthey Inc. (JMI) and the Pennsylvania Department of Environmental Protection (DEP) seeking a declaratory judgment that it has no obligation to defend or indemnify JMI with respect to a lawsuit filed by DEP against JMI seeking recovery of costs for cleanup of environmental contamination. Before this Court is Insurer's motion for summary relief.[1] For the reasons set forth below, we deny Insurer's motion.

         Insurer issued comprehensive general liability (CGL) policies insuring JMI's predecessor companies that were in effect from at least April 1, 1969 to April 1, 1979. (Insurer's Amended Petition for Review ¶¶12, 14 & Exs. A, B; JMI Answer to Amended Petition for Review ¶12, JMI Counterclaims ¶8 & Ex. B.) JMI alleges that Insurer also insured its predecessor companies between 1955 or 1957 and April 1, 1969, but the existence of coverage for periods before April 1, 1969 is disputed. (Insurer's Amended Petition for Review ¶15; JMI Answer to Amended Petition for Review ¶¶12, 15, JMI Counterclaims ¶6 & Ex. A; Insurer's Answer to Counterclaims ¶6.) Insurer did not insure JMI or its predecessor companies after April 1, 1979. (Insurer's Amended Petition for Review ¶20; JMI Answer to Amended Petition for Review ¶¶12, 20; Insurer's Motion for Summary Judgment ¶24; JMI Answer to Insurer's Motion for Summary Judgment ¶24.) The aggregate property damage limits of liability of the CGL policies covering the period from April 1, 1971 to April 1, 1979 have been exhausted. (Insurer's Amended Petition for Review ¶13; JMI Answer to Amended Petition for Review ¶13.) The property damage limits of the April 1, 1969 to April 1, 1970 and April 1, 1970 to April 1, 1971 policies are not exhausted. (Insurer's Amended Petition for Review ¶14; JMI Answer to Amended Petition for Review ¶14.)

         On May 12, 2010, DEP named JMI as a defendant in a civil action captioned Commonwealth of Pennsylvania Department of Environmental Protection v. Whittaker Corporation and Johnson Matthey Inc., filed in the Eastern District of Pennsylvania, Civil Action No. 08-6010 (the Underlying Action). In the Underlying Action, DEP alleges that from 1951 through April 1, 1969, a JMI predecessor company owned the Bishop Tube Site (the Site), a property in East Whiteland Township, Chester County, Pennsylvania, and manufactured and processed metal alloy tubes and associated equipment at the Site. (Underlying Action Amended Complaint ¶¶1, 7.) DEP alleges that the JMI predecessor companies and a corporation unaffiliated with JMI that owned the Site from 1969 to 1974 "used hazardous substances, including trichloroethylene ('TCE')" in their operations at the Site. (Id. ¶9.) DEP further alleges that "[a]s a result of Defendants operations, hazardous substances, including TCE, were disposed into the environment, including the Site's soils and groundwater, " and that "[s]ubsurface migration of contaminated groundwater from the Site has contaminated the aquifer beneath the Site and beneath off-Site properties." (Id. ¶¶10-11.) Based on these allegations, DEP asserts that JMI and the later owner of the Site are liable to DEP under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)[2] and the Hazardous Sites Cleanup Act[3] for costs incurred in remediating the environmental damage caused by the release of hazardous substances at the Site. (Underlying Action Amended Complaint ¶¶27-29, 33-34.)

         Insurer on June 2, 2010 agreed to defend JMI with respect to the Underlying Action subject to a reservation of rights. (JMI Counterclaims ¶20; Insurer's Answer to JMI Counterclaims ¶20.) On September 27, 2010, Insurer advised JMI that it "continues to reserve its right to assert the following defenses: lost policies, exhaustion, owned property, voluntary payments and pre-tender costs, allocation, and other insurance, " but that it "is no longer asserting the following defenses in this matter: late notice, failure to cooperate, pollution exclusion (in the 4/1/70-4/1/71 policy), trigger-of-coverage, and the definition of occurrence" with respect to coverage of the Underlying Action. (9/27/10 Letter from Insurer's Counsel to JMI Counsel, JMI Answer to Insurer's Motion for Summary Judgment Hagan Aff. Ex. 3.) Insurer defended JMI in the Underlying Action from 2010 until 2015. (JMI Counterclaims ¶¶20-24; Insurer's Answer to JMI Counterclaims ¶¶20-24.)

         In 2015, Insurer notified JMI that it would no longer defend JMI in the Underlying Action and filed the instant petition for review seeking a declaratory judgment that it has no duty to defend or indemnify JMI in the Underlying Action.[4] In its petition for review, Insurer asserts that the Underlying Action is not within the coverage provided by the April 1, 1969 to April 1, 1970 and April 1, 1970 to April 1, 1971 policies or any earlier policies because the contamination at the Site was not detected during the period that those policies were in effect. (Insurer's Amended Petition for Review ¶¶21, 23-25.) JMI filed an answer to the petition for review disputing Insurer's contention that the policies do not provide coverage and asserting counterclaims for a declaratory judgment that Insurer is required to defend and indemnify it with respect to the Underlying Action and for breach of contract.

         Insurer has now moved for summary relief granting the declaratory judgment sought in its petition for review. Insurer bases its motion on the contentions that as a matter of law liability insurance coverage for environmental property damage claims is triggered only at the time the property damage is first manifested and that the first environmental testing that detected TCE was in 1988. JMI and DEP oppose the motion both on the law and on the grounds that summary disposition is not proper because there are disputed issues of fact and discovery is not complete.

         Rule 1532(b) of the Rules of Appellate Procedure provides that "[a]t any time after the filing of a petition for review in an appellate or original jurisdiction matter the court may on application enter judgment if the right of the applicant thereto is clear." Pa. R.A.P. 1532(b). A motion for summary relief is evaluated according to the same standards as a summary judgment motion. Myers v. Commonwealth, 128 A.3d 846, 849 (Pa. Cmwlth. 2015); Summit School, Inc. v. Department of Education, 108 A.3d 192, 193 n.1 (Pa. Cmwlth. 2015); see also Pa. R.A.P. 1532 Note (stating that Pa. R.A.P. 1532(b) "authorizes immediate disposition of a petition for review, similar to the type of relief envisioned by the Pennsylvania Rules of Civil Procedure regarding judgment on the pleadings and peremptory and summary judgment"). Summary relief may be granted only if there are no genuine disputes of material fact and, viewing the evidence in the light most favorable to the nonmoving party, the movant's right to judgment in its favor is clear as a matter of law. Hospital & Healthsystem Association of Pennsylvania v. Commonwealth, 77 A.3d 587, 602 (Pa. 2013); Leach v. Commonwealth, 118 A.3d 1271, 1277 n.5 (Pa. Cmwlth. 2015) (en banc), aff'd, 141 A.3d 426 (Pa. 2016).

         The central issue raised by Insurer's motion is what event must take place within the policy period to trigger coverage under Insurer's CGL policies. Identifying the appropriate trigger of coverage under an insurance policy turns upon the language of the policy. Pennsylvania National Mutual Casualty Insurance Co. v. St. John, 106 A.3d 1, 14 (Pa. 2014); Warrantech Consumer Products Services, Inc. v. Reliance Insurance Co. in Liquidation, 96 A.3d 346, 357 (Pa. 2014).

The goal in construing and applying the language of an insurance contract is to effectuate the intent of the parties as manifested by the language of the specific policy. When the language of an insurance policy is plain and unambiguous, a court is bound by that language. Alternatively, if an insurance policy contains an ambiguous term, "the policy is to be construed in favor of the insured to further the contract's prime purpose of indemnification and against the insurer, as the insurer drafts the policy, and controls coverage." Contract language is ambiguous if it is reasonably susceptible to more than one construction and meaning. Finally, the language of the policy must be construed in its plain and ordinary sense, and the policy must be read in its entirety.

St. John, 106 A.3d at 14 (citations omitted, quoting 401 Fourth Street Inc. v. Investors Insurance Group, 879 A.2d 166 (Pa. 2005)). The interpretation of the language of an insurance policy is a question of law. Babcock & Wilcox Co. v. American Nuclear Insurers, 131 A.3d 445, 456 (Pa. 2015); St. John, 106 A.3d at 14.

         Because Insurer seeks a declaratory judgment with respect to its duty to defend, the Court must also consider the allegations of the complaint in the Underlying Action to determine whether it alleges facts that could trigger coverage under the policies. American and Foreign Insurance Co. v. Jerry's Sport Center, Inc., 2 A.3d 526, 541 (Pa. 2010); Kvaerner Metals Division of Kvaerner U.S., Inc. v. Commercial Union Insurance Co., 908 A.2d 888, 896 (Pa. 2006); Consulting Engineers, Inc. v. Insurance Co. of North America, 710 A.2d 82, 84 (Pa. Super. 1998), aff'd, 743 A.2d 911 (Pa. 2000). If a complaint against the insured pleads facts that are potentially within the scope of the policy's coverage, the insurer has a duty to defend the action until all covered claims ...


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