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Independent Petrochemical Corp. v. Aetna Casualty & Sur. Co.

ELR Citation: 22 ELR 20983
Nos. No. 83-3347, 781 F. Supp. 9/35 ERC 1295/(D.D.C., 12/06/1991) Summary judgment granted

The court holds that two insurance companies have no duty to defend or indemnify a company that served as the intermediary for the disposal of dioxin-contaminated waste against personal injury and property damage claims allegedly arising from contamination at Missouri sites where the waste was sprayed. The intermediary company arranged for an independent contractor to remove over 20,000 gallons of hazardous waste from a customer's facility. The contractor mixed the waste with waste oil and sprayed the mixture as a dust suppressant at 26 sites. After the toxic effects of the dioxin allegedly became apparent, 57 civil actions involving over 1,600 claimants were filed against the intermediary company seeking $4 billion in bodily injuries and property damage and $4 billion in punitive damages. The court holds that pollution exclusion clauses in the intermediary's insurance policies relieve the insurers of any obligation to defend or indemnify the intermediary in connection with the claims, because the clauses are unambiguously plain. Applying New York law as designated by the policies, the court holds that the clauses are applicable because the underlying complaints clearly allege that during the early 1970s the independent contractor intentionally and deliberately discharged or dispersed dioxin onto several sites in eastern Missouri and that such discharges or dispersals resulted in pollution to the environment. Following the New York Court of Appeals' holding in Technicon Electronics Corp. v. American Home Assurance Co., 20 ELR 20380, the court holds that the applicability of a pollution exclusion clause does not depend on a finding that toxic or hazardous waste in fact resulted in pollution. Rather, the inquiry is whether the complaint alleges a discharge or dispersal that resulted in pollution, because the duty to defend insureds is derived from the allegations of the complaint and the terms of the policy. The court also holds that the independent contractor's spraying of dioxin-tainted waste oil constitutes pollution and contamination within the common meaning of those terms. Based on the New York Court of Appeals' holdings in Technicon and Powers Chemco, Inc. v. Federal Insurance Co., 74 N.Y.2d 910, the court holds that the discharges were intentional and deliberate and, thus, the pollution exclusion clauses' sudden and accidental exceptions do not apply. The court finds that the contractor was cognizant of the presence of the dioxin-tainted waste in the waste oil mixture that he sprayed. Applying New York precedent, the court rejects the intermediary's argument that the contractor's discharge was accidental as to the intermediary. Finally, the court holds that Missouri law has no fundamental policy conflicting with the New York law on which the court based its decision, because the Missouri Supreme Court has not spoken on this issue. Further, the intermediary does not point to a single Missouri statute or decision by a Missouri court establishing a fundamental policy on the pollution exclusion in question. The court finds that neither of the federal district court decisions cited by the intermediary sets forth a fundamental policy of Missouri law as it relates to pollution exclusion.

[A prior decision of the court in this litigation is published at 21 ELR 21483.]

Counsel for Plaintiffs
John H. Gross
Anderson, Kill, Olick & Oshinsky
666 Third Ave., New York NY 10017
(212) 850-0700

Counsel for Defendants
Alan G. Miller
Morrison, Mahoney & Miller
250 Summer St., Boston MA 02210
(617) 439-7500

Dennis M. Flannery
Wilmer, Cutler & Pickering
2445 M St. NW, Washington DC 20037
(202) 663-6000