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15 ELR 20756 | Environmental Law Reporter | copyright © 1985 | All rights reserved Continental Insurance Cos. v. Northeastern Pharmaceutical and Chemical Co.No. 84-5034-CV-S-4 (W.D. Mo. June 25, 1985)The court holds that under Missouri law an insurer owes neither a duty to defend nor a duty to indemnify a hazardous waste generator in government actions to recover cleanup costs incurred after the expiration dates of the policies. Plaintiff and other parties sought to clarify plaintiff's defense and indemnity obligations in two separate hazardous waste cleanup actions by the federal and state governments and a toxic tort action by private citizens against a corporate hazardous waste generator and its officers, who were covered by plaintiff's comprehensive general liability insurance policies during part of the period in which liability-causing disposal of the wastes took place. The court holds that the insurance policies do not cover actions to recover cleanup costs that were incurred after the policies expired. The policies made insurer liable only for injuries or damage occurring "during the policy period." Missouri law, which all parties agree governs the dispute, defines "occurrence" in terms of the time the loss or damage was sustained, not when the wrongful acts took place. Wrongful disposal of defendant's wastes at the Denney Farm site, subject of the United States' suits, and at the Minker/Stout/Romaine Creek site, subject of the state's suit, took place during the life of the policies, but the cleanup actions were carried out, and the "damages" incurred, long after the policies expired. The court grants summary judgment to plaintiff as to its liability to defend or indemnify in the two government actions. The court next holds that it lacks the factual basis to rule on plaintiff's summary judgment motion in the toxic tort action. The court notes that the most difficult issue is whether the alleged injuries "occurred" during the period covered by the policies. The court finds relatively persuasive the middle-of-the-road injury in fact theory of insurer liability, which requires more than mere exposure but less than an actual manifestation of injury during the policy period; nevertheless, it notes that all courts that have ruled on this difficult question have had the benefit of substantial medical evidence on the nature and progression of the diseases involved, evidence not yet before the court in this case. Likewise, whether the pollution was sudden and accidental, and thus not barred by the pollution exclusion clauses in the policies, turns on unresolved factual questions. [Related decisions are published at 13 ELR 20992, 14 ELR 20212, and 15 ELR 20161.] Counsel for Plaintiff Counsel for Defendant Counsel for Defendant-Intervenor Clark, J.: Procedural and Factual Background Continental Insurance Company filed this declaratory judgment action of February 9, 1984. The declaratory judgment action sought a declaration of the rights and liabilities concerning two separate lawsuits concerning certain hazardous wastes initially produced by the defendant Northeastern Pharmaceutical and Chemical Company (NEPACCO) at their manufacturing site near Verona, Missouri. The initial suit, United States v. Northeastern Pharmaceutical and Chemical Company (NEPACCO), 80-5066-CV-SW-4 [13 ELR 20992] (hereinafter referred to as the EPA suit) was tried before this Court and a memorandum opinion was issued January 31, 1984, reported at 579 F. Supp. 823 (W.D. Mo. 1984). In that order, the Court found the defendants jointly and severally liable pursuant to §§ 104, 106(a) and 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, 42 U.S.C. §§ 9604, 9606(a) and 9607(a) for costs of removal or remedial action incurred in cleaning up certain disposed of hazardous wastes at the Denney farm site, near Verona, Missouri, after December 10, 1980, as well as litigation costs, including attorney's fees, salaries and expenses and future costs of removal or remedial action. The second lawsuit is Capstick v. Independent Petrochemical Corp., et al., filed March 7, 1983 in the Circuit Court of the City of St. Louis, Missouri, No. 832-00453 (hereinafter referred to as the Capstick suit). The Capstick lawsuit named as defendants the same defendants in the EPA suit, as well as numerous individuals and corporations which were alleged to have transported and spread upon the streets and roads of Times Beach, Missouri certain hazardous wastes in 1972 or 1973. In addition, the Capstick lawsuit includes an allegation that certain hazardous wastes produced at the NEPACCO plant, near Verona, Missouri, were sprayed by certain defendants on the Bubbling Springs Stables farm in Fenton, Missouri. Allegedly, the contaminated soil was subsequently taken and spread on adjacent property in Imperial, Missouri. The plaintiffs in the Capstick lawsuit seek: (1) recovery for present and future personal injury and property damage; (2) payment for clean-up operations; and (3) punitive damages. No claims pursuant to CERCLA or § 7003 of the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. § 6973 (1980) were made. On December 24, 1985, the State of Missouri filed a motion for leave to intervene. Plaintiffs did not oppose the motion to intervene but sought to respond to the State's allegation. The motion to intervene was granted on January 25, 1985. The State's interest arises from a suit filed by the State of Missouri against Independent Petrochemical (IPC); NEPACCO, Michaels, Lee, Bliss, Jerry-Russell Bliss, Inc., Syntex Laboratories, Inc., Syntex Agribusiness, Inc. In the United States District Court for the Eastern District of Missouri, Eastern Division, No. 83-2670-C-C (hereinafter referred to as the IPC suit), filed November 23, 1983, pursuant to § 107(a) of CERCLA, 42 U.S.C. § 9607(a) (1976) and Supp. VI (1981), and Missouri common law of public nuisance. The action was filed for the purpose of seeking (1) the reimbursement to the State of Missouri by the defendants of money expended by the State and its agencies in protecting members of the general public and the environment from the danger of soil contamination and (2) a declaratory judgment that defendants are liable for all future costs of remedial action at the abovesites. The IPC and Capstick lawsuits are factually similar. The State filed an answer to Continental's declaratory judgment action on January 25, 1985 and made a counterclaim against Continental for the reimbursement of past and future clean up costs at the sites noted in the IPC lawsuit. On February 11, 1985, a motion was filed by Raymond F. Wehner to intervene. In support of said motion, the movant notes that numerous lawsuits by Wehner and approximately 1,000 other individuals are or will be pending in the United States Court, Eastern District of Missouri and the Circuit Court for the City of St. Louis, State of Missouri. The actions are substantially identical in fact to the EPA, IPC and Capstick lawsuits. In addition, the actions seek damages for personal injury and property damage based upon negligence, strict liability, and products liability. The movant suggests that there are common legal and factual issues. Plaintiff filed a response and suggestions in opposition to Wehner's motion to intervene on March 11, 1985. Essentially, the plaintiff contends that the movant Wehner lacks standing, his claims are unrelated to the subject lawsuits, and that whatever interests the movant Wehner has are already protected by the State of Missouri. To date, the Court has not ruled upon the pending motion to intervene by Wehner. The plaintiff, Continental Insurance Company, filed a motion [15 ELR 20757] for summary judgment on November 14, 1984. Intervenor, State of Missouri, filed suggestions in opposition to plaintiff's motion for summary judgment on March 11, 1985. Pending a resolution of this motion for summary judgment, plaintiff filed a motion to dismiss Count II of its complaint for declaratory judgment without prejudice relative to its obligation to defend and indemnify the defendants in the Capstick lawsuit. The defendant intervenor, State of Missouri, filed suggestions in opposition to plaintiffs' motion to dismiss Count II without prejudice. On March 29, 1985, this Court granted a joint motion by the State of Missouri and the United States to consolidate their lawsuits for purposes of discovery since there were common questions of fact and law pursuant to Fed. R. Civ. P. 42(a). Numerous discovery motions have also been filed by the parties. Movant and suggested intervenor Raymond F. Wehner filed a motion to withdraw his motion to intervene on June 10, 1985. For the following reasons, the Court finds that summary judgment should be granted in favor of Continental Insurance Companies as to Count I of its declaratory action, and that summary judgment should be granted in favor of Continental Insurance Companies as to the counterclaim pled by the intervenor, State of Missouri. In addition, the Court finds that plaintiff's motion to dismiss Count II of its declaratory judgment action without prejudice should be granted and plaintiff's motion to dismiss the defendant-intervenor State of Missouri's counterclaim should be denied.Finally, movant-intervenor Raymond R. Wehner's motion to withdraw motion to intervene should be granted. All other motions will be denied as moot and the parties are to bear their own costs. Granting declaratory relief is within the sound discretion of the trial court. C. Wright, A. Miller and Kane, Federal Practice and Procedure, § 2759 (2d Ed. 1983). The elements and general criteria for declaratory judgment relief are sufficiently set forth by the Eight Circuit in Alsager v. District Court of Polk County, Iowa, Juv. Div., 518 F.2d 1160, 1163-64 (8th Cir. 1975). In determining whether or not declaratory relief is proper in a given situation it is appropriate to focus on two criteria: (1) whether the declaratory judgment will serve a useful purpose in clarifying and settling important legal issues between the parties; and (2) whether a declaratory judgment will afford relief from uncertainty, insecurity and controversy. Id.; Twin City Federal Savings and Loan Association v. Gelhar, 525 F. Supp. 802, 804 (D. Minn. 1981), aff'd, 681 F.2d 528 (8th Cir. 1982). Certainly, for a declaratory judgment to issue there must be a dispute which does not call "for an advisory opinion upon a hypothetical basis but for an adjudication of present rights based upon established facts." Ashcroft v. Mattis, 431 U.S. 171, 172 (1977). In contemplating a motion for summary judgment under Fed. R. Civ. P. 56, this Court is mindful of the strict standards imposed by the Eighth Circuit Court of Appeals. McGee v. Hester, 724 F.2d 89, 91 (8th Cir. 1983); Roberts v. Browing, 610 F.2d 528, 531-32 and 536 (8th Cir. 1979). The issue sought to be resolved is whether or not the plaintiff, Continental Insurance Companies, owes the defendants a duty to defend and a duty to indemnify in the various actions. The plaintiff issued three Comprehensive General Liability (CGL) policies covering the operations of NEPACCO, and its officers and employees, including Edwin B. Michaels and John W. Lee. The three CGL policies were in effect from August 5, 1970 until November 17, 1973. It is undisputed that the plaintiff is presently providing the above-mentioned defendants a defense to all the above-named actions with a reservation of rights. Plaintiff has specifically denied said obligation to defend or indemnify in the various actions.The duties to defend and/or indemnify are sufficiently set forth by the Eighth Circuit in Howard v. Russell Stover Candies, Inc., 649 F.2d 620, 624 (8th Cir. 1981): Under Missouri law, the duty of a liability insurer to defend pursuant to its agreement is ordinarily determined by comparing the language of the insurance contract and the allegations of the petition or complaint in the action brought by the person injured or damaged against the insured. * * * Courts have generally placed the burden of uncertainty as to the policy's coverage on the insurer. Where the allegations of a plaintiff's complaint * * * state a claim which is potentially or arguably within the policy's coverage, the insurer must accept defense of the claim. We note that the duty to defend is not coexistent with the duty to indemnify. Rather, "the duty of an insurer to defend its insured is broader than its duty to pay a judgment rendered against its insured." U.S. Fidelity and Guaranty Co. v. Louis A. Roser Co., 585 F.2d 932, 936 (8th Cir. 1978) (construing a provision similar to ours which gives U.S.F.&G. the "right and duty to defend any suit against the insured * * * even if any of the allegations of the suit are groundless, false, or fraudulent. . . ." Id. at 624-625. See also, Missouri Terrazzo v. Iowa Nat'l Mut. Ins., 566 F. Supp. 546, 554 (E.D. Mo. 1983); Ranger Ins. Co. v. Mercantile Trust Co., 363 F. Supp. 795, 800 (E.D. Mo. 1973); Fidelity and Cas. Co. of New York v. Wrather, 652 S.W.2d 245, 247 (Mo. App. 1983). In addition, the insurer may provide a defense with the reservation of rights and does not concede his obligation to provide such a defense or to indemnify. Hawkeye-Security Ins. Co. v. Iowa Nat'l Mut. Ins. Co., 567 S.W.2d 719, 720-21 (Mo. App. 1978). The parties, as well as this Court, agree that Missouri law applies to the interpretation of the insurance policies at issue; since, the State of Missouri has the most significant relation with the negotiation and terms of the insurance contract. Havenfield Corp. v. H & R Block, Inc., 509 F.2d 1263 (8th Cir.), cert. denied, 421 U.S. 999 (1975); Ryder Truck Rental v. U.S. Fidelity and Guaranty Co., 527 F. Supp. 666 (E.D. Mo. 1981); National Starch and Chemical Corp. v. Newman, 577 S.W.2d 99 (Mo. App. 1978). Each of the comprehensive general liability policies have the following provisions: The Company [Continental] will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as 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 such bodily injury or property damage . . . . All three policies contain the following definition of an occurrence: "Occurrence" means an accident, including continuous or repeated exposure to conditions, injury or property damage neither expected nor intended from the standpoint of the insured. All three CGL policies issued to NEPACCO provide: "This insurance applies only to bodily injury or property damage which occurs during the policy period. . . ." The applicable insurance policy provisions in the second and third policies, effective August 5, 1971 through November 17, 1983, contain a pollution and contamination exclusion clause: It is agreed that the insurance does not apply to bodily injury or proerty 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 watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental. The plaintiff contends that it owes no duty to defend or indemnify because: (1) the damages which are alleged in the underlying lawsuits either were not caused by an "occurrence" or were excluded from coverage by the pollution exclusion clause; (2) the damages alleged in the underlying lawsuits did not occur within any of the three policy periods, August 5, 1971 through November 17, 1973; (3) the EPA lawsuit is not predicated on insurable "bodily injury" or "property damage"; and (4) the punitive damages sought in the Capstick lawsuit are excluded from coverage. Initially, the defendants and intervenors contend that the policy [15 ELR 20758] language either clearly provides for such coverage or such policy language is ambiguous and should be construed in favor of the insured giving rise to a duty of defend and indemnify on the part of the plaintiff, Continental Insurance Companies. As noted in Pearce v. General American Life Ins. Co., 637 F.2d 536 (8th Cir. 1980): As a general rule, plain and unambiguous language will be given its ordinary meaning and effect; the need to resort to construction arises only where an ambiguity exists. [citations omitted]. The language in the policy is ambiguous where it is reasonably susceptible of two interpretations. [citations omitted]. Such ambiguities are construed against the insurer, and in favor of the insured [citation omitted]. But where a term is defined in the policy, the Court must look there and nowhere else [citation omitted]. . . . Id. at 539. Such a construction should give a reasonable meaning to the reasonable expectations and intentions of the parties in entering such a contract. The Court cannot create an ambiguity where no such ambiguity exists merely to enforce a particular construction which it might feel applicable. state Farm Mut. Auto Ins. Co. v. Universal Underwriters Inc. Co., 594 S.W.2d 950, 953-54 (Mo. App. 1980); Reliance Insurance Co. of Pa. v. Community Fed. S. & L. Ass'n, 440 S.W.2d 929, 931 (Mo. 1969). The purpose of an insurance contract is to furnish protection where reasonably possible. Such a contract should be construed to provide protection to the insured, if possible. Bellamy v. Pacific Mut. Life Ins. Co., 651 S.W.2d 490, 496 (Mo. banc 1983). Finally, restrictive exclusionary clauses which would tend to limit or restrict the insurance coverage provided are to be strictly construed against the insurer. McMichael v. American Ins. Co., 351 F.2d 665, 669 (8th Cir. 1965); Ranger Ins. Co. v. Mercantile Trust Co., 363 F.2d at 801; McRaven v. F-Stop Phto Labs, Inc., 660 S.W.2d 459, 462 (Mo. App. 1983); Ins. Co. v. West Plains Air, 637 S.W.2d 444, 446 (Mo. App. 1982). A.Damages Incurred in the EPA and the IPC Lawsuits Pursuant to the insurance contract, the insurer is liable only for "bodily injury or property damage which occurs during the policy period." The Court finds that the insurance contracts, relative to the time of the occurrence, is unambiguous as applied to the instances giving rise to liability in the EPA and IPC lawsuits. It is settled law in the State of Missouri, that the time of an "occurrence" within the meaning of an indemnity policy is the time the loss or damage was sustained and not the time when the negligence or wrongful act was committed. Hawkeye-Security Ins. Co. v. Iowa Nat'l Mut. Ins. Co., 567 S.W.2d at 720; Kirchner v. Hartford Accident and Indemnity Co., 440 S.W.2d 751, 756 (Mo. App. 1969).Consequently, this Court must analyze the actual loss sustained by the parties and determine at what time such loss was sustained. As noted above, the defendants were found liable in the EPA lawsuit pursuant to §§ 104, 106(a) and 107(a), CERCLA, for removal and remedial costs, litigation costs, attorney fees, salaries and future expenses of removal and remedial action after December 10, 1980. This finding was based upon the premise that no liability was found under RCRA and that CERCLA did not become effective until December 11, 1980. United States v. Northeastern Pharm. & Chemical Co., 579 F. Supp. at 850-852. The alleged wrongful acts in the EPA lawsuit took place in the early 1970's. The IPC lawsuit was filed by the State of Missouri against Independent Petrochemical Corporation and others. Among the party defendants in the IPC lawsuit are NEPACCO, Michaels and Lee, who are also the party defendants in the EPA lawsuit. The IPC lawsuit seeks compensation for all costs incurred by the State of Missouri for its efforts in cleaning up an area near Imperial, Missouri, commonly referred to as the Meeker/Stout/Romaine Creek site and for a declaratory judgment that the party defendants are liable for all future costs of remedial action at the site which are incurred by the State and/or its agencies. The IPC lawsuit alleges that the Meeker/Stout/Romaine Creek site became contaminated with dioxin because of various actions and inactions on the part of NEPACCO, Michaels, Lee, Bliss and the remaining defendants in the IPC lawsuit. A complaint was brought pursuant to §§ 107(a) of CERCLA, 42 U.S.C. § 9607(a) (1976 and Supp. VI 1981), and Missouri common law of public nuisance. All of the alleged wrongful and/or negligent acts committed in the IPC lawsuit took place from 1970 to 1973. Briefly, the IPC lawsuit alleges that NEPACCO arranged for the disposal of the dioxin-contaminated waste; that Bliss spread the dioxin-contaminated waste on the grounds of the Bubbling Springs Ranch near Imperial, Missouri as a dust suppressant; that because of the unexplained dilatorious effects of the spraying on the health of horses and/or other animals, the owner and/or operator of the Bubbling Springs Ranch had the soil upon which contaminated waste had been sprayed excavated and removed; that the dioxin contaminated soil was then hauled away and a portion of its was used as fill material at various locations, including the Meeker/Stout/Romaine Creek site. Reviewing the IPC complaint, it becomes apparent that the State did not incur any remedial or removal costs until late 1982. Once again, as in the EPA lawsuit, a governmental entity is seeking indemnification for response costs incurred due to a toxic waste clean up and contamination prevention operation. If the State of Missouri does prevail in the IPC lawsuit, then according to this Court's prior holding in the EPA lawsuit, only those costs incurred after December 10, 1980 can be recovered in such an action. It is significant in both the EPA and IPC lawsuits, that there are no allegations that damages were incurred by the governmental entities during the time of the policies' effective dates. In fact, a very lengthy span of time separates the alleged wrongful or negligent acts and the loss incurred by the governmental entities. The governmental entities do not seek compensation for bodily injury, or property damage. This case appears analogous to Kirkham and Michaels Ass'n, Inc. v. Travelers Indemnity Co., 361 F. Supp. 189(D.S.D. 1973), aff'd, 493 F.2d 475 (8th Cir. 1974). Kirkham involved a contract for insurance concerning a waste treatment plant. The city took over the project after a lapse of the insurance policy, although, the negligent acts would have been committed during the policy period. The defendant insurer in denying an obligation to defend or indemnify argued that since the sewage treatment plant was not taken over by the city until after the policy coverage lapsed, the city could not have been damaged until after that date. The insured in the Kirkham case argued, as do the insured and the State of Missouri in the IPC and EPA cases, that the defendants' actions constituted a continuous course of negligence or wrongful acts. The district court rejected this argument relying upon the general rule that the time of an occurrence within the meaning of an indemnity policy is determined by the time the actual damage occurred and not the time when the wrongful act was committed. Such would appear to be the case at hand. Although the complaint suggests that the wrongful and negligent act did occur during the policy periods, there is no allegation that the State of Missouri or the United States incurred any loss or damage during this same policy period. It was not until the governmental entities incurred remedical or removal costs that they sustained a loss which was compensable. The insurance clauses concerning the time of the occurrence relative to the EPA and IPC lawsuits do not appear to be ambiguous. Accordingly, since there was no damage or loss incurred by the governmental entities until after the policy period effective dates, there was not an occurrence giving rise to the insurer's liability for their losses. Consequently, summary judgment should be granted in favor of Continental Insurance Company as to Count I of its declaratory judgment action. In addition, summary judgment should be entered in favor of Continental Insurance Company on the State's counterclaim relative to the insurer's duty to defend or indemnify in the IPC lawsuit, since, it appears on the face of the complaint that the State did not incur a loss or damage until after the lapse of the policies' periods. Resolution of the declaratory action relative to the Capstick lawsuit is considerably more difficult. In analyzing these issues, the Court has considered the parties' arguments relative to the application of the pollution exclusion clause contained in the insurance contracts, definition of an "occurrence" as an "accident," the number of "occurrences" and whether the parties involved suffered bodily injury or property damage during the policies' periods. The Court finds that it is unable to determine at this point the applicability of the pollution exclusion clauses, the definition of an "occurrence" as applied to the the facts of this case, or the number of occurrences involved. Suffice it to say, there are numerous decisions [15 ELR 20759] which have construed the pollution exclusion clause and reached various differing opinions as to their applicability. Great Lakes Container v. National Union Fire Ins. Co., 727 F.2d 30 (1st Cir. 1984); American States Ins. Co. v. Maryland Casualty Co., 587 F. Supp. 1549 (E.D. Mich. 1984); Waste Management of Carolinas v. Peerless Ins., 323 S.W.2d 726 (N.C. App. 1984); Jackson Township Municipal Utilities Authority v. Hartford Accident and Indemnity Co., 451 A.2d 990 (N.J. Super. Ct. Law Div. 1982); Niagara County v. Utica Mut. Ins. Co., 439 N.Y.S.2d 538 (N.Y. App. Div. 1981); Allstate Ins. Co. v. Klock Oil Co., 426 N.Y.S.2d 603 (N.Y. Super. Ct. App. Div. 1980); Lansco, Inc. v. Department of Environmental Protection, 350 A.2d 520 (N.J. Super. Ct. Ch. Div. 1980). The most perplexing issue upon which this Court has determined that a declaratory judgment is improper is whether the insured has incurred a loss which occurred during the policy period. The defendants and intervenor argue that the initial wrongful or negligent acts and a certain amount of damage did occur within the policies' periods, August 5, 1970 through November 17, 1973. Allegedly, additional damages occurred outside the policies' periods. On the other hand, the insurer argues that in this case coverage will only be triggered if the claimed injury or damage occurred during the policies' periods. The insurer argues that the date of damage or injury is properly measured by determining the date the damage became manifest or ascertainable. As noted above, the general rule in Missouri, relative to bodily injury and property damage, is that the time of loss and not the time of the wrongful or negligent acts determines the time in which the occurrence occurred. The defendants and intervenor argue that this policy clause is vague and ambiguous as applied to toxic waste litigation and that liability should attach from the time of the wrongful or negligent act (disposal) to the time of the discovery of the ultimate damage. Numerous courts have analyzed these questions and the situation most analogous to the case at bar are those cases dealing with asbestos related diseases. The ultimate question in those cases was when does an injury, sickness or disease occur as defined by the insurance policies. The holdings of these courts can be classified in three categories: (1) the "exposure" thetory; (2) the "manifestation" theory; and (3) the "injury in fact" theory. First, under the exposure theory, exposure to asbestos resulting in asbestosis was defined as a continuing tort as all insurance companies which provided coverage from the time of the injured's initial exposure to the time of the manifestation of the disease are jointly and severally liable to defend and to indemnify the defendant, if liability is found. Several courts relying on the exposure theory have construed the CGL policy terms to provide coverage for the progressive and long term illness of asbestosis. The exposure theory has been adopted by the Fifth, the Sixth, and the District of Columbia Circuits. In doing so, the courts have found the term "bodily injury and occurrence" inherently ambiguous as applied to progressive diseases such as asbestosis. Those courts theorize that the exposure theory tends more to closely approximate the reasonable expectations of the manufacturer and the insurer at the time the contract was entered into. See, Ducre v. Executive Officers of Halter Marine, Inc., 752 F.2d 976 (5th Cir. 1985); Porter v. American Optical Corp., 641 F.2d 1128 (5th Cir. 1981); Ins. Co. of North America v. Forty-Eight Insulators, Inc., 633 F.2d 1212 (6th Cir. 1980);Keene Corp. v. Ins. Co. of North America, 667 F.2d 1034 [12 ELR 20105] (D.C. Cir. 1981); Owens-Illinois, Inc. v. Aetna Cas. & Sur. Co., 597 F. Supp. 1515 (D.D.C. 1984). Second, the manifestation theory holds that only those insurance companies providing coverage at the time the injuries manifested themselves or become reasonably ascertainable by medical diagnosis are liable for damages or bodily injury. These courts have rejected the exposure theory and found that the CGL provisions actually support a manifestation theory. Eagle-Picher Industries, Inc. v. Liberty Mut. Ins. Co., 523 F. Supp. 110 (D. Mass. 1981), modified 682 F.2d 12 (1st Cir. 1982), cert. denied, U.S. , 103 S. Ct. 1279 (1983).The manifestation theory was also followed by the Third Circuit in Appalachian Ins. Co. v. Liberty Mutual Insurance Company, 676 F.2d 56 (3rd Cir. 1982) when dealing with sex discrimination, but the court carefully distinguished that case from the various asbestosis cases. Id. at p. 62. n.14. See also, U.S. Fidelity and Guaranty Co. v. American Ins. Co., 345 N.E.2d 267 (Ind. App. 1976). Third, the injury in fact theory rejects both exposure and manifestation theories, instead, holding that the insured must prove an injury in fact during the policy period in order for coverage to apply. The most thorough examination of the various theories is provided by the district court in American Home Products v. Liberty Mut. Ins. Co., 565 F. Supp. 1485 (S.D.N.Y. 1983), aff'd as modified, 748 F.2d 760 (2d Cir. 1984). Although not determining this issue at this time, this Court does find itself in agreement with the scholarly and thorough opinion written by District Judge Sofaer in American Home Products. The appellate court agreed with the injury in fact theory, but felt that the lower court's requirement that the injury in fact be "diagnosable" or "compensable" during the policy period was unwarranted. In quoting the district court, the second circuit stated: "[A] real but undiscovered injury, proved in retrospect to have existed at the relevant time, would establish coverage, irrespective of the time the injury became [diagnosable]." 748 F.2d at 766, quoting the district court at 565 F. Supp. at 1497. Although this is an issue of first impression in the Eighth Circuit, it does appear that the Eighth Circuit agrees in principle that the terms "bodily injury" and "property damage" as applied to CGL policies are inherently ambiguous as applied to progressive diseases. Such a conclusion was reached in Hon v. Director, Office of Workers Compensation Programs, 699 F.2d 441 (8th cir. 1983). In making such a determination, the Eighth Circuit noted the split among the various other circuits, adopting either the exposure or manifestation theories. Id. at 443. This was particularly important when the case involved cumulative illnesses such as the black lung disease considered in Hon. This Court finds that a declaratory judgment as to the rights and obligations of the various paries at this juncture in the Capstick and Wehner litigation is premature. Initially, the Court notes that those courts which haveconsidered the various theories, manifestation, exposure, or injury in fact, have at least had substantial medical evidence as to the progression and nature of the disease in question. To date, this Court, nor any other court to its knowledge, has analyzed the exact nature and progression of the disease or illnesses related to hazardous waste. In addition, the cases at issue involve both bodily injury and properly damage. Given these uncertainties in factual allegations, it does not appear that these actions are ripe for a determination as to the rights and liabilities of the various parties. Suffice it to say, this Court finds that a more proper determination of the various issues concerning the insurer's duty to defend and to indemnify can be made after more specific findings of bodily injury and property damage are made. Certainly, a court could not attempt to esolve these major issues concerning insurance coverage for victims of hazardous waste disposal without having determined the various policy considerations and medical facts of each individual case. Finally, the pollution exclusion clause specifically states that it "does not apply if such discharge, dispersal, release or escape is sudden and accidental." Whether the events giving rise to the Capstick and Wehner lawsuits amount to a "sudden and accidental" occurrence will inevitably depend upon findings of fact after a trial on the merits. Those courts construing the applicability of the pollution exclusion clause, supra, have consistently been called upon to determine whether the pollution incident amounted to an "accident" as defined in the CGL policies. Such a determination may involve ascertaining whether the polluting acts were intended or unintended and whether the pollution results were intended or unintended, in that the pollution results were the "natural" and "probable consequences" of the insured's acts. See also, American Cas. Co. v. Minn. F.B.S. Co., 270 F.2d 686 (8th Cir. 1959); Missouri Terrazzo v. Iowa Nat'l Mut. Ins., 566 F. Supp. 546 (E.D. Mo. 1983); Fidelity & Cas. Co. of New York v. Wrather, 652 S.W.2d 245 (Mo. App. 1983); Truck Ins. Exchange v. Pickering, 642 S.W.2d 113 (Mo. App. 1982); Travelers Ins. Co. v. Cole, 631 S.W.2d 661 (Mo. App. 1982); White v. Smith, 440 S.W.2d 497 (Mo. App. 1969); Evans v. Aetna Cas. & Sur. Co., 435 N.Y.S.2d 933 (N.Y. Super Ct. 1981); Aetna Gas. & Sur. Co. v. Freyer, 411 N.E.2d 1157 (Ill. App. 1980); Clark v. London & Lancashire Indemnity Co. of America, 124 N.W.2d 29 (Wisc. 1963). Accordingly, it appears that plaintiffs' motion to dismiss Count II of its declaratory action without prejudice is meritorious. In addtion, the motion of movant-intervenor Robert F. Wehner to wighdraw his motion to intervene should be granted. Since the plaintiff has prevailed in its motion for summary judgment in Count I of its original declaratory judgment action and on the counterclaim filed by the State of Missouri, but seeks to dismiss in regard to the Capstick lawsuit, the Court finds that the various parties should be liable for their own costs. Accordingly, for the above reasons, it is hereby ORDERED that plaintiff's motion for summary judgment is granted as to Count I of its declaratory judgment action; and it is further ORDERED that summary judgment is entered in favor of the plaintiff Continental Insurance Company and against the State of Missouri as to the State of Missouri's counterclaim dated January 25, 1985; and it is further ORDERED that plaintiff's motion to dismiss Count II without prejudice is granted; and it is further ORDERED that the motion of Robert F. Wehner to withdaw his motion to intervene is granted; and it is further ORDERED that the parties shall be liable for their own costs; and it is further ORDERED that all other motions are denied as moot. 15 ELR 20756 | Environmental Law Reporter | copyright © 1985 | All rights reserved |