National Indemnity Co. v. United States Pollution Control, Inc.

No. CIV-88-656-W (717 F. Supp. 765) (W.D. Okla. May 1, 1989)

The court holds that response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) are covered under insurance policies as "damages" resulting from "property damage." The court first holds that CERCLA response costs are "damages." The term should be given its plain meaning, and the insurance policy's definition of "damages," which specifies what the term includes, leaves it open to interpretation. The dictionary definition of damages makes no distinction between legal and equitable actions. The court next holds that CERCLA response costs are the result of "property damage" within the meaning of the insurance policies. "Property damage" includes that which is caused by environmental contamination.

Counsel for Plaintiff
Ray H. Wilburn, Richard W. Wassall
Wilburn, Masterson & Holden
Atlanta South Bldg., 2526-A E. 71st St., Tulsa OK 74136
(918) 494-0414

Counsel for Defendant
George W. Dahnke
Hastie & Kirschner
3000 First Oklahoma Tower, 210 W. Park Ave., Oklahoma City OK 73102
(405) 239-6404

Robert L. Tofel
Fine, Tofel, Saxl & Berelson
823 United Nations Plaza, New York NY 10017
(212) 490-0700

[19 ELR 21449]

LEE R. WEST, District Judge.

Before the Court are the Motions of the Plaintiff and the Intervenor for Summary Judgment in the above-captioned case. In this declaratory action, the insurers claim they are not liable under their insurance policies for the response and clean-up actions taken by the United States Environmental Protection Action (EPA) pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9606. The insurers contracted to pay "all sums which the insured shall become legally obligated to pay as damages . . ." The insurers claim that response and clean-up actions taken by the EPA are actions in equity and therefore preclude the recovery of "damages." The Intervenor also maintains that clean-up costs are not expenses incurred as a result of "property damage."

The first issue before the Court is whether the term "damages" as used in the insurance policy should be construed in a plain and ordinary sense or whether the term connotes the more technical, legal distinction between an action in law or an action in equity.

The law in Oklahoma requires that the language in an insurance policy be accepted in its plain, ordinary and popular sense. Penley v. Gulf Ins. Co., 414 P.2d 305 (Okla. 1966). Unless it affirmatively appears otherwise, terms in an insurance policy should be construed according to their plain, ordinary and accepted use in common speech. Houston v. National General Ins. Co., 817 F.2d 83 (10th Cir.1987).

In the instant action, the Plaintiff's insurance policy gives the following definition:

"Damages includes . . . damages for loss of use of property resulting from property damage." (Court supplied emphasis)

The policy defined damages in an inclusive manner only, leaving the term open to interpretation. Clearly, the policy did not affirmatively limit the definition of damages to the legal definition only. Likewise, the Intervenor's insurance policy did not affirmatively limit the definition of damages to the legal definition only. Said policy gave no definition for damages as applied to seeking damages for property damage. Thus, the ordinary and plain meaning of damages must be applied.

The dictionary defines damages as: "the estimated reparation in money for detriment or injury sustained: compensation or satisfaction imposed by law for a wrong or injury caused by violation of a legal right." Webster's Third New International Dictionary (1976). The dictionary makes no distinction between actions at law and actions in equity. Therefore, the meaning of damages should include monies sought under CERCLA for response and clean-up of contamination of the environment by toxic wastes.

The Court is not persuaded by contrary rulings. See Continental Insurance Companies v. Northeastern Pharmaceutical & Chemical Co., Inc., 842 F.2d 977 (8th Cir. 1988); Maryland Casualty Co. v. Armco, [19 ELR 21450] Inc., 822 F.2d 1348 (4th Cir.1987). The Court finds the better approach is to construe the meaning of damages in its ordinary and popular sense. See United States Fidelity and Guaranty Co. v. Thomas Solvent Co., 683 F. Supp. 1139 (W.D.Mich.1988); New Castle County v. Hartford Acc. & Indem. Co., 673 F. Supp. 1359 (D.Del.1987).

The second issue before this Court is whether the response and clean-up sought by the EPA for contamination constitutes expenses incurred as the result of "property damage" within the meaning of the policy. The Court answers in the affirmative.

Property damage is defined in the Intervenor's policy as: "physical injury or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom." Once property damage is found as a result of environmental contamination, this Court finds that clean-up costs should be recoverable as sums that the insured was liable to pay as a result of property damage. See United States Fidelity & Guaranty Co. v. Thomas Solvent Co., supra.

Accordingly, Plaintiff's and Intervenor's Motions for Summary Judgment are hereby DENIED.