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UTI CORP. v. FIREMAN'S FUND INS. CO.

March 28, 1995

UTI CORPORATION, Plaintiff
v.
FIREMAN'S FUND INSURANCE COMPANY and AMERICAN INSURANCE COMPANY, Defendants



The opinion of the court was delivered by: JEROME B. SIMANDLE

 SIMANDLE, District Judge:

 Presently before the court are the motions, numbered 1, 2 and 3, of defendants for summary judgment and the cross-motion of plaintiff for summary judgment in this insurance coverage dispute between defendants, Fireman's Fund Insurance Company and American Insurance Company, and their insured, plaintiff UTI Corporation, in connection with certain actions brought against plaintiff for pollution.

 The pollution claims which underlie the instant coverage dispute can be briefly described as follows. Plaintiff UTI, which is the successor corporation to Uniform Tubes, Inc. (hereinafter collectively referred to as "UTI"), manufactures "precision, small diameter tubing," with its principal place of business located in Collegeville, Pennsylvania. Pl. 12G Statement at P 2. As part of its manufacturing operations, UTI uses solvents, which, through 1977, were stored in three underground storage tanks ("USTs") located under UTI's Plant No. 1. From 1964 to July 1975, UTI stored trichloroethylene ("TCE") in the USTs. In July, 1975, UTI switched from TCE to 1,1,1 trichloroethane ("TCA"), which it stored in the USTs.

 UTI engaged an expert, one Roy F. Weston, who concluded that the source of the groundwater contamination was a TCE/TCA leak from the USTs. After a letter was sent to Alexander & Alexander ("A&A"), UTI's insurance broker, apprising defendants of the groundwater contamination and the possibility of claims, Fireman's Fund advised plaintiff, on November 30, 1978, that is was denying coverage. Thereafter, on December 18, 1978, UTI commenced an action in the United States District Court for the Eastern District of Pennsylvania against Fireman's Fund and Home Insurance Company, seeking coverage under one of the Fireman's Fund policies for coverage connected with the groundwater contamination. That matter was settled pursuant to a Settlement and Release Agreement dated June 16, 1982.

 On April 22, 1981, the Collegeville-Trappe Joint Water System, a neighboring public water authority ("water authority"), sued UTI in the Court of Common Pleas in Montgomery County, Pennsylvania for contaminating groundwater as a result of a TCE leak. The complaint in the water authority action referred to a TCE leak from UTI's USTs in May, 1979 "and for some period prior thereto," which contaminated the groundwater supply. Coverage was denied for that claim by letter dated May 14, 1981 from Fireman's Fund. Home Insurance Company undertook the defense of UTI in the water authority action. During the latter part of 1991, settlement discussions between UTI and the water authority intensified; apparently the action had lied relatively dormant for some length of time. It became clear, according to UTI, that the water authority action could not be settled by UTI within the asserted $ 500,000 limits of the Home policy. After sending a letter to Fireman's Fund requesting that the insurer acknowledge coverage to UTI for the claims asserted in that action in excess of Home's $ 500,000 limit, UTI was advised by Fireman's Fund to "take appropriate steps to protect" its interests, Pl. 12G Statement at P 34, and UTI settled the water authority action by agreement dated July 2, 1992 for $ 900,000, $ 500,000 of which was paid by Home. UTI tendered the remaining $ 400,000 to settle the case.

 In 1978 the Collegeville site was treated with a "pump and treat" system to extract TCE and TCA from the groundwater under the facility. UTI operated the groundwater remediation system under PaDER's authority. Id. at P 38. In the 1980s, the United States Environmental Protection Agency ("EPA") asserted jurisdiction over the remediation activities, and asserted claims against UTI under the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 9601 et seq. Id. P 39. Two administrative consent orders were negotiated. The first, dated July 6, 1988, required UTI, inter alia, to complete its ongoing hydrogeologic evaluation and propose remedial alternatives. Id. P 41. The second administrative consent order, signed March 31, 1992, required UTI, inter alia, to implement selected groundwater treatment remedies. Id. P 42. UTI seeks reimbursement from Fireman's Fund for costs incurred to perform the groundwater cleanup under EPA's jurisdiction. The policies issued by Fireman's Fund, or its wholly-owned subsidiary, American Insurance Company, to UTI at issue in the instant case are as follows: CGL Coverage n1 Term Policy Number 4/7/64-4/7/67 TP-24112 4/7/67-4/7/70 MXP-1435805 4/7/70-5/7/73 MXP-1550776 5/7/73-5/7/76 MXP-2412312 5/7/76-2/14/77 MXP-3008464 Excess Coverage Term Policy Number 6/7/69-6/7/72 XL-33943 6/7/72-6/7/73 XLB-1065316*n2 6/7/73-4/7/74 XLB-1069383 * 6/7/74-6/7/75 XLB-1071748 6/7/75-5/7/76 XLB-1242425 5/7/76-5/7/77 XLB-1244947 5/6/77-5/6/78 XLX-1267851 5/6/78-5/6/79 XLX-1268771

 n1 Comprehensive general liability coverage.

 n2 The policies marked with a "*" are the so-called "lost policies" whose existence is not admitted by defendants.

  Against this factual backdrop, I proceed to treat each of the arguments advanced in defendants' motions, and plaintiff's cross-motion, for summary judgment in turn. The motions, which are voluminous, *fn3" raise multiple issues, most of which involve disputed factual questions of a type which cannot be resolved on a motion for summary judgment.

 Discussion

 A. Summary Judgment Standards

 The court's jurisdiction is based upon diversity of citizenship under 28 U.S.C. § 1332(a).

 The summary judgment movant must "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). See Hersh v. Allen Products. Co., Inc., 789 F.2d 230, 232 (3d Cir. 1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir. 1983). In deciding whether there is a disputed issue of material fact the court must view all inferences, doubts and issues of credibility in favor of the non-moving party. See Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983), cert. denied, 465 U.S. 1091, 79 L. Ed. 2d 910, 104 S. Ct. 2144 (1984); Hancock Industries v. Schaeffer, 811 F.2d 225, 231 (3d Cir. 1987) (citation omitted). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 Supreme Court decisions mandate that "a motion for summary judgment must be granted unless the party opposing the motion can produce evidence which, when considered in light of that party's burden of proof at trial, could be the basis for a jury finding in that party's favor." J.E. Mamiye & Sons, Inc. v. Fidelity Bank, 813 F.2d 610, 618 (3d Cir. 1987) (Becker, J., concurring) (citing Anderson, 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505, and Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)). Moreover, once the moving party has carried its burden of establishing the absence of a genuine issue of material fact, "its opponent must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). Thus, if the non-movant's evidence is merely "colorable" or is "not significantly probative," the court may grant summary judgment. Anderson, 477 U.S. at 249. Nonetheless, defendants, as the moving party on the motion, and plaintiff, as the moving party on the cross-motion, bear, respectively, the initial responsibility of demonstrating the absence of a genuine issue of material fact. Celotex, 477 U.S. at 325.

 B. Defendants' Motion for Summary Judgment on Statute of Limitations Grounds

 Defendants move for summary judgment on the ground that the statute of limitations bars plaintiff's claims. It is defendants' position that Counts II, IV and V of plaintiff's complaint (counts regarding breach of contract in connection with the water authority action, declaratory judgment, and bad faith conduct of the insurance company) are untimely because the underlying causes of action accrued more than four years before November 2, 1992, the date plaintiff commenced the instant action.

 Defendants are correct that the applicable statute of limitations for contract actions under Pennsylvania law is four years. *fn4" 42 Pa.C.S.A. § 5525(8). They are incorrect, however, to argue that the statute had long run by the time the instant action was filed based upon the facts that (1) A. Brooke Aker, as counsel for UTI, tendered the water authority action complaint by letter dated April 30, 1981, and (2) coverage was denied by Mary Butter's letter, on behalf of Fireman's Fund, dated May 14, 1981. The problem with defendant's reasoning is that the May 14, 1981 denial of coverage letter does not trigger the running of the statute in this coverage action.

 Rather, under Pennsylvania law, the statute of limitations does not begin to run against an insurer until the conclusion of the litigation against the insured by the injured party. Prior to that time, the defense and indemnity expenses incurred for which the insurer sues are not determined. As the court recognized in Moffat v. Metropolitan Cas. Ins. Co. of New York, 238 F. Supp. 165, 175 (M.D.Pa. 1964), in rejecting the insurer's argument that the statute began to run on the date of its disclaimer of coverage:

 
The result contended for by Metropolitan is absurd. In this day of crowded court calendars and delays of years before trial, an insured could find that the statute had run long before he had incurred his trial and appellate expenses. Also it would lead to a multiplicity of suits, long in disfavor in law. There would be a suit for costs and expenses and then, after judgment against the insured, a suit for indemnity. The latter cannot be started until there is a final judgment against the insured.

 Id. at 175.

 Accordingly, the denial of coverage letter in 1981 did not activate the statute of limitations for purposes of the coverage action. The water authority action was a case which was not timely called for trial, and settlement of the action did not occur until July 2, 1992, on the eve of trial. Prior to that time, plaintiff could not have known that the limits of the Home policy would be exceeded and that it would need to pay $ 400,000 out of pocket to consummate settlement on the action. Accordingly, as Moffat recognized, it could only have been inefficient for plaintiff to have sued for coverage prior to that time, when there was a possibility that the action would be disposed of for less than the limits of the Home policy. We hold that, with regard to the water authority claim, the instant cause of action accrued on July 2, 1992, and the instant action, commenced within five months of that date, was timely.

 As to the "bad faith" claim contained in Count V of plaintiff's complaint, that cause of action did not earlier accrue. As plaintiff points out, an insurer has a continuing obligation to act in good faith towards its insured, which obligation extends through litigation. See Kauffman v. Aetna Cas. & Sur. Co., 794 F. Supp. 137, 140 (E.D.Pa. 1992); Rottmund v. Continental Assurance Co., 813 F. Supp. 1104, 1109-11 (E.D.Pa. 1992). The bad faith actions alleged in the complaint include "refusing to participate in the defense of UTI or to indemnify UTI for damages for the reason that it has not received sufficient information to render a coverage opinion, while failing to undertake its own independent investigation to obtain information from other sources to assemble what it believes to be complete information necessary to render a coverage opinion." Cmplt., Count V, P 38(f). In this connection, the court notes that it was by letter dated April 1, 1992, that Michelle Musante of Fireman's Fund stated, in response to the second round of correspondence from UTI on the water authority claim (informing Fireman's Fund of the possibility of settlement for more than $ 500,000), that she had not completed her investigation, and advised UTI to take appropriate steps to protect its interests. Any bad faith claim related to such conduct by Fireman's Fund could not be time-barred, as the complaint was filed within months of that event. *fn5" Like the other counts of plaintiff's complaint, Count V will not be dismissed on statute of limitations grounds.

 For the sake of completeness, even if the law were unclear, the court would be constrained to reject defendants' argument for a wholly distinct reason -- the language of the policies themselves requires plaintiff to await a final judgment before suing on the policies. Plaintiff points out, Br. at 102, that each of the Fireman's Fund policies contains language similar or identical to the following: "No action shall lie against the [insurance] company unless, as a condition precedent thereto, . . . the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company." Whatever the legal effect of this language is in light of the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, the defendants should not be permitted to argue, at least with regard to the breach of contract claim, that the statute of limitations began running at any earlier time. For all these reasons, defendants' motion for summary judgment on statute of limitations grounds will be denied. Plaintiff's cross-motion for summary judgment on the statute of limitations issue will be granted, the court finding all counts to have been timely filed.

 C. Defendants' Argument for Summary Judgment on the Ground that the Instant Action is Barred by Laches

 The equitable defense of laches is available where there is a failure to assert one's rights in a timely and diligent manner, resulting in prejudice to the opposing party. Wheeler v. Nationwide Mut. Ins. Co., 749 F. Supp. 660, 662 (E.D.Pa. 1990) (Pa. law) (citing Western Water Prop. Co. v. Board of Prop. Assessment, 124 Pa. Commw. 133, 555 A.2d 1357 (1989)). The burden of establishing laches falls upon the defendant if the statute of limitations concerning the action has not yet expired. Id. (citing Gall v. U.S. Steel Corp., 598 F. Supp. 769, 773 (W.D.Pa. 1984)). Because defendants premised their initial argument on the concept that the statute of limitations had run, they theorized, wrongly, that plaintiff bore the burden of coming forward with evidence to disprove laches. Def. Br. at 20-21. Here, however, the burden is on defendants, and the court finds that defendants have failed to meet their burden with regard to each of the two prongs --namely, to show that plaintiff failed to pursue its claim in a timely and diligent manner, and to show that defendants suffered prejudice.

 In its reply brief, defendant attempts to make the requisite showings. Suffice it to say that defendant fails to meet its burden. For example, the fact that Fireman's Fund made the unilateral decision to close its claim file some time after the execution of the Settlement and Release Agreement with its insured on June 16, 1982 is of no moment for a laches analysis. Cf. Wheeler, 662-663 (insurer's decision to purge claim file within three years after accident does not evidence prejudice). The court similarly rejects defendants' argument that it should find prejudice to the insurer where a claim denial was tendered by Fireman's Fund in May, 1981 on the water authority claim, and where "nothing more was heard" from UTI until February, 1992, when UTI sought reconsideration of the denial in light of recent events. Fireman's Fund had already articulated its position, and the case law does not support the proposition that there are additional burdens placed upon an insured in order to protect its rights against its insurer once coverage has been denied. Accordingly, defendants' motion for summary judgment on the basis of laches will be denied. Plaintiff's cross-motion for a declaration that laches does not bar the action will be granted, as defendants have failed to present proof which, consistent with their burden of proof at trial, could be the basis for a jury finding in its favor on the defense.

 C. Defendants' Argument that the Pollution Exclusion Bars Coverage

 Defendants move for summary judgment, seeking a declaration that, as a matter of law, certain of the policies containing a Pollution exclusion do not provide coverage for the gradual pollution at issue here. Plaintiff cross-moves for summary judgment on the ground that defendants are estopped from arguing that the "pollution exclusion" clause found in any of defendants' policies limits coverage to pollution incidents that are of short duration, and seeks to strike defendants' affirmative defenses based upon the pollution exclusion. The parties have stipulated that Pennsylvania law applies, in a Consent Order filed February 19, 1993. *fn6"

 The policies at issue contain the following language:

 This insurance does not apply:

 
(f) to bodily injury or property 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 the land, the atmosphere or other water course or body of water; but this exclusion does not apply if such discharge, dispersal, escape or release Is sudden and accidental.

 See Def. Br. at 25.

 The basic underlying facts are uncontested, and the seepage of pollutants, including TCE, from UTI's USTs, took place over an extended period of time. Thus, defendants press that governing Pennsylvania law provides that no coverage is available under the policies containing the exclusionary language. *fn7"

 Although the Pennsylvania Supreme Court has not yet ruled on the issue, the Superior Courts of Pennsylvania have found the pollution exclusion to be a bar to coverage under similar circumstances. Finding the language clear and unambiguous, the court in O'Brien Energy Systems, Inc. v. American Employers' Ins. Co., 427 Pa. Super. 456, 629 A.2d 957 (1993), affirmed the trial court's entry of summary judgment in favor of the insurers on the ground that the pollution exclusion barred the insured from obtaining coverage for property damage caused by the gradual migration of methane gas: "It must be said in this case . . .that the policy language in the several policies contains an unambiguous, all-encompassing disclaimer of coverage for damages caused by a migration of polluting gases." Id. at 466. Relying in part upon an earlier decision of the Superior Court in Techalloy Co., Inc. v. Reliance Ins. Co., 338 Pa. Super. 1, 487 A.2d 820 (1984), allocatur denied, 338 E.D.Allo.Dkt. 1985, where the court held that there could be no coverage for a chemical discharge in the face of a pollution exclusion unless the discharge at issue was both sudden, "meaning abrupt and lasting only a short time," and accidental, "meaning unexpected." id., and Lower Paxon Twp v. United States Fidelity and Guar. Co., 383 Pa. Super. 558, 557 A.2d 393 (1989), holding the exclusion unambiguous, the O'Brien court rejected the insured's argument that coverage should not be barred on the ground that the insured was not an "active polluter," but rather was merely alleged by third parties to have been negligent in the maintenance of its gas to energy facility.

 Plaintiff does not argue that the interpretation of the pollution exclusion set forth in O'Brien, Techalloy, and Lower Paxton should be rejected by this court. Rather, plaintiff argues that, however persuasive the authority is upon which defendants rely in support of their argument that the pollution exclusion bars coverage for claims arising out of gradual pollution of the environment, defendants should be estopped from so arguing in this particular case. Plaintiff urges this conclusion based upon (1) representations made to it directly by defendants or their representatives (the brokers on the policies) regarding the meaning of the pollution exclusion; (2) representations made by defendants, through their industry representatives (e.g., the Insurance Services Organization ("ISO")), to state regulatory agencies regarding the meaning of the pollution exclusion when presenting for state approval the new standard insurance forms containing the pollution exclusion; and (3) representations made by the defendant to its own claims people and brokers about the meaning of the pollution exclusion.

 "Pennsylvania insurance law incorporates principles of equitable estoppel." West American Ins. Co. v. Park, 933 F.2d 1236, 1239 (3d Cir. 1991):

 
"Reduced to its essence, equitable estoppel is a doctrine of fundamental fairness intended to preclude a party from depriving another of a reasonable expectation, when the party inducing the expectation knew or should have known that the other would rely to his detriment upon that conduct."

 Id. (quoting Straup v. Times Herald, 283 Pa. Super. 58, 423 A.2d 713 (1980)). Thus,

 
"the reasonable expectation of the insured is the focal point of the insurance transaction. . . Courts should be concerned with assuring that the insurance public's reasonable expectations are fulfilled. Thus, regardless of the ambiguity, or lack thereof, inherent in a given set of insurance documents. . .the public has a right to expect that they will receive something of value in return for the premium paid."

 Id. (quoting Collister v. Nationwide Life Ins. Co., 479 Pa. 579, 388 A.2d 1346 (1978), cert. denied, 439 U.S. 1089, 59 L. Ed. 2d 55, 99 S. Ct. 871 (1979)).

 In applying Pennsylvania law, the Third Circuit made clear in Park that the plaintiffs may attempt to defeat the otherwise plain meaning of a clause in an insurance contract if they reasonably expected the contract to provide coverage in a particular situation:

 
Collister and subsequent insurance cases expand traditional notions of equitable estoppel so that the insurer is bound not only by the expectations that it creates, but also by any other reasonable expectations of the insured. The insured's reasonable expectations control, even if they are contrary to the explicit terms of the policy. State Farm Mut. Auto Ins. Co. v. Williams, 481 Pa. 130, 392 A.2d 281 (1978)).

 Id. (emphasis supplied).

 Here, plaintiff has come forward with sufficient evidence to support its position that it reasonably expected the policies containing the "sudden and accidental" pollution exclusion to provide coverage for gradual pollution claims to defeat defendants' motion for summary judgment. Indeed, plaintiff has done more than what Park would seem to require of them by producing evidence to support an argument under even the most traditional notions of equitable estoppel -- plaintiff produces evidence of actual representations made to it by representatives of defendant (the insurance broker) to the effect that the pollution exclusion would do nothing other than to clarify the coverage previously afforded by policies which did not contain such an exclusion. Specifically, plaintiff produces the Declaration of John J. Sherman, Jr., who, while employed by Alexander & Alexander, managed the UTI account. Ex. 56 P 1. Mr. Sherman states: "From discussions with representatives of Fireman's Fund, I understood this exclusion [the pollution exclusion] to have the same meaning as In the [standard] 1973 CGL form, *fn8" that is, to provide coverage for pollution damage as long as the event or events giving rise to the damage was neither expected nor intended by the insured." Id. P 6. He goes on to explain:

 
Consistent with the representations made by the insurance industry, including Fireman's Fund, during my annual review, I advised UTI that the Fireman's Fund 1973 CGL form continued to provide pollution coverage like the 1966 CGL form. Likewise, I advised UTI during my annual review that the Fireman's Fund excess liability policy continued to provide pollution coverage.

 Id. P 8.

 With the Sherman Declaration, plaintiff has produced evidence that it was advised that the policies it purchased from defendants containing the pollution exclusion did not alter the coverage previously provided. As Cornelius Verhoog, current Vice President, Finance of UTI and the individual who has, since 1972, overseen UTI's insurance needs, states in his Declaration, it was not until some time in the 1980s, after the introduction of the so-called "absolute" pollution exclusion, *fn9" that he was first advised of a pollution exclusion which eliminated pollution coverage for his company. Verhoog Dec., Ex. 55, at P 8. Pennsylvania law clearly provides that plaintiff must be permitted to pursue this theory at trial, namely, to show that its expectations of coverage for gradual, unintentional and unexpected pollution were reasonable, based, among other things, upon representations made to it by its insurance brokers (who acted upon information provided by defendants). *fn10" In the present instance, there is evidence that Sherman's agency, Alexander & Alexander, was Fireman's Fund's agent (Ex. 97), upon whose statements plaintiff's Verhoog could reasonably base an expectation of coverage.

 Standard Venetian Blind Co. v. American Empire Ins. Co., 503 Pa. 300, 469 A.2d 563 (1983), urged as controlling by defendants, is not to the contrary. In that case, the Pennsylvania Supreme Court was confronted with a situation in which a clear and unambiguous exclusion governed the claim presented, but in which the insured argued that the exclusion should be stricken on the ground that he had failed to read the policy, and that the insurer had not taken affirmative steps to explain the exclusion to him. The Court ordered the entry of judgment in favor of the defendant, but its holding was limited:

 
We hold only that where, as here, the policy limitation relied upon by the insurer to deny coverage is clearly worded and conspicuously displayed, the insured may not avoid the consequences of that limitation by proof that he failed to read the limitation or that he did not understand it.

 Id. at 307. See Tonkovic v. State Farm Mut. Automobile Ins. Co., 513 Pa. 445, 521 A.2d 920 (1987) (Venetian Blind's holding not to be mechanically applied regardless of the factual context in which the claim arose).

 Unlike Standard Venetian Blind, this is not a case in which plaintiff's argument is premised upon a failure to read. Standard Venetian Blind has nothing to say about the availability of an estoppel defense under circumstances where an otherwise clear and unambiguous exclusion was misrepresented to the insured, causing the insured to reasonably believe its policy provided coverage notwithstanding the exclusionary language. Indeed, Park was decided by the Third Circuit long after the Pennsylvania Supreme Court decided Standard Venetian Blind, and Park nonetheless strongly reinforced the proposition that Pennsylvania courts expand traditional estoppel notions in insurance coverage cases in order to protect the reasonable expectations of the insured.

 The continuing availability of a reasonable expectation analysis after Standard Venetian Blind even under circumstances where the exclusionary language is otherwise clear and unambiguous was also articulated by the Pennsylvania Superior Court in Dibble v. Security of America Life Ins. Co., 404 Pa. Super. 205, 590 A.2d 352 (1991). In that case, the insured argued that coverage under a life insurance policy was clearly unavailable for the suicide of plaintiff's spouse, where the policy required that suicide would only be covered if such an event occurred more than two years from the effective date of the policy; the application for the policy was completed on July 11, 1986, a premium was paid on August 11, 1986, the application provided that the insurance would become effective on the first of the second month following approval if the application were approved after the 20th day of the month, the application was formally approved on September 8, 1986, and plaintiff's spouse committed suicide on September 28, 1988. The court affirmed the trial court's grant of summary judgment in favor of the insured, although it did not disagree with the insurer that the applicable policy language was unambiguous:

 
In the instant situation, the Dibbles could have reasonably believed that when they paid the first premium on August 11, 1986, that the mortgage life insurance policy became effective at that time. By simply directing us to unambiguous language in the application and policy, Security of America has not established by clear and convincing evidence that the Dibbles were unreasonable in believing that coverage began upon their payment of the first premium.

 Id. at 212.

 For all these reasons, the court rejects defendants' argument that Standard Venetian Blind is controlling. Plaintiffs' estoppel argument, supported by evidence on the instant cross-motions, retains validity under controlling Pennsylvania law.

 In sum, plaintiff has met its burden to show the existence of genuine issues of material fact remaining for trial on the issue of whether the pollution exclusion may be applied to bar coverage for claims arising out of gradual pollution from the USTs. As to plaintiff's cross-motion for summary judgment on the ground that defendants are estopped from arguing that the "pollution exclusion" clause found in any of defendants' policies limits coverage to pollution incidents that are of short duration, that motion must also be denied because genuine issues of material fact remain for trial. Plaintiff will, however, be permitted to present its estoppel defense at trial for resolution by the finder of fact.

 D. Defendants' Argument that All or Parts of UTI's "Damages" Are Barred By the June 16, 1982 Settlement and Release Agreement

 In June, 1982, the parties to the instant action executed a Settlement and Release Agreement to dispose of the claims stated against defendant Fireman's Fund by UTI in a case captioned Uniform Tubes, Inc. v. Fireman's Fund Ins. Co., et al., filed in the Eastern District of Pennsylvania. Defendant Fireman's Fund apparently takes the position that UTI "relinquished all rights to future claims" to the four categories of expenses *fn11" listed in the agreement, and thus "UTI cannot have incurred any losses, costs or damages after June 16, 1982 for the listed categories," and that UTI's present damages claims are accordingly "barred by the terms of the June 16, 1982 Settlement and Release Agreement." Def. Br. at 35.

 The coverage action which was settled by means of the June, 1982 agreement was one in which plaintiff sued Fireman's Fund only under policy number LC-2566937, a CGL policy. Substantively, the complaint alleged that payment ...


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