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PPG Industries, Inc. v. American Home Assurance Co.

August 20, 2007

PPG INDUSTRIES, INC., PLAINTIFF-APPELLANT,
v.
AMERICAN HOME ASSURANCE COMPANY; APPALACHIAN INSURANCE COMPANY FOR ITSELF AND AS SUCCESSOR-IN-INTEREST TO APPALACHIAN INSURANCE COMPANY OF PROVIDENCE; EMPLOYERS INSURANCE COMPANY OF WAUSAU, A MUTUAL COMPANY; GREAT AMERICAN INSURANCE COMPANY; HANOVER INSURANCE COMPANY; NEW HAMPSHIRE INSURANCE COMPANY; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; OLD REPUBLIC INSURANCE COMPANY; PROTECTION MUTUAL INSURANCE COMPANY; AND UTICA MUTUAL INSURANCE COMPANY, DEFENDANTS-RESPONDENTS,
AND ACCIDENT AND CASUALTY INSURANCE COMPANY OF WINTERTHUR AS PREDECESSOR IN INTEREST TO WINTERTHUR SWISS INSURANCE COMPANY; AETNA CASUALTY AND SURETY COMPANY (NOW KNOWN AS TRAVELERS CASUALTY AND SURETY COMPANY); AGRICULTURAL INSURANCE COMPANY; AIU INSURANCE COMPANY; ALBA GENERAL INSURANCE COMPANY LTD.; ALLIANZ INSURANCE COMPANY; ALLIANZ INTERNATIONAL INSURANCE COMPANY LTD.; ALLIANZ UNDERWRITERS INSURANCE COMPANY; ALLSTATE INSURANCE COMPANY AS SUCCESSOR-IN-INTEREST TO NORTH-BROOK EXCESS AND SURPLUS INSURANCE COMPANY FORMERLY KNOWN AS NORTH-BROOK INSURANCE COMPANY; AMERICAN INSURANCE COMPANY; AMERICAN RE-INSURANCE COMPANY; ANCON INSURANCE COMPANY (U.K.), LTD.; ANGLO FRENCH INSURANCE COMPANY LTD.; ANGLO SAXON INSURANCE ASSOCIATION LTD.; ARGONAUT INSURANCE COMPANY; ARGONAUT NORTHWEST INSURANCE COMPANY; ASSICURAZIONI GENERALI T.S.; ASSICURAZIONI GENERALI S.P.A.; ASSOCIATED INTERNATIONAL INSURANCE COMPANY; ATLANTIC MUTUAL INSURANCE COMPANY; BELLEFONTE INSURANCE COMPANY (U.K.) LTD.; BIRMINGTON FIRE INSURANCE COMPANY OF PENNSYLVANIA; THE BISHOPSGATE INSURANCE COMPANY, LTD.; BRITISH AVIATION INSURANCE COMPANY; BRITISH NATIONAL INSURANCE COMPANY LTD.; BRITISH NATIONAL LIFE INSURANCE SOCIETY LTD.; BRITISH RESERVE INSURANCE COMPANY; BRITTANY INSURANCE COMPANY, LTD.; THE CAMDEN FIRE INSURANCE ASSOCIATION; C.E. HEATH COMPENSATION AND LIABILITY INSURANCE COMPANY AS SUCCESSOR-IN-INTEREST TO FALCON INSURANCE COMPANY FORMERLY KNOWN AS COMMERCIAL UNION SURPLUS LINES INSURANCE COMPANY, FORMERLY KNOWN AS EMPLOYERS SURPLUS LINES INSURANCE COMPANY; CIGNA INSURANCE COMPANY OF EUROPE SA-NV AS SUCCESSOR-IN-INTEREST TO THE HOME INSURANCE COMPANY; CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY AS SUCCESSOR-IN-INTEREST TO AETNA INSURANCE COMPANY; CIGNA SPECIALTY INSURANCE COMPANY AS SUCCESSOR-IN-INTEREST TO CALIFORNIA UNION INSURANCE COMPANY; CITY GENERAL INSURANCE COMPANY, LTD.; CNA REIN-SURANCE OF LONDON, LTD.; COLUMBIA CASUALTY COMPANY; COMMERCIAL UNION INSURANCE COMPANY FORMERLY KNOWN AS EMPLOYERS COMMERCIAL UNION INSURANCE COMPANY AND AS SUCCESSOR-IN-INTEREST TO EMPLOYERS LIABILITY ASSURANCE CORPORATION LIMITED; COMPAGNIE D'ASSURANCES MARITIMES AERIENNES ET TERRESTRES (CAMAT); CONTINENTAL CASUALTY COMPANY; THE CONTINENTAL INSURANCE COMPANY FOR ITSELF AND AS SUCCESSOR-IN-INTEREST TO BOSTON INSURANCE COMPANY AND HARBOR INSURANCE COMPANY; DELVAG; THE DOMINION INSURANCE COMPANY, LTD.; DRAKE INSURANCE COMPANY, LTD.; EAGLE STAR INSURANCE COMPANY, LTD. AS SUCCESSOR-IN-INTEREST TO HOME AND OVERSEAS INSURANCE COMPANY, LTD.; EISEN UND STAHL; EMERALD INSURANCE COMPANY, LTD.; EMPLOYERS MUTUAL CASUALTY COMPANY; EMPLOYERS REINSURANCE CORPORATION; EVEREST REINSURANCE COMPANY AS SUCCESSOR-IN-INTEREST TO PRUDENTIAL REINSURANCE COMPANY; EXCESS INSURANCE COMPANY, LTD.; EXECUTIVE RISK INDEMNITY COMPANY, INC. AS SUCCESSOR-IN-INTEREST TO EXECUTIVE RE INDEMNITY INC., FORMERLY KNOWN AS ERIC REINSURANCE COMPANY, FORMERLY KNOWN AS AMERICAN EXCESS INSURANCE COMPANY; FEDERAL INSURANCE COMPANY; FIDELIDADE INSURANCE COMPANY, LTD.; FIDELITY AND CASUALTY COMPANY OF NEW YORK; FIRE-MAN'S FUND INSURANCE COMPANY; FIRST STATE INSURANCE COMPANY; FOLKSAM INTERNATIONAL INSURANCE COMPANY (U.K.), LTD.; GANS INSURANCE COMPANY, LTD. AS SUCCESSOR-IN-INTEREST TO MINSTER INSURANCE COMPANY, LTD.; GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA AS SUCCESSOR-IN-INTEREST TO GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION; GENERAL INSURANCE COMPANY; HELVETIA LTD.; GIBRALTAR CASUALTY COMPANY; THE GLENS FALLS INSURANCE COMPANY; GOVERNMENT EMPLOYEES INSURANCE COMPANY (GEICO); GRANITE STATE INSURANCE COMPANY; GREAT SOUTHWEST FIRE INSURANCE COMPANY; GUARDIAN INSURANCE COMPANY, LTD. AS SUCCESSOR-IN-INTEREST TO BRITISH OAK INSURANCE COMPANY, LTD. AND LICENSE & GENERAL INSURANCE COMPANY, LTD.; GUILDHALL INSURANCE COMPANY, LTD.; HARCO NATIONAL INSURANCE COMPANY AS SUCCESSOR-IN-INTEREST TO WASHINGTON GENERAL INSURANCE CORPORATION; HARTFORD ACCIDENT AND INDEMNITY COMPANY; HEDDINGTON INSURANCE (U.K.), LTD.; HELVETIA ACCIDENT SWISS INSURANCE COMPANY, LTD. (GIBBON NM GROUP); HIGHLANDS INSURANCE COMPANY; HIGHLANDS INSURANCE COMPANY (U.K.), LTD.; THE HOME INSURANCE COMPANY; HOME AND OVERSEAS INSURANCE COMPANY, LTD.; HUDSON INSURANCE COMPANY; INSURANCE COMPANY OF NORTH AMERICA FOR ITSELF AND AS SUCCESSOR-IN-INTEREST TO INDEMNITY INSURANCE COMPANY OF NORTH AMERICA FORMERLY THE STUYVESANT INSURANCE COMPANY; INSCO LTD.; INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA; INTERNATIONAL INSURANCE COMPANY FOR ITSELF AND AS SUCCESSOR-IN-INTEREST TO INTERNATIONAL SURPLUS LINES INSURANCE COMPANY; IRON TRADES MUTUAL INSURANCE COMPANY, LTD.; LANDMARK INSURANCE COMPANY; LEXINGTON INSURANCE COMPANY; LEXINGTON INSURANCE COMPANY, LTD.; LOMBARD MARINE AND GENERAL INSURANCE LTD.; LONDON AND EDINBURGH GENERAL INSURANCE COMPANY, LTD.; LONDON GUARANTEE AND ACCIDENT COMPANY OF NEW YORK; MARYLAND CASUALTY COMPANY; LA MINERVE INSURANCE COMPANY, LTD.; MINSTER INSURANCE COMPANY, LTD.; NATIONAL CASUALTY COMPANY; NEW LONDON REINSURANCE COMPANY, LTD.; NEW YORK MARINE MANAGERS, INC.; NORTH ATLANTIC INSURANCE COMPANY, LTD.; NORTHERN ASSURANCE COMPANY, LTD.; NORTHWESTERN NATIONAL INSURANCE COMPANY AS SUCCESSOR-IN-INTEREST TO BELLE-FONTE INSURANCE COMPANY (U.K.) LIMITED; PACIFIC EMPLOYERS INSURANCE COMPANY; PHOENIX ASSURANCE COMPANY OF NEW YORK; LA PRESERVATRICE; PROVIDENCE WASHINGTON INSURANCE COMPANY; PRUDENTIAL INSURANCE COMPANY; RANGER INSURANCE COMPANY; REASEGURADORA NACIONAL DE VENEZUELA; RELIANCE FIRE AND ACCIDENT INSURANCE CORP. LTD.; RELIANCE INSURANCE COMPANY; RIVER THAMES INSURANCE COMPANY LTD.; RLI INSURANCE COMPANY; ROYAL INDEMNITY COMPANY; THE ROYAL SCOTTISH INSURANCE COMPANY, LTD.; SAFETY NATIONAL CASUALTY CORPORATION AS SUCCESSOR-IN-INTEREST TO SAFETY MUTUAL CASUALTY CORPORATION; SOUTHERN INSURANCE COMPANY, LTD.; SOVEREIGN MARINE AND GENERAL INSURANCE COMPANY, LTD.; SPHERE INSURANCE COMPANY, LTD.; ST. KATHERINE INSURANCE COMPANY, LTD.; ST. PAUL INSURANCE COMPANY, LTD. SUCCESSOR-IN-INTEREST TO ST. KATHERINE INSURANCE COMPANY, LTD.; STONEWALL INSURANCE COMPANY; STOREBRAND INSURANCE COMPANY (U.K.) LTD.; STRONGHOLD INSURANCE COMPANY, LTD.; SWISS NATIONAL INSURANCE COMPANY, LTD.; SWISS UNION GENERAL INSURANCE COMPANY, LTD.; SWITZERLAND GENERAL INSURANCE COMPANY, LTD.; TAISHO MARINE AND FIRE INSURANCE COMPANY (U.K.), LTD.; TERRA NOVA INSURANCE COMPANY, LTD.; THREADNEEDLE INSURANCE COMPANY, LTD.; TOKIO MARINE AND FIRE INSURANCE COMPANY (U.K.), LTD.; TRAVELERS INDEMNITY COMPANY; TRENT INSURANCE COMPANY, LTD.; TUREGUM INSURANCE COMPANY; TWIN CITY FIRE INSURANCE COMPANY; UNDERWRITERS AT LLOYD'S LONDON AND LONDON MARKET COMPANIES; UNION-AMERICA INSURANCE COMPANY, LTD.; L'UNION ATLANTIQUE S.A. D'ASSURANCES; UNITED SCOTTISH INSURANCE COMPANY; UNI STOREBRAND INSURANCE COMPANY (U.K.) LTD. AS SUCCESSOR-IN-INTEREST TO STOREBRAND INSURANCE COMPANY LTD.; UNITED STATES FIRE INSURANCE COMPANY; VANGUARD INSURANCE COMPANY, LTD.; WESTCHESTER FIRE INSURANCE COMPANY AS ASSUMPTIVE REINSURER OF UNITED STATES FIRE INSURANCE COMPANY AND INTERNATIONAL INSURANCE COMPANY; WESTPORT INSURANCE CORPORATION FORMERLY KNOWN AS PURITAN INSURANCE COMPANY WHICH WAS FORMERLY KNOWN AS THE MANHATTAN FIRE AND MARINE INSURANCE COMPANY; WINTERTHUR SWISS INSURANCE COMPANY; WORLD AUXILIARY INSURANCE CORPORATION LTD.; WORLD MARINE AND GENERAL INSURANCE COMPANY, LTD.; YASUDA FIRE AND MARINE INSURANCE COMPANY (U.K.), LTD.; ZURICH INSURANCE COMPANY; AND ZURICH INTERNATIONAL LTD., DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Hudson County, L-1845-95.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 23, 2007

Before Judges Lintner, S.L. Reisner and C.L. Miniman.

Plaintiff PPG Industries, Inc. (PPG) appeals from a dismissal on statute-of-limitations grounds of its action to compel insurance coverage from defendants American Home Assurance Company, Appalachian Insurance Company, Employers Insurance Company of Wausau, Great American Insurance Company, Hanover Insurance Company, New Hampshire Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, Old Republic Insurance Company, Protection Mutual Insurance Company, and Utica Mutual Insurance Company (collectively, insurers) for environmental contamination at its Barberton, Ohio (Barberton) and Lake Charles, Louisiana (Lake Charles) plants. We affirm.

On March 7, 1995, PPG instituted a declaratory judgment action against sixty comprehensive general liability insurers and thirty-five all-risk property insurers. PPG sought coverage for environmental contamination damage occurring at fifteen owned sites located in twelve states and Puerto Rico, and at other sites it did not own located in seventeen states and Puerto Rico. Some of the properties were located in New Jersey. The answers filed by insurers between 1995 and 1996 generally contained affirmative defenses alleging that PPG failed to commence suit within the time period set forth in the respective policies, its claims were barred by the applicable statute of limitations, and PPG failed to provide timely notice of claim.

The first order from which PPG appeals determined a summary judgment motion filed on September 25, 1998, by some of the property insurers based upon "suit limitation provisions in the policies of insurance at issue" with respect to the Barberton site. In granting defendants' motion in a letter opinion dated December 11, 1998, the motion judge found the suit-limitation provision contained in the 1965 to 1983 policies, which required suit against the insurer to be "commenced within twelve (12) months next after the happening of the loss, unless a longer period of time is provided by applicable statute," to be unambiguous. The judge further held "that PPG's coverage claims with respect to the Barberton site we[re] untimely even under the six-year statute of limitations on contract actions because PPG was aware of contamination at the Barberton site prior to March 1989," that is, over six years prior to the date it filed its initial complaint. An order was entered on December 11, 1998, and a corrected order was entered in January 1999. The second order from which PPG appeals was entered after the same property insurers moved on January 15, 1999, for partial summary judgment based upon suit-limitation provisions contained in the policies with respect to the Lake Charles site. By letter opinion dated April 1, 1999, the first motion judge granted this motion, and entered in an order on the same date.

On April 3, 2000, Century Indemnity Company (Century) moved against PPG for partial summary judgment on the issue of choice of law. Between April 28, 2000, and July 3, 2000, other insurers cross-moved for partial summary judgment or joined in Century's application. PPG cross-moved on October 2, 2000, for partial summary judgment on choice of law with respect to pollution-exclusion and notice issues. In a November 6, 2000, oral opinion, another motion judge ruled that the respective laws of the sites applied to the undisputed issue of pollution exclusion and to the disputed issue of late notice. An order to that effect was entered on November 20, 2000.*fn1

By May 2005 PPG had settled its claims against the remaining insurers. An order entered November 1, 2005, by the third motion judge, granted PPG's motion for leave to file a fifth amended complaint against the all-risk property insurers who prevailed on their summary judgment motions and provided that "[a]ll claims . . . relating to all sites . . . other than the Barberton, Ohio site and the Lake Charles Louisiana site," were dismissed with prejudice with the consent of PPG. PPG's fifth amended complaint sought a declaratory judgment that it was entitled to insurance coverage "for losses incurred by it as a result of environmental damage existing at and about two sites, Barberton, Ohio and Lake Charles, Louisiana," under "All- Risk Property Insurance Policies" issued by the insurers. In a final order and judgment dated December 20, 2005, a third motion judge granted a declaratory judgment in favor of the insurers on the basis of the above-described orders. PPG's fifth amended complaint was also dismissed with prejudice by the final order and judgment. This appeal followed.

I.

PPG, originally Pittsburgh Plate Glass Company, purchased all-risk property insurance policies from 1963 until 1985. These policies broadly promised to cover all risk of physical loss or damage to insured property, but contained the following suit-limitation provision:

Suit Against the Company: No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless the Assured shall have fully complied with all the requirements of this policy, nor unless commenced within twelve (12) months next after the happening of the loss, unless a longer period of time is provided by applicable statute.

This clause was contained in the all-risk property policies in effect between 1965 and 1983 (the 1965 clause)*fn2 and applies to the contaminated sites described in the fifth amended complaint. The 3000-acre Barberton facility is located in the cities of Barberton and Norton in northeastern Ohio. Beginning in 1899, Columbia Chemical Company, which merged into PPG, produced synthetic soda ash on that site. Since that time, PPG and its predecessors manufactured inorganic and organic chemicals there. Located on the facility are six "lime lakes" covering some 600 acres. Over the years, the lime lakes became repositories of solid wastes from the production of soda ash. They also contained soda ash wastewaters (Lime Lake 1); tarry still bottom materials from chlorinated hydrocarbon manufacture (Lime Lake 2); an unknown quantity of light halogenated organic fluids and finely divided asbestos from the periodic disposal of chlorine production that contained these materials (Lime Lake 3); possibly "finely divided asbestos" (Lime Lake 4); chlorine- caustics, amorphous silicas, bleach, chlorinated organics, herbicides, chloroformates and CR-39 monomers (Lime Lakes 4 and 5); "silicas, chlorinated hydrocarbons and initiator wastes, as well as biological treatment sludges from the city of Barberton Wastewater Treatment Plant" (Lime Lake 6). Waste materials had also been deposited in other areas of the facility.

In the summer of 1978, PPG became concerned about the dangers of halogenated organic wastes and PPG's perchlor compounds like hexacholorbutadiene and hexachlorobenzene. The author of a memorandum expressed the following concerns:

Although the requests were made months ago, I have not seen any data on the samplings of water from the Calcasieu [River in Lake Charles, Louisiana] or the discharge from Barberton's containment basin. Likewise boreholes that were to be placed in and about the perimeters of the old organics dumps at both Barberton and Lake Charles have not been reported.

It is imperative that we have information of the success of the burial techniques employed at Lake Charles and Barberton. The longer the problem persists (if there is a problem), the more difficult it will be to correct.

The environmental catastrophe at the Love Canal in Niagara Falls, New York, in 1978 caught the attention of PPG. Thus, in an August 31, 1978, PPG memorandum, the following appeared:

In looking at the problems which are occurring in Niagara Falls relative to past disposal sites, it is essential that we have an inventory taken of all disposal sites and materials which we have disposed of over the years. By this inventory, I mean we should have an identification as much as possible-- a quantity determined of materials which has been sent to disposal sites. We should follow-up on the material which has been disposed of to be sure that there is no danger of exposure to the public. If sampling stations are necessary to measure leaching from these sites, then these sampling stations should be established.

Please work with these plant locations to determine what our position on chemical disposal has been and develop full information on the history of the material which has been sent to disposal sites. You should work with Environmental Affairs in this assignment to include their recommendations.

A decade later, a September 23, 1988, a PPG memorandum revealed the extent of PPG's awareness of contamination at Barberton and its realization that remediation costs would be astronomical:

PPG has been conducting voluntary environmental site assessment work since December of 1986 at our demolished manufacturing facilities in Barberton, Ohio. This work has been done in two phases, a preliminary work scoping phase in 1986 was conducted by Engineering Science, Inc., while the second more definitive assessment phase is currently being conducted by IT Corporation.

In late 1987 this second phase of work uncovered chlorinated hydrocarbon groundwater contamination in the areas of the old perc[h]loroethylene manufacturing facility and the old trichloroethylene facility. It also indicated that these solvent contaminations were migrating towards the plant boundaries. Follow-up well drilling investigations conducted this past winter and summer by IT Corp. have revealed that there are several locations at the facility boundaries where contamination is present at significant levels and is moving offsite.

Because of the significant areal extent of contamination and unfavorable geology, the costs associated with the remediation of this facility will, unfortunately, be very large. At this time it is impossible to quantify the capital costs except to say they will likely be double digit millions of dollars. Potential annual operating costs for the operation and maintenance of the remedial systems will also be quite significant.

This plant groundwater study and findings are not part of the Lime Lake contamination studies conducted earlier for which a $4.5 million provision has already been made. The Lime Lake provision will also require additional refinement to accurately define the total remediation costs related to Lime Lakes #1, and #2 and the Contractors Landfill . . . .

In June of 1989 PPG met with the Environmental Protection Agency (EPA) to discuss a Corrective Action Order of Consent for remediation of the Barberton site. The order was entered on April 5, 1991, and required that PPG implement three interim measures and conduct an environmental investigation and study at Barberton. The interim measures were to "expeditiously abate or remove the threats presented by hazardous waste or hazardous constituents to human health and the environment." The order has been modified on three occasions.

PPG summarized its efforts to determine the nature and extent of contamination and to remediate pollution at Barberton in a December 1991 Community Relations Fact Sheet, issued in compliance with an EPA Administrative Consent Order (ACO). As to the result of studies conducted, PPG reported:

PPG began, in the early 1980's, to perform studies of the Barberton facility on a voluntary basis. Initially, these studies focused on the Lime Lakes. In 1983 and 1984 remediation pilot studies were performed, and in 1985 full-scale reclamation of Lime Lake 4 began. Additional in-depth studies focusing on all the Lime Lakes and an area known as the Contractors Landfill were also performed. PPG completed these studies in 1987 and at that time approached [the] U.S. EPA regarding a mechanism to accomplish the Corrective Action Process. The studies that PPG presented to the U.S. EPA concluded that both the soil and groundwater were contaminated with volatile organic compounds (VOCs) and dissolved solids in the form of chlorides.

Respecting groundwater contamination,

PPG worked with the Summit County and Ohio Health Departments in 1983, 1985 and 1988 to sample residential drinking water wells and to perform a pilot health assessment. In the most recent study performed, only one of the 36 wells tested showed any evidence of VOCs; however, the concentrations of the VOCs was below the established drinking water standards. The earlier studies ...


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