La. Dep't of Envtl. Quality v. Tidewater Landfill LLC

APPEAL FROM 25TH JDC, PARISH OF PLAQUEMINES
NO. 64-848, DIVISION "A"
Honorable Kevin D. Conner, Judge

Judge Dale N. Atkins

(Court composed of Judge Edwin A. Lombard, Judge Roland L. Belsome, Judge Daniel L. Dysart, Judge Tiffany G. Chase, Judge Dale N. Atkins)

BELSOME, J., DISSENTS FOR THE REASONS ASSIGNED BY JUDGE DYSART

DYSART, J., DISSENTS

Oscar Magee
Jill Carter
Gail C. Holland
Rodney Barnes
Amber G. Litchfield
LOUISIANA DEPARTMENT OF ENVIRONMENTAL QUALITY
Legal Affairs Division
P.O. Box 4302
Baton Rouge, LA 70821-4302

COUNSEL FOR PLAINTIFF/APPELLANT

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Sidney W. Degan, III
Travis L. Bourgeois
Karl H. Schmid
DEGAN BLANCHARD & NASH
400 Poydras Street
Suite 2600 Texaco Center
New Orleans, LA 70130

COUNSEL FOR DEFENDANT/APPELLEE

REVERSED AND REMANDED

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DNA
EAL
TGC

This is an insurance coverage dispute. Appellant, the Louisiana Department of Environmental Quality (the "LDEQ"), appeals the trial court's February 21, 2020 judgment, which granted a motion for summary judgment filed by Gray Insurance Co. ("Gray"), dismissed all claims against Gray, and found Gray had no obligation to provide insurance coverage under a pollution exclusion endorsement contained in Gray's insurance policy. For the reasons that follow, we reverse the trial court's judgment and remand for further proceedings.

Louisiana Fruit Company ("LFC") co-owns property that it leased on May 1, 1991, to South Louisiana Environmental Control Company ("SLECC"), Tidewater Landfill, LLC ("Tidewater"), and Environmental Operators, Inc. ("Environmental Operators") for the use of a landfill in Venice, Plaquemines Parish, Louisiana. The term of the lease extends until July 1, 2021. Under the agreement, SLECC and Tidewater contracted with Environmental Operators for the installation, maintenance, operation, and closure of the landfill. On April 12, 1998, the LDEQ issued Permit P-0717 for the operation of the landfill. Permit P-0717 was renewed twice, on June 18, 1998 and July 19, 2011, respectively. The permit required,

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among other things, that the operators of the landfill maintain a certain amount in trust to cover costs associated with operating and closing the landfill in accordance with certain regulations promulgated by the LDEQ. Tidewater and Environmental Operators maintained insurance policies with several insurance companies, one of which is Gray.

On October 12, 2018, the LDEQ filed a Petition for Mandatory Injunction to Abate a Continuing Nuisance (the "Petition"), naming, among others, LFC, SLECC, Tidewater, Environmental Operators, and Gray as defendants. The LDEQ alleged that the landfill operations were governed by La. R.S. 30:2151 et seq., Louisiana's Solid Waste Management and Resource Recovery Law, and LAC 33:VII.101 et seq., Louisiana's Solid Waste Regulations. According to the Petition, these statutes and regulations were designed to prevent environmental damage caused by past waste disposal practices, and established standards for the storage, collection, processing, recycling, and disposal of solid waste.

The LDEQ further alleged that, as of October 1, 2015, Tidewater estimated that the closure costs for the Type I and II Disposal Footprint of the landfill were $793,494.28 and that the cost of post-closure care was $775,086. The estimated closure costs for the Type III Disposal Footprint of the landfill were $208,285.20 and post-closure care costs were $31,260.00, for a total of $1,808,125.48. The LDEQ also alleged that Tidewater only had $660,000 of available financial assurance in trust, which was inadequate to cover the costs of closure and post-closure care of the landfill.

In the Petition, the LDEQ noted that, pursuant to its regular inspections of the landfill, Tidewater was not compliant with the regulatory financial assistance requirements, nor was it compliant with other rules and regulations regarding

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maintenance of the landfill, such as failing to provide adequate daily cover of solid waste going back to November 1997. The LDEQ also alleged that Tidewater was allowing leachate from the landfill to run into waters of the State, which was a nuisance and was causing danger to human health and the environment. Accordingly, because Tidewater had continued to dispose of solid waste at the landfill in violation of La. R.S. 30:2155, the LDEQ prayed for an injunction to issue against Tidewater. The injunction the LDEQ sought would mandate that Tidewater comply with La. R.S. 30:2155, the Louisiana Environmental Quality Act, the Louisiana Solid Waste Regulations, and all applicable permits and orders to properly close the landfill and maintain the landfill in post-closure care.

At issue in this appeal is Gray's Commercial General Liability ("CGL") insurance policy number XSGL-072472 (the "Primary Policy"), under which Environmental Operators and Tidewater are identified as named insureds. Gray issued excess policy numbers GXS-040627, GXS-040692, GXS-040758, XSWC-060867, and XSAL-072271, which covered Tidewater and Environmental Operators as named insureds for consecutive yearly policy periods from January 1, 1993 to January 1, 2016.

The Primary Policy specified that Gray would "pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies" and that Gray would "have the right and duty to defend any 'suit' seeking those damages." The Primary Policy included a total pollution exclusion endorsement, issued on December 29, 1992, and effective January 1, 1993, which stated:

This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART

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Exclusion f. under COVERAGE A (Section I) is replaced by the following:

***
(2) Any loss, cost or expense arising out of any:

(a) Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify, or neutralize, or in any way respond to or assess the effects of pollutants; or

(b) Claim or suit by or on behalf of a governmental authority for damages because of testing for monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects or pollutants.

Pollutants means any solid, liquid, gaseous, or thermal irritant or contaminant including smoke vapor, soot, fumes, acid, alkalis, chemicals and waste. Waste includes material to be recycled, reconditioned or reclaimed. (Emphasis added).

The policies also included a Seepage...