Landis+gyr Inc. v. Zurich Am. Ins. Co.

LANDIS+GYR INC., a Delaware Corporation,f/k/a LANDIS & GYR METERING, INC., Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY, a New York Corporation, f/k/aZURICH INSURANCE COMPANY, Defendant.

Case No. 4:16-cv-82

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA LAFAYETTE DIVISION

October 5, 2018

OPINION AND ORDER

This matter is before the court on the Motion for Partial Summary Judgment [DE 53] and the Motion to Strike Certain Inadmissible Testimony Cited by Zurich [DE 84] filed by the plaintiff, Landis+Gyr Inc., on December 1, 2017 and March 22, 2018, and the Rule 56(D) Motion [DE 100] filed by the defendant, Zurich American Insurance Company, on May 14, 2018. For the following reasons, the Motion for Partial Summary Judgment [DE 53] is DENIED, the Motion to Strike Certain Inadmissible Testimony Cited by Zurich [DE 84] is DENIED, and the Rule 56(D) Motion [DE 100] is DENIED.

Background

The plaintiff, Landis+Gyr Inc., initiated this matter on October 7, 2016. Landis seeks to compel the defendant, Zurich American Insurance Company, to defend and indemnify Landis against the liability claims that the United States Environmental Protection Agency (USEPA) and the Indiana Department of Environmental Management (IDEM) brought over environmental contamination. Landis asserts that the allegations fall within the coverage of the primary and umbrella policies that were issued by Zurich.

In November of 1984, Landis was required to commence an investigation under the Resource Conservation and Recovery Act (RCRA) at the Sagamore Parkway Site (Site) located at 3601 Sagamore Parkway North in Lafayette, Indiana, in response to demands from USEPA and IDEM. USEPA identified Landis as a possible source of significant contamination at the Site. Landis has indicated that the contamination was not intended or expected, rather it resulted from historical, inadvertent releases and/or spills of contaminants. Landis asserts that the contamination resulted in property damage during the Zurich policy years. Zurich had issued primary commercial general liability insurance policies to Landis for the years 1978 through 1988, and beginning in 1978 issued Landis umbrella policies, as well as several excess policies.

In 1999, administration of the investigation and remediation at the Site was transferred from USEPA to IDEM and was handled by IDEM under the Voluntary Remediation Program (VRP). The closure process dragged on for many years and finally came to an end in April of 2017. Landis was granted regulatory closure for the site and received a Covenant Not to Sue from IDEM on April 4, 2017. Landis has incurred approximately $7 million in expenses in response to the EPA and IDEM's demands, and with interest at the statutory rate, total costs incurred were over $13 million.

Landis has indicated that by at least mid-1995 it had provided notice to Zurich concerning the environmental liability claims that were pending against it. Landis asserts that it re-engaged Zurich through a letter dated September 16, 2014. Zurich's claim handler, David Olson, responded on September 19, 2014 that Zurich was investigating coverage and requested additional information. On October 17, 2014, Olson sent a second letter indicating that Zurich still was determining the availability of coverage and that he expected to issue a coverage determination within 30 days.

Approximately one year later, Julie York, a different Zurich adjuster, sent a letter to Landis indicating that she had taken over the claim and was reviewing it. York represented to Landis that the claim was flagged with the highest priority and that Zurich would be responding with a coverage determination. On July 10, 2016, Zurich still was reviewing the matter, and Landis again asked for a coverage determination on August 1, 2016. Landis has indicated that when Zurich failed to respond it filed its Complaint against Zurich on October 7, 2016. Landis asserts that Zurich is obligated to pay for all past and future liabilities associated with the contamination on and around the Site, including costs to investigate, monitor, and remediate the contamination, as well as legal defense costs and fees.

Landis has now moved for partial summary judgment on Zurich's duties to defend and to indemnify it concerning the environmental liability claims relating to the Sagamore Site. Zurich filed a response in opposition on February 2, 2018, and Landis filed a reply on March 22, 2018.

Landis also has filed a motion requesting that the court strike portions of the affidavits of Cherish Hairrell and Peter Alvey that were submitted by Zurich. Landis has argued that the affidavits consist of unsubstantiated speculation and do not purport to be the product of a proper expert opinion. Zurich filed a response in opposition on April 5, 2018, and Landis filed a reply on April 12, 2018.

The parties have filed Motions for Partial Summary Judgment on Choice of Law that are still pending before the court. The motions were fully briefed on August 28, 2018. The choice of law analysis will not affect the outcome of the motions that currently are before the court.

Discussion

Before addressing Landis's motion for partial summary judgment, the court first must determine what evidence it may evaluate by addressing Landis's motion to strike certaintestimony cited by Zurich. In its response, Zurich cited and relied on an affidavit from Cherish Hairrell to support its contention that Landis did not notify Zurich of its initial claim concerning the contamination at the Sagamore Parkway Site prior to September 16, 2014. Moreover, Zurich relied on an affidavit from Peter Alvey to support its contention that Landis's late notice prejudiced Zurich.

Landis has moved to strike paragraphs 5, 7, 8, 10, 11, 13, and 14 of Hairrell's affidavit, as well as paragraphs 13, 14, and 15 of Alvey's affidavit. Landis asserts that the paragraphs are not based on personal knowledge and consist of unsubstantiated speculation and multiple levels of hearsay. Thus, Landis has argued that the paragraphs are inadmissible and cannot create a genuine issue of material fact under Federal Rule of Civil Procedure 56.

Federal Rule of Civil Procedure 56(c)(4) mandates that, "[a]n affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." The affiant may include reasonable inferences drawn from his own observations but may not testify as to the knowledge or observations of another. Payne v. Pauley, 337 F.3d 767, 772 (7th Cir. 2003) (quoting Visser v. Packer Eng'g Assoc., 924 F.2d 655, 659 (7th Cir.1991) (en banc)) ("[A]lthough personal knowledge may include reasonable inferences, those inferences must be 'grounded in observation or other first-hand personal experience. They must not be flights of fancy, speculations, hunches, intuitions, or rumors about matters remote from that experience.'"); see also Jenkins v. Heintz, 124 F.3d 824, 831 (7th Cir. 1997) (affiant cannot testify as to the knowledge of another); Davis v. House of Raeford Farms of Louisiana LLC, 2008 WL 2952477, *1 (W.D. La. 2008) (finding that witness was not competent to testify to what another knew). On a motion for summary judgment, a court mustnot consider those parts of an affidavit that do not comply with the requirements as set out in Rule 56. Adusumilli v. City of Chicago, 164 F.3d 353, 359 (7th Cir. 1998) (citing Friedel v. City of Madison, 832 F.2d 965, 970 (7th Cir. 1987)).

First, Landis contends that the statements in paragraphs 5, 7, 8, 10, 11, 13, and 14 of Hairrell's affidavit are hearsay and not based on personal knowledge, lack foundation, and are speculative, making them inadmissible and insufficient to establish a genuine issue of material fact. Hairrell's affidavit indicated that she was an employee of Zurich for over 15 years and was employed as a Claims Supervisor within the claims department. [Hairrell Aff. ¶2]. Landis contends that Hairrell has attested to facts dating back to the 1980's and 90's, yet she did not have the personal knowledge that was required under Rule 56(c)(4). Landis has requested that the court strike the following paragraphs:

¶ 5 Zurich first received notice of the environmental contamination and remediation at the Sagamore Site on September 16, 2014, when Zurich received a letter from Landis+Gyr, Inc.'s counsel, Brent Huber of Ice Miller. In that letter, Mr. Huber stated that Landis + Gyr, Inc. had previously given notice of the Sagamore Site to Zurich. By letter dated September 25, 2014, Landis contended that Zurich was notified of the Sagamore Site claim in 1987.

¶ 7 Zurich maintains a claims database that includes all claims reported to Zurich from May 1, 1986 through the present. Zurich does not delete claim information that is entered into this database.

¶ 8 Zurich employees can search all of the claims that have been reported to Zurich and entered into this database through software known as "eZACCESS."

¶ 10 If Zurich had received notice of the Sagamore Site after May 1, 1986, a record of the claim would have been maintained in the claim database.

¶ 11 Zurich has never systematically disposed of old claim files from the 1980s and 1990s, even if Zurich's relevant document retention policy would have permitted Zurich to dispose of certain types of claim files under certain circumstances. Instead, it has always been Zurich's practice to transfer older claims files to storage.

¶ 13 During this search, Zurich employees working under my supervision did locate a claim related to Landis & Gyr, Inc.'s disposal of hazardous wastes at a landfill operated by Lakeland Disposal Services in Claypool, Indiana (the "Lakeland Site"). The claim regarding the Lakeland Site was reported to Zurich in 1987 and was unrelated to the Sagamore Site. None of the correspondence or documents in the Lakeland Site

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