The Courtland Co. v. Ohio Farmers Ins. Co.

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THE COURTLAND COMPANY, INC., Plaintiff, v. OHIO FARMERS INSURANCE COMPANY, Defendant.

Civil Action No. 2:22-cv-00135

United States District Court, S.D. West Virginia, Charleston

April 23, 2024

MEMORANDUM OPINION AND ORDER

JOHN T. COPENHAVER, JR. SENIOR UNITED STATES DISTRICT JUDGE

Pending are Ohio Farmers Insurance Company's (“Ohio Farmers”)^[1] Motion for Summary Judgment (ECF No 22),^[2] and The Courtland Company, Inc.'s (“Courtland”) Motion for Partial Summary Judgment (ECF No. 24), both filed on December 22 2022, and on which briefing concluded on January 12, 2023.

I. BACKGROUND

Each party seeks declaratory judgment on the issue of whether Ohio Farmers has the duty to defend and indemnify Courtland on counterclaims filed by Union Carbide Corporation (“Union Carbide” or “UCC”) against Courtland in Courtland v. Union Carbide Corporation (“Courtland II”), No. 2:19-cv-00894, one of four complex environmental actions involving those parties.^[3]

A. Courtland II

Courtland initiated Courtland II by filing suit on December 13, 2019.^[4] See Compl., Courtland II, ECF No. 1. In its complaint, Courtland alleged that Union Carbide “has caused the release of toxic, noxious harmful and hazardous contaminants into the environment, and such contaminants have become present and threaten to become further present at, on, and under Plaintiff's property. . . .” Id. at ¶ 1. Courtland brought the following causes of action against Union Carbide: recovery of response costs and declaratory relief under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) (Count I); citizen suit for relief for violations of the Resource Conservation and Recovery Act (“RCRA”) subchapter III and the West Virginia Hazardous Waste Management Act (Count II); citizen suit relief for judicial abatement of an imminent and substantial endangerment (Count III); judicial abatement of a public nuisance (Count IV); judicial abatement of a public nuisance per se (Count V); private nuisance (Count VI); negligence (Count VII); negligence per se (Count VIII); gross negligence (Count IX); and strict liability (Count X).

Union Carbide filed a motion to dismiss (Courtland II, ECF No. 9), which the court granted only as to Count VIII (negligence per se). See Mem. Op. & Order, Aug. 26, 2020, Courtland II, ECF No. 75. Thereafter, on September 9, 2020, Union Carbide filed its answer and counterclaim against Courtland. See Answer & Amend. Counterclaim, Courtland II, ECF No. 82. In its counterclaim, Union Carbide alleged the following causes of action: violation of CERCLA sections 107 and 113 (Count I); declaratory relief under CERCLA (Count II); negligence (Count III); declaratory relief under West Virginia Law (Count IV); and equitable indemnity (Count V). Union Carbide's counterclaims were based on Courtland's ownership of the “Courtland Property” in South Charleston, West Virginia, and Courtland's practice of disposing hazardous substances onto the property. Answer at ¶¶ 7-9, Courtland II, ECF No. 82. On September 30, 2020, Courtland moved to dismiss Union Carbide's counterclaim (Courtland II, ECF No. 103), which the court granted without prejudice on May 10, 2021. See Mem. Op. & Order, May 10, 2021, Courtland II, ECF No. 250.

On July 21, 2021, Union Carbide filed its Rule 15 Motion for Leave to File an Amended Answer and Re-Alleged Counterclaims. Mot. File Amend. Answer, Courtland II, ECF No. 271. The court granted in part and denied in part this motion on October 22, 2021. Mem. Op. & Order, Oct. 22, 2021, Courtland II, ECF No. 302. Union Carbide's amended counterclaims asserted the following causes of action: violation of CERCLA section 107(a) (Count I);^[5] violation of CERCLA Section 113(f) (Count II); declaratory judgment pursuant to CERCLA section 113(g) (Count III); negligence (Count IV); declaratory relief under West Virginia Law (Count V); and equitable indemnity (Count VI). Amend. Answer, Courtland II, ECF No. 304.

Union Carbide's amended counterclaim asserts “the historical use of the Courtland property is responsible for some or all of the environmental impacts to the Courtland property.” Id. at ¶ 7. The Courtland property is currently used to store and dispose of construction waste, but in the past it was used for the “storage and disposal of raw coal, fly ash, diesel fuel, concrete, timber, and other materials.” Id. at ¶¶ 11, 20.

Relevantly, the amended counterclaim claims that Union Carbide conducted an investigation of the Courtland property in December 2020, for the purpose of “determin[ing] . . . whether contamination exists on the Courtland property which presents a threat to human health or the environment and whether Courtland is responsible for some or all of that contamination on its property.” Id. at ¶ 10. Union Carbide alleges that the soil investigation showed the presence of the following metals and organic chemicals:

1,2 Dichloroethane, 1,2 Dibromoethane, 1,1,2 Trichloroethane, Acetone, Benzene, Carbon Tetrachloride, Cyclohexane, Ethylbenzene, Methyl Ethyl Ketone (2-Butanone), Trichloroethene, Toluene, o Xylene, m,p Xylene, total Xylene, Aluminum, Antimony, Arsenic, Barium, Beryllium, Cadmium, Chromium, Cobalt, Copper, Lead, Manganese, Mercury, Nickel, Selenium, Sodium, Thallium, Vanadium, Zinc, 1,1 Biphenyl, Acenaphthylene, Anthracene, Benzo(a)anthracene, Benzo(a)pyrene, Benzo(b)fluoranthene, Benzo(g,h,i)perylene, Benzo(k)fluoranthene, Chrysene, Dibenzo(a,h)anthracene, Dibenzofuran, Fluoranthene, Fluorene, Indeno(1,2,3-cd)pyrene, Naphthalene, Phenanthrene and Pyrene.

Id. at ¶ 13. Union Carbide contends “[t]he presence of these substances shows that Courtland is at lease partially responsible for environmental impacts on the Courtland property and potentially the UCC property,” id. at ¶ 14, the failure of Courtland to “control, monitor, or maintain facilities it owns or operates . . . in a proper and legal manner . . . result[ed] in the release, disposal, discharge, collection, and exacerbation of contamination in and at the Courtland Property,” id. at ¶ 42, and the resulting contamination of the Courtland Property caused Union Carbide “to suffer damages, including consequential, incidental, and general damages,” id. at 43. Union Carbide claims it incurred $169,391.58 in costs for the investigation and analysis and says it will likely incur additional response costs in the future. Id. at ¶¶ 16, 25.

B. Courtland's Case Against Ohio Farmers

After Union Carbide filed its initial counterclaim on September 9, 2020, “Courtland, [Callaghan (Courtland's counsel)], and [Callaghan's] co-counsel diligently searched for evidence of Courtland's historic liability insurance policies for the period from 1980 to 2005.” See Callaghan Decl. ¶ 13, Dec. 22, 2022, ECF No. 24-1.^[6] This search uncovered “historic accounting records that [Westfield] had issued the Policies to Courtland in the 1980s.” Id. at ¶ 14. On March 31, 2021, Callaghan “tendered on Courtland's behalf to [Westfield] a defense against and indemnification of the UCC Counterclaim . . . .” Id. Westfield acknowledged receipt of Courtland's tender letter on April 5, 2021, Email from S. Karapashev, Westfield Complex Claims Specialist, to M. Callaghan, Apr. 5, 2021, Def.'s Resp. Ex. C, ECF No. 27-3. Westfield sent a letter to Callaghan on May 6, 2021, informing him:

Based upon available information, Westfield is currently investigating whether your client is entitled to any rights or coverage in connection with any actions or proceedings relating to the above claim under any policy issued by Westfield....

Westfield will conduct an investigation into this matter. However, please be advised that this investigation is without prejudice and is not intended to waive any rights or obligations of either you or Westfield Insurance under any of Westfield's insurance policies. Westfield hereby reserves all of its rights and defenses under such policies.

Until further information is known about the Site, the cause and timing of the release, alleged property damage, and the claim being made, Westfield cannot complete its coverage review and determine whether coverage exists for this matter. Westfield needs the cooperation of its insured to provide information so that a coverage analysis can be completed.

Letter from S. Karapashev to M. Callaghan, May 6, 2021, at 2, Def.'s Resp. Ex. D, ECF No. 27-4. Included in that letter was a list of information requested by Westfield so that it “may investigate whether there is coverage for this matter.” Id.

Four days later, on May 10, 2021, the court granted Courtland's motion to dismiss Union Carbide's counterclaim without prejudice. Mem. Op. & Order, May 10, 2021, Courtland II, ECF No. 250. Two days after that order, Callaghan avers that he provided Westfield with a copy of the court's order. Dec. 22 Callaghan Decl. ¶ 18.

On July 21, 2021, Union Carbide filed a motion for leave to amend to file an amended answer and re-alleged counterclaim (Courtland II, ECF No. 271). Callaghan says he tendered to Westfield a copy of Union Carbide's motion for leave to amend and provided Westfield with a copy of the proposed amended counterclaim. Id. at ¶ 20. Callaghan then filed a motion in opposition to Union Carbide's motion for leave to amend on August 4, 2021 (Courtland II, ECF No. 274), which was apparently also provided to Westfield. Id. at ¶ 21. Callaghan avers that on August 13, 2021, he received a message from Westfield's “in-house coverage counsel,” Suzanne Karapashev, noting that Westfield was reviewing the tenders and that it would provide a response to Courtland within two weeks. Id. at ¶ 22.

On October 22, 2021, the court granted Union Carbide's motion for leave to amend, which permitted it to file its amended...