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Home Indemnity Co. v. Hoechst Celanese Corp.

January 06, 1998

THE HOME INDEMNITY COMPANY, THE HOME INSURANCE COMPANY, AND CITY INSURANCE COMPANY, PLAINTIFFS,
v.
HOECHST CELANESE CORPORATION; AETNA CASUALTY & SURETY COMPANY; AIU INSURANCE COMPANY; ALLSTATE INSURANCE COMPANY; AMERICAN CENTENNIAL INSURANCE COMPANY; AMERICAN HOME ASSURANCE COMPANY; AMERICAN MOTORIST INSURANCE COMPANY; AMERICAN PROFESSIONALS INSURANCE COMPANY; AMERICAN RE-INSURANCE COMPANY; ASSOCIATED INTERNATIONAL INSURANCE COMPANY; BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA; CALIFORNIA UNION INSURANCE COMPANY; CENTENNIAL INSURANCE COMPANY; CERTAIN UNDERWRITERS AT LLOYDS LONDON AND CERTAIN LONDON MARKET INSURANCE COMPANIES; CERTAIN UNDERWRITING SYNDICATES OF THE ILLINOIS INSURANCE EXCHANGE; CERTAIN UNDERWRITING SYNDICATES OF THE INSURANCE EXCHANGE OF THE AMERICAS; CIGNA INSURANCE COMPANY; COLUMBIA CASUALTY COMPANY; COMMERCIAL UNION INSURANCE COMPANIES; CONTINENTAL CASUALTY COMPANY; CONTINENTAL INSURANCE COMPANY; CRUM & FORSTER INSURANCE COMPANY; EMPLOYERS INSURANCE OF WAUSAU, A MUTUAL COMPANY; EMPLOYERS MUTUAL CASUALTY COMPANY; ERIC REINSURANCE COMPANY; EXCESS INSURANCE COMPANY, LIMITED; FEDERAL INSURANCE COMPANY; FIREMAN'S FUND INSURANCE COMPANY; FIRST STATE INSURANCE COMPANY; FREMONT INDEMNITY INSURANCE COMPANY; GIBRALTAR CASUALTY COMPANY; GOVERNMENT EMPLOYEES INSURANCE COMPANY (GEICO); HARBOR INSURANCE COMPANY; HARTFORD ACCIDENT AND INDEMNITY COMPANY; HIGHLANDS INSURANCE COMPANY; HUDSON INSURANCE COMPANY; INSURANCE COMPANY OF NORTH AMERICA; INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA; INTERNATIONAL SURPLUS LINES INSURANCE COMPANY; LEXINGTON INSURANCE COMPANY; LONDON GUARANTEE AND ACCIDENT COMPANY OF NEW YORK; LUMBERMEN'S MUTUAL CASUALTY INSURANCE COMPANY; MEADOWS SYNDICATE, INC.; NATIONAL CASUALTY COMPANY; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, P.A.; NEW ENGLAND INSURANCE COMPANY; NEW ENGLAND REINSURANCE COMPANY; NORTH RIVER INSURANCE COMPANY; NORTH STAR REINSURANCE CORPORATION; NORTHWESTERN NATIONAL CASUALTY COMPANY; NORTHWESTERN NATIONAL INSURANCE COMPANY; PACIFIC INSURANCE COMPANY; PROGRESSIVE AMERICAN INSURANCE COMPANY; PRUDENTIAL REINSURANCE COMPANY; ROYAL INDEMNITY COMPANY; SIGNAL INSURANCE COMPANY; ST. PAUL FIRE AND MARINE INSURANCE COMPANY; STONEWALL INSURANCE COMPANY; TORTUGA CASUALTY INSURANCE COMPANY; THE TRAVELERS INDEMNITY COMPANY; TWIN CITY FIRE INSURANCE COMPANY; VIK RE SYNDICATE, INC., UNDERWRITERS REINSURANCE COMPANY; UNITED INSURANCE COMPANIES, INC.; X.L. INSURANCE COMPANY LIMITED; ZURICH INSURANCE COMPANY, DEFENDANTS.



Appeal by defendant Hoechst Celanese Corporation from order entered 28 August 1996 by Judge Marvin K. Gray in Mecklenburg County Superior Court.

Eagles, Judge. Judges Wynn and Martin, Mark D., concur.

The opinion of the court was delivered by: Eagles

This appeal concerns insurance coverage for contamination claims under thirteen (13) Lloyds London and Certain London Market Insurance Companies ("Lloyds") general liability policies in effect from 1985-89. The insured, Hoechst Celanese Corporation ("HCC"), obtained the policies at issue from its American insurance broker in New York. The policies were placed pursuant to the surplus lines laws of the State of New York. Lloyds is not admitted or authorized to conduct the business of insurance in the states of North Carolina or New York. For purposes of this appeal which concerns North Carolina sites, the parties agree that North Carolina law applies.

HCC has owned and operated a polyester manufacturing plant in Salisbury, North Carolina, since 1966. Pollutants generated in the normal course of operation have included glycol and Dowtherm. Glycol was disposed of at an on-site treatment plant from 1969 through 1974. HCC has also operated an on-site wastewater treatment plant since 1966. From 1966 through April 1990, the Salisbury plant also disposed of its waste at a nearby off-site landfill known as the Needmore Road landfill.

HCC's manufacturing operations at the Salisbury plant and disposal of waste at the Needmore Road landfill caused degradation of soil and groundwater. Glycol and Dowtherm were among the constituent contaminants identified in the groundwater. On 28 April 1988, the State of North Carolina issued two notices of non-compliance to HCC concerning the contamination of groundwater beneath the Salisbury Plant and the Needmore Road landfill. On 6 April 1990, the United States Environmental Protection Agency ("EPA") issued an administrative order directing further cleanup and investigation of the Salisbury Plant site. HCC has also been operating under a state mandate to clean up the contamination at the Needmore Road landfill. HCC seeks to recover the costs of environmental investigation, remediation and cleanup, which aggregate over $30 million for expenses at the Salisbury Plant and over $15 million for expenses at the Needmore Road landfill.

HCC filed suit in New Jersey on 14 February 1989 seeking a determination that primary insurance policies issued to HCC cover the claims. On 9 March 1989, The Home Indemnity Company, one of the defendants in the New Jersey case, filed this action in North Carolina seeking a declaratory judgment as to the same insurance policies and claims. In August 1989, this case was stayed to allow the New Jersey case to proceed, but that stay was lifted in December 1992.

On 29 March 1996, defendants Lloyds moved for partial summary judgment concerning claims arising from the site in Salisbury, North Carolina, which consists of the HCC plant in Salisbury as well as the Needmore Road landfill. The motion was based on "absolute pollution exclusions" contained in certain Lloyds' policies. Following a hearing on 23 July 1996, partial summary judgment was entered for defendants on 28 August 1996. The trial court certified the issues raised by defendants motion for immediate appeal pursuant to G.S. 1A-1, Rule 54(b). HCC appealed on 20 September 1996.

EAGLES, Judge.

We first consider whether there was sufficient evidence before the trial court to support Lloyds' motion for summary judgment . HCC argues that summary judgment was not appropriate because there were genuine issues of material fact concerning what exclusion language was included in the policies and when that language became effective. HCC contends that as the moving party, Lloyds had the burden of putting into evidence the insurance policies relied upon, and that Lloyds failed to meet this burden. First, HCC maintains that the only evidence of the insurance policy language filed with Lloyds' motion for summary judgment was contained in Lloyds' own interrogatory responses, each answered upon "information and belief." HCC contends that affidavits based upon "information and belief" must be disregarded because affidavits in support of a motion for summary judgment must be made on personal knowledge. See G.S. 1A-1, Rule 56(e); Blackwell v. Massey, 69 N.C. App. 240, 316 S.E.2d 350 (1984); Schoolfield v. Collins, 281 N.C. 604, 189 S.E.2d 208 (1972). Second, HCC contends that Lloyds' attempt to get the policies admitted based on attorney's affidavits failed to meet the standards of Rule 56 because the policies were not authenticated by anyone with personal knowledge. In addition, HCC contends that the papers submitted by Lloyds created genuine issues of material fact concerning the exact policy language relied on in Lloyds' motion. HCC argues that one policy relied upon by Lloyds, policy no. UVA0194, has two different overlapping pollution exclusion endorsements. Other polices include endorsements containing pollution exclusions dated three years after the policies expired. Accordingly, HCC argues that because genuine issues of material fact remain, summary judgment was erroneously granted.

Lloyds argues that it met its burden of proof because their motion for summary judgment was initially supported by sworn answers to interrogatories and later by the actual policies containing the specific policy language found in the sworn answers to interrogatories. The policies were attached to the verified supporting affidavit of attorney Henry Lee, Lloyds' attorney. Lloyds argues that this affidavit was based upon personal knowledge because the affidavit explains that the attached policies were produced by HCC and its insurance broker during discovery in this same lawsuit and that their attorney, Henry Lee, clearly would have personal knowledge of documents produced by HCC and its insurance broker in response to a deposition subpoena duces tecum. Accordingly, Lloyds contends that the supporting affidavit of attorney Henry Lee was competent evidence and sufficient to authenticate the policies. Furthermore, Lloyds argues that the Lee affidavit was timely filed and that HCC never objected to or moved to strike the affidavit. Additionally, Lloyds contends that there was no issue regarding the effective dates of the endorsements on policy no. UVA0194 because the effective dates of the two endorsements are different and do not overlap. Finally, Lloyds argues that HCC is estopped from denying the authenticity of policies which HCC itself produced in discovery in this very case. Accordingly, Lloyds maintains that summary judgment was properly granted.

HCC's argument centers around three policies: UVA0194, NTC344 and NTC345. HCC first points to Policy No. UVA0194, which covers the period of 1 May 1987-1 May 1990. HCC claims that there are genuine issues concerning the exact language of the policy, as there are endorsements with overlapping coverage. UVA0194 contains two Category II pollution exclusions. The first exclusion, listed as Endorsement No. 1, contains provisos which operate to bar coverage during the policy's first year (May 1987-May 1988) for the pollution claims at issue here. However, the policy also contains a second endorsement, No. 27, which amends the policy effective 1 May 1988. Endorsement No. 1 in the policy was effective for the first year of the policy, while Endorsement No. 27 was effective for the remaining two years of the policy. The dates are clear and do not overlap.

The next issue was whether Endorsement No. 27 to policy no. UVA0194 contained a proviso precluding coverage for the environmental claims at issue here. The policy copy attached to Henry Lee's affidavit included in the original record on appeal did not include such a proviso. In response to an order of this court, the Clerk of Superior Court of Mecklenburg County has supplemented the record on appeal and certified to us a true copy of the proviso contained in the trial court's record. Accordingly, the record on appeal now includes proviso (a) to Endorsement No. 27 of policy no. UVA0194 which purports to preclude coverage for the environmental claims at issue here.

HCC next argues that genuine issues of material fact remain concerning policy numbers NTC344 and NTC345. Those policies ended in 1986, but contain pollution exclusions dated in 1989, after the initial New Jersey lawsuit in this case was filed. HCC questions whether these endorsements were actually part of the policies, and if so, when did they go into effect.

HCC's arguments are unpersuasive. HCC is estopped from denying the authenticity of the policies and their endorsements because these policies were produced by HCC's insurance broker in response to discovery requests in this case. In this record, the policies and endorsements are attached to the verified affidavit of Lloyds' attorney in this case who explained that the policies had been produced by HCC and its insurance broker in response to a deposition subpoena duces tecum. This affidavit was based on personal knowledge and satisfies Rule 56(e). See Lockwood v. Wolf Corp., 629 F.2d 603, 611 (9th Cir. 1980). Accordingly, the trial court properly considered the exclusions as authentic and as part of the policy. The endorsements clearly ...


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