Case Title: Certain Underwriters at Lloyd's, London v. Southern Natural Gas Company

Citation: 

Docket Number: 1110698

State: alabama

Court: Alabama Supreme Court

Date: 2013-06-28T00:00:00Z

Document:
e1:06/26/2013,

Wotice: Tis opinion i aubject to fomsl revision before publication in the advance

shects of Southern Reporter, Readers are requested to notity the Reportar of Decisions,

Alabama Appellate Courts, 300 Dexter Avenue Montgomery, Alabama 36106-3741 ((334) 229"

9648) of any Papograpnical or ether grrore, sn order that corrections may ba made bafore
She Qpsion Le Betneed in ssuchers neporeac ¥

 

SUPREME COURT OF ALABAMA

OCTOBER TERM, 2012-2013
1110698

Certain Underwriters at Lloyd's, London, and Certain London
Marketing Insurance Companies

Southern Natural Gas Company

1110769

Southern Natural Gas Company

Certain Underwriters at Lloyd's, London, and Certain London
Marketing Insurance Compan:

 

Appeals from Jefferson Circuit Court
(cv-01-6388)
BOLIN, Justice.

This appeal and cross-appeal result from a multiphase
trial involving liability-insurance policies regarding
roverage af anvirnnmantal-ramadiatinn enste On Aetnher 15,
2001, Southern Natural Gas Company ("Sonat") sued Certain
Underwriters at Lloyd's, London, and Certain London Marketing
Insurance Companies (hereinafter referred to collectively as
"IMI") alleging that LMI had breached numerous umbrella and
excess-liability-insurance policies by failing to pay Sonat
for coxtain cnvironmental remediation coote, Thio io the
third time this case has come before this Court. See Certain
Underwriters at Lloyds, London v. Southern Natural Gas Co.,
939 So. 2d 21 (Ala. 2006) (dism:ssing appeal following Phase I
of the trial as not being from a final judgment); Certain
Underwriters at Llovds, London v. Southern Natural Gas Co., 41
So. 3d 56 (Ala. 2009) (dismissing appeals following Phase II of
the trial as not being from a final judgment). The trial
court entered a summary judgment in favor of LMI during Phase
III of the trial, adjudicating all the claims before it. The
appeal and the cross-appeal are now properly before this

court.
1110698 and 1110769
E Procedural Hi

Sonat operates a natural-gas pipeline that spans an area
from Texas to Georgia. A series of 38 compressor stations are
positioned on the pipeline (11 are located in Alabama) in
order to maintain the flow of natural gas through the
pipeline, Suuat's inteyiated pipeline system alou includes
numerous mercury-metering stations, 131 of which are in
Alabama, The integrated pipeline system is controlled from
Sonat's headquarters in Birmingham.

From 1057 ta the early 147s, Sonat emplayass need the
lubricating oil, "Pydraul," in the air-compressor engines at
the compressor stations. in 1989, Sonat Learned that vyaraul
contained the toxin polyctlorinated biphenyl ("PCBN) .
Environmental testing conducted by Sonat on its own initiative
revealed the presence of PCBs at 13 of the 38 compressor
stations. Sonat conducted remedial activities at the
compressor stations to remove the PCB and to prevent further
migration of the PCB into the groundwater.

Sonat also discovered that mercury may have been
discharged from mercury-metering stations located along the

pipeline. For years, Sonat used manometers or mercury-
1110698 and 1110769
metering stations along its pipeline to measure the flow of
natural gas through its pipeline. The mercury meters were
used to determine if there were leaks in the pipeline and to
determine customers’ qas usage for billing purposes. Those

mercury meters were eventually replaced with newer technology.

 

we Buvisul Ue

 

However, in 1992, weulal Protection Ayeuuy

 

EPA") notified other gas-pipeline companies that mercury
meters may have leaked. Sonat was notified in 1994 by the
Louisiana Department of Environmental Quality that it had
hegnn investigating Sonat's merenry meters located in
Louisiana. In 1994, Sonat conducted remedial activities at
hundreds of its mercury stations to prevent rurtner migration
of mercury into the groundwater.

IMI had issued umbrella and excess-liability-insurance
policies to Sonat from 1949 to 1987. Most of the policies in
effect during those years defined an "occurrence" as:

"An accident or a happening, event or a
continuous or repeated exposure to conditions which
results unexpectedly and unintentionally as applied
to the Assured seeking indemnity hereunder, in
property damage ... during the policy period. All
ouch oxpocurce to oubotantially the oame goncral

conditions existing at or emanating from one
premises location shall be deemed one occurrence."

 

 

Other policies in effect during those years defined an
1110698 and 1110769
occurrence as “one happening or series of happenings arising
out of or caused by one event taking place during the term of

this contract

 

All the policies limited coverage to sums

Sonat became “leaally obligated" to pay “as damages." The

 

policies barred coverage of claims for damage to property
wumued Ly" sunat.

On August 28, 1991, and September 3, 1991, Sonat notified

 

LMI of the PCB contamination et the 13 compressor stations
Sonat informed LMI that it was informing all affected
nnderuritars af Sonat'a potential Mahiliry with regard te the
contamination cleanup costs. 0n November 2, 1994, Sonat sent
um notice that tne cleanup process was completed.

On November 13, 1995, LMI issued a reservation-of-rights
letter to Sonat. In that letter, LMI asked for copies of
additional underlying policies from 1959 to 1962, in order to
determine coverage for contamination at the compressor sites
under the umbrella and excess-liability-insurance policies
issued by IMI. LMI reserved its right to deny coverage under

the policies issued from 1962 to 1978 for several reasons.

ltt ie unclear when fonat notified IME of the
contamination at the mercury-metering stations

5
1110698 and 1110769
IMI also reserved its right to deny coverage in “Whiteshield
No. 31" and "Pike County Drum Superfund."*

In 1996, Sonat notified LMI that it would appear from the
cost of the cleanup that LMI's volicies would not be impacted.
However, Sonat reserved its rights to seek coverage under the
policies in Ule eveul Liat sual received alleyatious of
third-party property damage or bodily injury.

Subsequently, Sonat notified LMI that it would be seeking
coverage for its PCB and mercary-remediation programs under

the nmbrella and excess-1iahi

 

vy policies taaned hy TMT. Th
July 2001, LMI filed a declaratory-judgment action against
Sonat in Georgia, seeking a resolution of tne coverage issue.
The Georgia action was removed to federal court and was later
dismissed.

On October 15, 2001, Sonat filed in the Jefferson Circuit
Court a "an action for a declaratory judgment and for breach
of contract and anticipatory breach of contract and avoidance

of contractual obligations under umbrella and excess liability

°rt fe unclear from the bricfe what contamination had
occurred at these sites.
1110698 and 1110769
insurance policies"? against LMI. In its complaint, Sonat
asserted that the EPA, “other governmental agencies and
departments and/or private parties," including Alabama
residents, “have brought or asserted lawsuits, claims, and
demands against Sonat alleging property damage, personal
injury, bodily injury, aud otter damayef] and causes of
action, including, without limitation, nuisance, trespass,
negligence and strict liability, allegedly as a result of
Sonat's operations and ownership" of the natural-gas
integrated-pipeline system. Sonat asserted that ir has "paid
substantial amounts under legal obligation for the remediation
or gamage in, at, and around tne vicinity ot compressor
stations, and for mercury damage arising from mercury meters."
Sonat alleged as follows:

Claims, demands and suits have been asserted
against Sonat concerning property damage and other
damages arising out of Sonat's integrated operations
at compressor stations -- including 11 compressor
stations located in the State of Alabama. The

claimants in the environmental actions, allege,
inter alia, damage and other injury ‘based on

 

‘The “liability insurance policies" referred to in the
complaint are those "Known Primary, Umbrella and Excess
General Liability Insurance Policies issued to [Sonat] by
Cortain Underwritere at Lloyd'e" and licted in Appendix 1 to
Sonat's complaint.

 
1110698 and 1110769

purported damage including the presence of
polychlorinated biphenyls and other substances of
concern including petroleum-related hydrocarbons,
volatile o1yanic chemicals, semi-volatile vryanic
chemicals, polycyclic aromatic hydrocarbons, and
various metals, in the groundwater, surface water,
air and general environment in, at, around, and in
the vicinity of the compressor stations. Claimants
seek damages for past and future response costs for
alleged property damage and personal injury which is
voutinuvus and pruyessive, Leyiuuing in ur befure
1949 and extending until at least 1986. The monies
spent and to be spent in response to demands of a
governmental agency, or a private party are
‘damages' under the Liability Insurance Policies.
Alabama viating Uo. v. united states rigelity ana
Guar. Co., 690 So. 2d 331 (Ala. 1997). As such, the
Liability Insurance Policies respond to and are
reqnired ta pay for all damages hecanse of property
damage, bodily injury or personal injury (or a
combination thereof) which Sonat is or becomes
legally obligated to pay as respects the compressor
Stations. Ine damages tnat Sonat nas paid or 1s
likely to become legally obligated to pay because of
property damage, bodily injury and personal injury
ariging ont of environmental and fart actiane
concerning Sonat's compressor stations are within
the jurisdictional limits of this Court.

 

“Claims, demands and suits nave been assertea
against Sonat concerning property damage and other
damage[] arising out of Sonat's integrated
operations at mercury metering stations -- including
131 mercury metering stations located in the State
of Alabama. The claimants in the environmental and
tort actions, allege, inter alia, damage and other
injury based on purported damage including the
prcocnes of moroury in the groundwater, ourface
water, air and general environment in, at, around,
and in the vicinity of the mercury metering
stations. Claimants seek damages for past and
future response costs for alleged property damage
1110698 and 1110769

which is continuous and progressive, beginning in or
before 1949 and extending until at least 1986. The
monies spent and to be spent in response to demands
of @ yovernmental agency, o: a private party are
‘damages’ under the Liability Insurance Policies.
Alabama Plating Co. v. United States Fidelity and
Guar. Co., 690 So. 2d 331 (Ala. 1997). As such, the
Liability’ Insurance Policies respond to and are
required to pay for all damage because of property
damage, bodily injury or personal injury (or a
combination Uterecf) whieh Sonal is ur becomes
legally obligated to pay as respects the mercury
metering stations. The damages that Sonat has paid
or is likely to become legally obligated to pay
because of property danage, bodily injury and
personal injury arising out or environmental ana
tort actions concerning Sonat's mercury metering
stations are within the jurisdictional limits of
this Cont.”

Sonat went on to list in its complaint the location of
tne atrected compressor stations. sonat's asserted claims tor
relief included: (1) that IMI was obligated to pay in full
Sonat's legal liabilities arising out of or in connection with
the previously described “environmental and tort actions" and
had "failed, or threatened to fail, to fulfill, or acknowledge
completely [its] insuring obligations to pay in full Sonat's
legal liabilities"; (2) that there was an actual and
justiciable controversy as to IMI's obligations; (3) that LMI
had breached its insuring obligations to Sonat and was

obligated to pay Sonat “all direct, indirect, consequential,
1110698 and 1110769

incidental, special, compensatory and other damages resulting

 

from" the breaches of contract; (4) that LMI's conduct
effected a waiver of its right "to enforce any contractual
obligation, limitation, exclusion, or other provisions running
in [its] favor" and Sonat was entitled to a judicial
Ueelaralion Ly Ulal effects 15) Wiel EME had breached ite
contracts of insurance by "disclosing confidences of Sonat and
confidential settlement communications of Sonat in violation
of [its] contractual duties to act with good faith and with
reasonable care and pridence with regard to [ite] inanred,™
thereby waiving LMI's “ability to enforce any contractual
obligation, limitation, exclusion, or other provision running
in [its] favor," entitling Sonat to a judicial declaration to
that effect; and (6) that LMI's conduct represented an
anticipatory breach of contract entitling Sonat to damages.

In its concluding “prayer for relief," Sonat demanded a

 

judgment declaring that LMI was "obligated to pay or reimburse
in full Sonat's cost and expenses for investigation and
defense of the environmental and tort actions and to pay or

reimburse in full Sonat's legal liabilities in connection with

said environmental and tort actions" and to pay an award for

10
1110698 and 1110769
"compensatory damages in an ancunt or amounts to be determined
by the trier of fact at trial, and attorneys’ fees and costs."

Because of the size and complexity of the case, the
parties aqreed that the trial should be conducted in phases.
The trial court entered an order on October 25, 2002, that the
(adel be cumducLed 1 pases because IL would nul be pussible
to try the issues related to all the sites involved in Sonat's
complaint at one trial. The parties proposed to the trial
court that two sites be chosen for the initial phase of the
frial, ane chosen by each party. Sonat chase the compressor
station located in Tarrant, and LMI chose the compressor
station Locatea in Kerorm.

IM filed several sunmary-judgment motions in Phase I.
In one of its motions, IMI argued that the Tarrant and Reform
compressor-station sites were separate "occurrences" under the
majority of policies, which limited coverage to occurrences at
a single-premises location. LMI also argued that no costs at
either site would implicate the attachment points of the
umbrella and excess policies. IMI also moved for a summary
judgment on the ground that the policies do not provide

coverage for liability arising out of damage to Sonat's own

nu
1110698 and 1110769
property. Additionally, LMI argued that the remediation costs
had been voluntarily incurred by Sonat and were not
recoverable without third-party compulsion. The trial court
concluded that there were genuine issues of material fact
remaining and denied the motions.

AL Ute Cluse uf Lie evidence in Phase I, Lie Lidal court
submitted special interrogatories to the jury, which the jury
marked as indicated below:

INTERROGATORIES: You are hereby directed to
answer the following Questions after you have fully
considered all the evidence relating ta your answers

and the applicable rules of law as explained to you
by the Court:

 

Question 1: Did Sonat reasonably satisfy you by
the evidence af the existence of each nf the

following insurance policies?

“voLicy No. volacy verioa
. cu 1887 1952-65 _X Yes __No

. K 11477 1985-68 —X Yes __No

2 cu 10353 1958-71 TE Yes No
K 23900 1971-71 —X Yes __No

1K 24880 1971-72 ie Yes To

: K 25800 1972-75 Tx ves No
uct 1330 1975-76 Tr veo “ne
ua 1370 1976-77 Tc ves Two

: VIL 1680 1977-78 Tx ves No

 

"If your answer to all parts of this Question(]

2
1110698 and 1110769

is 'No,' stop, have the foreperson sign at the end
of this verdict form and Notify the Court.

If your answer to any part of this Question is
"Yes," proceed to Question No.

 

OCCURRENCE:

"Question 2: (A) Did Sonat reasonably satisfy
you that there was an ‘occurrence’ under the
iusurauce policies in force Cxum 1962 uulil 19727

"An occurrence is defined in those policies as
follows:

“tyne term “vccurrence” wnenever usea nerein
shall mean an accident or a happening, event or a
continuous or repeated exposure to conditions which
reanits nnexpectadly and nnintentianally as applied
to the Assured seeking indemnity hereunder, in ...
property damage ... during the policy period. All
such exposures to substantially the same general
conditions existing at or emanating trom one
premises location shall be deemed one occurrence.’

see Policy Numbere cl 1A77; K 11477 and cit
10353

 

X_ Yes No

"(B) Did Sonat reasonably satisfy you that there
was an ‘occurrence’ under the insurance policies in
effect from 1971 until 1978?

"An occurrence for these policies means as
follows:

"tthe word Yocourrence" shall be underotood to
mean "one happening or series of happenings arising
out of or caused by one event taking place during
the term of this contract."'

B
1110698 and 1110769

"See Policy Nos. K 23900; K 24880; K 25800; UGL
1330; UHL 1370; UJH 1680

 

"I£ your answers to all of the parts of this
Question are 'No,' stop, have the foreperson sign at
the end of this verdict form and Notify the Court.

"If your answer to any part of this Question is
proceed Lu Question No. 3.

 

tres,
LATE NOTICE:

‘Question 3:

(A) Was Sonat's Notice to IMI of any occurrence
at the Tarrant Compression Station late?

 

Yes X_ No

(8) Was Sonat's Notice to LMI of any occurrence
at the Kerorm Compressor station Late?

 

Yes X_No

"If your answer to either Question 3(A) or 3(B)
is "Yes," please proceed to Question 4. If your
answer to both Questions 3(A) and 3(B) is ‘No,’
Please proceed to Question >.

 

‘WAIVER

‘Question 5: Did LMI reasonably satisfy you by
the evidence that Sonat waived its claim?

 

Yes X_ No

"IE your answer to this Question is "Yes," stop,
have the foreperson sign at the end of the verdict

rT)
1110698 and 1110769

rorm, ana notiry tne vourt. if your answer to tnis
Question is 'No,' proceed to Question 6.

INIIMRER /OCCHRRENCE (8!

"Question 6: Did Sonat reasonably satisfy you by
the evidence that a sincle occurrence caused the
property damage|) at Yarrant Compressor station ana
Reform Compressor Station?

 

x Yes No

‘Question 7

(A) Are you reasonably satisfied from the
evidence that there wae damage to property owned by
anyone other than Sonat at the Tarrant Compressor
Station?

 

X_ Yes No

"(B) Are you reasonably satisfied from the
evidence that there waco damage to property owned by
anyone other than Sonat the Reform Compressor
Station?

 

X_ Yes No

"IE your answer to both Questions 7(A) and 7(B)
io to, otop, have the foropereon oign at the end
of the verdict form, and notify the Court. If your
answer to either Question 7(A) or 7(B) is 'Yes,*
Proceed to Question 8.

TRIGGER:

 

‘Question 8

"(A) When did any property damage begin at
Tarrant Compressor Station?

wpate __1997

15
1110698 and 1110769

“(s) wnen aia any property damage begin at tne
Reform Compressor Station?

nate 1957

"(C) When did the property damage at the Tarrant
Compressor Station end?

Date __1988

 

"(D) When Aid the property damage at the Reform
Compressor Station end?

"Date __1988
IAS DAMACES:
‘Question 9
(A) Were the amounts paid by Sonat at the

Tarrant Compressor Station incurred because Sonat
was legally obligated to pay them as damages?

 

X_ Yes __ No

"(B) Were the amounts paid by Sonat at the
Reform Compressor Station incurred because Sonat was
legally obligated to pay =hem as damages?

 

 

x Yeo No

"If your answer to both Questions 9(A) and 9(B)
is 'No,' stop, have the foreperson sign at the end
of the verdict form, and notify the Court. If your
auswer Lo citer Question 9(A) ur 9(B) is "Yes,"
please proceed to Question 10.

EXPECTED AND INTENDED:
"Question 10:

7 (A) bo you CLud Wat Sonal expected ur intended

16
1110698 and 1110769

011 contamination at tne ‘warrant compressor
Station?

 

Yes Xx No

"(B) Do you find that Sonat expected or intended
soil contamination at the Reform Compressor Station?

 

'___ Yes No

"TF your aneuar to hath Qnestians 1004) and
10(B) is 'Yes,' stop, have the foreperson sign at
the end of the verdict form, and notify the Court.
If your answer to either Question 10(A) or 10(B) is
'No,' please proceed to Question 11.

 

BREACH OF CONTRAC’

 

‘Question 11: Did LMI breach the contracts?

 

X_ Yes No

"r£ your anower to thie Queotion ic 'No,! have
the foreperson sign at the end of this verdict form
and notify the Court. If your answer to this
Question is 'Yes,' then what is the date when the
breach occurred?

"Month Nov Day_13__ Year 1995
'QUANTUM/COSTS:
"Question 12: Please state the total amount, if
any, that Sonat is entitled to recover as a result
LL PCB CuuLawinalion al Uke Tazraul Compressor

Station Site.

xe Million Three Hundred Ninety Two Thousané
Nine Hundred Fifty Eight and 87/1

($4,392, 958.87)

vv
1110698 and 1110769
“yuestion 13: ¥lease state tne total amount, ir
any, that Sonat is entitled to recover as a result

of PCB Contamination at the Reform Compressor
Station Site

‘Five Hundred Twelve Thousand Eight Hundred
Eighty Four and 57/100

($512, 884.57)
ATTACHMENT POTTS:
Question 14: Are policies CU 1887 (in effect

between 1962-65), K 11477 (in effect between 1965-

68), and CU 10353 (in effect between 1968-71),

exesee of $1,050,000.00 in limite of underlying

insurance or $50,000.00 in underlying insurance?
"__ $1,050,000.00  _x_ $50,000"

Based on the jury's answers to the interrogatories, the
txial court entered an order making a pro rata allocation of
the loss based on each policy year's share of the loss. The
trial court determined that LMI owed Sonat $974,277. The
trial court purported to make its order final pursuant to Rule
54(b), Ala. R. Civ. P. LMI appealed, and this Court concluded
that because there was no adjudication of any single claim in
Sunal"s Complaint, Ue Lidel court lad impeoperly cezticied
the judgment as final. Certain Underwriters of Lloyd's,
London v. Southern Natural Gas Co., 939 So. 2d 21 (Ala. 2006).

18
1110698 and 1110769

subsequentiy, tne parties proceeded to rnase 11 of tne
case, which involved the remaining 11 compressor stations
where PCB had been found and remediated. The LMI excess-
liability policies were the sare policies involved in Phase I.

Sonat filed a motion for a summary judgment in Phase IT
fn the grannd that there was nn gannine taane af material fant

with respect to Sonat's unitary-pipeline operation and that

 

the PCB-cleanup project constituted a single occurrence under
the LMI policies based on the jury's findings in Phase I of
the case. The trial court entered the following order:

"This matter is before the court on [Sonat's]
motion for summary judgment on the following:

Insurance Related Findings.

 

"(LMI] concedes the following:

 

"(1) Phase I established that LMI
insurance policies exist;

 

(2) Phase I established (erroneously)
the attachment points of the LMI policies;

 

(3) Phase I established (erroneously)
Wal Sonal did Hol waive ils claim undez
the LMI policies.

[LMI1 contests [Sonat's] motion of the
remaining issues.

This Court finds that the jury made factual
Uelerminalious wich are bindluy in Phase IZ un Lhe

19
1110698 and 1110769

 

Tollowing:

(4) The PCB Remediation Program

constituted an torenrrence! under the
policies;

"(5) The PCB Remediation Expenses
incurred by [Sonat] vere recoverapie;

"(6) [Sonat] provided timely notice to
IMT af the PCR Contaninatian isane

The Court finds that there is a jury issue
whether LMI breached the contracts with [Sonat].

2. Single Occurrence.
"[LMI] contends that there was a common cause

and, therefore, each site is distinct and separate.
However, the trial in Phase I was for two

representative sites. The issue presented was
whether Pydraul was the common cause of the
contamination in the pipeline oyetem. The jury

decided it was. Therefore, this court finds that
the jury determination that there was a single
occurrence is binding on che Phase II trial.

  

 

"Therefore, it is Ordered as follow:
1. The LMI inourance policice exicty

2. The attachment points are established;

3. Sonat did not waive its claim;

4. The Remediation Program was an ‘occurrence’;
‘5. The Remediation Expenses are recoverable:
[Sonat] provided timely notice; and

The PCR Cleanup was a Sluyle vecurcenee.

 

20
1110698 and 1110769

vyne motion ror sunmary jJuagment is aeniea
except as provided herein.

At the close of the evidence in Phase TT, the trial conrt
submitted interrogatories for the jury to answer, which the
jury answerea as inaicatea:

"Question 1:

‘Are you reasonably satisfied from the evidence
that, prior to the PCB remediation at the sites,
there was damage to the property of a third party or
an imminent threat to third party property,

{noluding groundwater and eurface water, at the
following compressor stations?

 

"DeArmanville Yes XL No
"Ellerslie _% Yes No
"BImore KL. veo Ne
"Enterprise __ Yes XL No
"Gallion _& Yes No
"Louisville _X Yes __ No
"McConnells yes _X_ No
"Ocmulgee _& Yes _—_ No

wad A res we
Rankin __ Yes XL No
"Thomaston Yes XL No

If your answer to this Question as to all
Compressuz Station sites 1s "Nu," slop, have Uke

2
1110698 and 1110769

Toreperson sign at tne end or tne verdict rorm,
notify the Court.

"Tf your answer te this Qnestion as to any
Compressor Station Site is 'Yes,' please proceed to
Question 2.

wyuestion 2.
"Are you reasonably satisfied that [Sonat]

neither expected nor intended property damage at the
following Compressor Station Sites?

 

"Dearmanville __ Wo
ELlorelio __ wo
"Elmore _X Yes __ No
Enterprise XK ves __ No
"Galion _X Yes __ wo
Louisville x Yes __ wo
"wcconnells _X Yes __ No
*ocmulgee _& Yes __ Wo
lonward i eo __ wo
"Rankin _X Yes wo
Thomaston _X Yes No

"If your answer as to all Compressor Station
Sites is 'No,' stop, have the foreperson sign at the
end of the verdict form, notifv the Court.

"If your answer as to any Compressor Station
Site is 'Yes," please proceed to Question 3.

22
1110698 and 1110769
“yuestion 3

"Are you reasonably satisfied that LMI breached
its contracts with (Sonat?

 

X_ Yes No

“ir you answered "No to uestion 3, stop, nave
the foreperson sign at the end of the verdict form,
and notify the Court.

If you answered 'Yes' to Question 3, what is
the date when the breach occurred?

"Month November Day 13. Year 1995

"If you answer 'Yes' to Question, 3, then
proceed to Question 4.

‘Question 4.

"Please state the tctal amount, if any, that
Sonat io ontitled to recover a0 a rcoult of PCB
Contamination at the DeArmanville, Alabama
Compressor Station Site:

Zero DOLLARS

($0.00)

Please state the tctal amount, if any, that
Sonat is entitled to recover as a result of PCB
Contamination at the Elmore, Alabama Compressor
Station Site:

‘Two Hundred One Thousand Nine Hundred Forty Six
and 36/100 DOLLARS

” ($201,946.36)

Please state the tctal amount, if any, that
Sunt ls entitled Ly recover as a sesull Of PCB

23
1110698 and 1110769

Contamination at the Gallion, Alabama compressor
Station Site:

 

a Hundred Righty Two Thousand Five Hundred

Eifty Four and 63/100 DOLIARS
” (582,554.63)

Please state the tctal amount, if any, that
Sonat is entitled to recover as a result of PCB
Contaminatian at the MeCannells, Alahama Comprasenr
Station Site:

Zero DOLLARS

"Please state the tctal amount, if any, that
Sonat is entitled to recover as a result of PCB
Contamination at the Ellerslie, Georgia Compressor
Station Site:

 

Onc Hundred Gixty Two Thousand Bight Hundsod

Twenty Eight and 69/100 DOLLARS
” ($162,828.69)

Please state the tctal amount, if any, that
Sonat is entitled to recover as a result of PCB
Contamination at the Ocmslgec, Ccorgia Compressor
Station Site:

"Three Hundred Ninety Four Thousand One Hundred
Six and 95/100 DOLLARS

(9394, 106.95)
Please state the tctal amount, if anv, that
Sonat is entitled to recover as a result of PCB

Contamination at the Thoraston, Georgia Compressor
Station Site:

24
1110698 and 1110769
Zero VULLAKS
($0.00)

Please state the tctal amount, if any, that
Sonat is entitled to recover as a result of PCB
Contamination at the Enterprise, Mississippi
Compressor Station site:

Zero DOLLARS
(30.00)
"Please state the tctal amount, if any, that
Sonat is entitled to recover as a result of PCB

Contamination at the Louieville, Mieeicoippi
Compressor Station Site:

‘Six Hundred Thirty Nine Thousand Sixty Three
and 237100 DOLLARS

" ($639,063.23)

Please state the tctal amount, if any, that
Sonat is entitled to recover as a result of PCB
Contamination at the Onward, Mississippi Compressor
Station Site:

"Four Hundred Twenty Two Thousand Three Hundred
ive ona 71/100

($422,305.74)

Please state the total amount , if any, that
Sunal is entitled Lu secover ao @ ‘resull Of PCB
Contamination at the Rank:n, Mississippi Compressor
Station Site:

"Zero DOLLARS

(30.00)

25
1110698 and 1110769
“yuestion 3.

“What is the amount of interest that [Sonat] is
entitled to on its damages?

Two Million Four Hundred Thirty Two One Hundred
Ten and 40/100 DOLLARS

(92,432,110. 40)

 

Raced nn the jury's anawers ta the aperial
interrogatories, the trial court entered an order finding
that, based on its prior orders and answers to the special
interrogatories from Phase I and Phase II, (1) the PCB
remediation program constituted an "occurrence" as defined in
the policies; (2) the attachment point of the policies for
LMI" cxceos coverage was $50,000, (3) fonat was legally
obligated to pay for the remediation program and, therefore,
Sonat had incurred damage; and (4) the PCB-remediation program
constituted a single occurrence under the policies. The trial
court concluded that LMI had breached its contracts with
Sonat. The court divided the total damages awards from Phase
To qud Phase I ou a piu tala basis aud cuueluded Ula LMT owed,
Sonat $2,377,962.45 in damages in Phase II. The court
purported to certify the order as final pursuant to Rule

54(b), Ala. R. Civ. PL

26
1110698 and 1110769

Lm appeaiea. Un vecemper 30, 2009, this Court conc1uaea
that the order certified pursuant to Rule 54(b) was not a
final judgment and, therefore, was not appealable because the
issue of the mercury contamination was still before the trial
court and the same policies issued by IMI were involved in
Sonatte allegatians that IMT had hraachad ite rantracte in
refusing to pay for the cleanup of the PCB-contaminated sites
and the sites contaminated with mercury from the mercury-
metering stations. Certain Underwriters at Llovds, London v.
Southern Natural Gas Co., 41 So. 3d 56 (Ala. 2009).
Accordingly, this Court dismissed the appeal as not being from
@ final judgment.

The parties proceeded to Phase III regarding the sites
contaminated with mercury, Sonat's cleanup of the mercury-
metering stations, and Sonat's claims that the umbrella and
excess-liability policies issued by IMI provided coverage for
the environmental cleanup. Both Sonat and LMI moved for a
Summary Judyuent. Ou Febiucry 8, 2022, Une etal cout
entered an order, denying both parties" motions. The parties
proceeded with additional discovery.

On September 9, 2011, LMI filed a motion in limine to

2
1110698 and 1110769
exclude 171 mercury-contaminatea sites that sonat allegealy
had failed to disclose in accordance with a prior discovery
order of the trial court in which Sonat had identified 737
mercury-contaminated sites. LMI also sought to exclude 59
sites (of the 737 disclosed sites) because Sonat allegedly had
Failed te produce dacnments ar reparts af the work performed
at those sites. LMI also argued that Sonat should not be
allowed to present aggregate costs of its mercury remediation.
IMI argued that evidence of aggregate costs without site-
specific damage figures might confuse the jury because some of
the costs related to Sonat's investigation and remediation of
ito own property and oites, which wore not damaged by moroury
contamination. On September 19, 2011, the trial court held a
hearing on the motion and subsequently granted the motion.
That same day, LMI moved for a partial summary judgment,
arguing:
"In prior trial phases of this case, the Court
required Sonat to prove the value of the damage and
AUS iemedialion efforts al each compressuz stallun
site. This necessarily required Sonat to prove, not
only that each site sustained 'property damage, ' but
also that the amount expended at each location is
covered ‘as damages' under the terms of the LMI
policies. Both Phase I and Phase II juries were

asked to identify the dollar amount of the covered
expendiluzes al each remediation site. This

28
1110698 and 1110769

requirea tne juries to ‘state tne total amount, ir
any, that Sonat is entitled to recover as a result
of PCB contamination at' each individual station.
Sonat raised no objection to this requirement
Because some of the sites were owned by Sonat, no
amount was awarded to Sonat for contamination at
those sites.

In Phase III discovery, Sonat failed to produce
any evidence demonstrating the amount spent on
marenry-ralated activities at any single lncatian
Additionally, in its proposed jury interrogatories,
Sonat revealed that it did not intend to prove the
costs expended at each individual mercury location.
Specifically, the proposed jury interrogatories
cubmitted by Sonat, unlike the interrogatories weed
in the earlier phases, do not ask the jury to
identify the covered damages at each site.
Instead, Sonat proposed only that the jury identify
a ‘total amount’ of covered damages at all locations
‘along its pipeline operations’ in a single
interrogatory. Sonat admitted in open court on
Soptomber 19, 2011, that io hao no ability to prove
amounts spent at any one of the 737 mercury sites
that Sonat proposed were at issue in the Phase IIT
trial.

"In open court on September 19, 2011, the Court
geanted LMI's Motion in Limine to Preclude Certain
Evidence Regarding Mercury Expenditures. In their
motion in limine, LMI argued that Sonat should not
be allowed to present invoices and summaries to the
Phase III jury because those invoices and summaries
are undifferentiated as to any of the sites at issue
du Phase IIT, On Lue basis Uf Ulal motion aud Lu
light of Sonat's admitted inability to present any
evidence of costs or damages at individual Phase III
sites, IMI hereby moves for summary judament as to
all mercury sites placed at issue in Phase III
and/or Sonat's complaint in this action.

In gesponse Lo LMZ"S suiwary~Judymenl wollun, Sonal

29
1110698 and 1110769
arguea that aamages do not nave to be proven to a matnematical
certainty. Sonat also argued that other jurisdictions have
allowed proof of aggregate damages.

The trial court granted LMI's summary-judgment motion.
on January 24, 2012, the trial court entered a final judgment
hhased an the prior triala in Phase T and Phase TT af the case.
and based on its partial summary judgment in favor of LMI in
Phase III. LMI appeals; Sonat cross-appeals.

LMI's Appeal (No. 1110698)
LMI argues (1) that environmental contamination occurring

at different geographical locations and at different times

 

conotituted coparate Mocourrences") (2) that none of the
policies provide coverage for damage to Sonat's own property?
(3) that the trial court erred in its instruction to the jury
regarding imminent threat; (4) that Sonat's cost for a

voluntary remediation of environmental contamination is not

 

recoverable because Sonat neve: became "legally obligated" to
vay any sums as “Uamayes7 (9) Ulal Ue Ural court erred in
instructing the jury regarding Sonat's compliance with
environmental regulations; (6) that Sonat failed to present

substantial evidence that LMI breached its contracts because

30
1110698 and 1110769
um. reservea its rights to challenge its 1iapiiity; (7) tnat
Sonat failed to present substantial evidence that LMI breached
its contracts when Sonat had expressly stated that LMI could
close its files on the claims; (8) that the umbrella and
excess-liability policies involved had not attached because
the damages did nat exceed the limite nf the nndarlying
insurance; and (9) that the trial court erred in imposing in
Phase II findings by the jury in Phase I.

First, we will address IMI's argument that the trial
court erred in applying the jury's findings in Phase I to the
jury in Phase IT. LMI complains that the trial court
improperly applicd the jury!o findingo from Phase I -~ that
the PCB contamination was a single occurrence, that the
remediation program was the cause of the costs Sonat incurred
as damages, and that Sonat gave timely notice of its
remediation claim related to the PCB contamination. In
support of its argument, LMI cites Black v. Comer, 920 So. 2d
1083, 1089-30 (Ala. 2005), fur Le yeneral prupusition What
the grant of an offensive motion for a summary judgment is
proper only when a plaintiff conclusively proves every element

of its claim. LMI then goes on to argue that the only issues

3
1110698 and 1110769
berore tne jury in rhase 1 irvolvea tne varrant ana kerorm
compressor sites and that the Phase I jury was not presented
with any evidence regarding the 11 compressor sites involved
in Phase II.

IMI also cites Beacon Theatres, Inc. v. Westover, 359
HS. 800, 81-11 (1959), for the propnsitinn that applying the
finding from Phase I to Phase II effectively denied LMI its
right to trial by jury. Although not noted by LMI, Beacon
concerned legal and equitable issues brought in the same
action where there were common issues of fact between the two
claims so that a court's resolution of an issue would
forcelooe rolitigation of that icouc before a jury under the
doctrine of res judicata or collateral estoppel, and the court
in Beacon held that the legal claims must be tried first to
ensure that the right to a jury trial of legal issues is not
lost.

Rule 42(b), Ala. R. Civ.

 

» provides:

wrhe uutl, in Curtiezanve Uf convenience, or Lo
avoid prejudice, or when separate trials will be
conducive to expedition and economy, may order a
separate trial of any claim, cross-claim,
counterclaim, or third-party claim, or of any
separate issue or of any number of claims, cross-
claims, counterclaims, third-party claims, or
dssues, always presezviuy invivlale We right of

32.
1110698 and 1110769

trial py jury as declarea py article 1, section 11
of the Alabama Constitution of 1901."

mtrnle 42(b) allows the court te order a separate trial

of any claim.... Separate trials usually will result in one

 

juagment .

 

vavis v. Hanson aggregates soutneast, inc.,
952 So. 2d 330, 339 (Ala. 2006) (quoting 9 Charles Alan Wright
& Arthur R. Miller, Federal Practice and Procedure: Civil 2d
§ 2387 (1995)). In short, Rule 42 authorizes the trial court
te bifureate triale in furthorance of convenience or to avoid
prejudice or when separate trials will be conducive to
expedition and econony.

Here, the parties agreed that it would be inefficient to
try the issues related to all 13 compressor-station sites
contaminated with PCB at once, and they therefore chose 2
sites to try in Phase I, The trial court cannot be put in

error for doing what the partico had agreed to do. Walker

 

Southern Trucking Corp., 283 Ala. 551, 219 So. 2d 379 (1968).
Also, we note that nothing in LMI's brief indicates that LMT
objected to the interrogatories posed to the jury in Phase I.
Failure to timely object to a special interroaatorv waives the
objection. MWetterhan v. Vesta Ins. Group, Inc., 844 So. 2d

968 (Ala. 2002); Nusfulk Su. Ry. vs BraUley, 772 Su. 2d 1147

33
1110698 and 1110769
(ala. 2000). Furthermore, it is not tne auty or tne appellate
court to search the record for evidence to support an
appellant's contention of error. Roberts v. NASCO Equip. Co.,
986 So. 2d 379 (Ala. 2007).

LMI now complains that it should not have been bound in
Phase TT hy the anawars ta the interragatarias given hy the
jury in Phase I of the trial. However, the factual
determinations in Phase I should not be reexamined by a second
or subsequent jury because to do so would lead to the
unacceptable risk that the jury at each phase would consider
evidence differently with possibly inconsistent results.
Baced on the facte and argumento before uo, wo cannot say that
the trial court erred in applying the facts as found in Phase
I to the jury in Phase II. We recognize that following Phase
I IMI objected to the trial court's application of the jury's
findings in Phase I to the Phase II jury. However, LMI had
agreed to a multiphased trial, and it had agreed to try the
issues related lu two compressur-stalion sites ay
representative. LMI apparently agreed to, or at least failed
to object to, the questions asked of the jury in Phase I.

Accordingly, we cannot say tha: the trial court erred in this

 

34
1110698 and 1110769
regara.

IMI argues that PCB contanination occurring at different
compressor stations at different times and by different means
of contamination from PCBs amounted to separate "occurrences"
under the terms of the policies. “Where an insurance policy

fafines cartain wards ar phrases a court mist defer ta the

 

Paul,

 

definition provided by the policy." $ re & Marine

Ins. Co. v. Christiansen Marine, Inc., 893 So. 2d 1124, 1136
(Ala. 2004). The majority of the policies at issue here

define an * " as follows:

 

courrenc

 

"An accident or a happening, event or a
continuous or repeated exposure to conditions which
rooulto uncxpectedly and unintentionally ac applied
to the Assured seeking indemnity hereunder, in ...
property damage ... during the policy period. All
such exposures to substantially the same general
conditions existing at or emanating from one
premises location shall be deemed one occurrence."

The other applicable policice define an "occurrence" act
"[O]ne happening or series of happenings arising out

of or caused by one event taking place during the
term of this contract.

 

IMI argues that the trial court should have entered a
judament as a matter of law based on the unambiquous
definitions of an “occurrence” in the policies. However, in

ALS Uriyinal Liles Lu Uuds appeal, LMT dues nul address Lhe

35
1110698 and 1110769

gerinitions containea in tne pelicies. instead, uM relies on
caselaw from Alabama and other jurisdictions interpreting an
"occurrence" and focuses its argument on the cause of the
"occurrence."

It is well settled that,

"[w)hen a trial court Ge [faced] with a contract
issue, it is important for the trial court to
determine as soon as practicable the ‘threshold
issue’ whether the contract is ambiguous. If the
trial court determines that there is no ambiguity,
it muet 'Wdotermine the force and offect of the
terms of the contract as a matter of law.""
Cherokee Farms, Inc. [v. Fireman's Fund Ins. Co.l,
526 So. 2d [871,] 873 [(Ala, 1988)], quoting
Wigington ‘v. Hill*Soberq Co., 396 So. 2d 97, 98
(Ala. 1981). However, if the trial court finds the
contract to be ambiguous, it ‘must employ
cotabliched rulceo of contract conctruction to
resolve the ambiguity.’ Voyager Life Ins. Co. v.
Whitson, 703 So. 2d 944, 948 (Ala. 1997). If the
application of such rules is not sufficient to
resolve the ambiguity, factual issues arise:

 

 

If one must go beyond the four
cornero of the agreement in conotruing an
ambiguous agreement, the surrounding
circumstances, including the practical
construction put on the language of the
agreement by the parties to the agreement,
aie cuntrelliny in aesulving Lue
ambiguity.’

"Id. at 949, Where factual issues arise, the
resolution of the ambiguity becomes a task for the
jury. McDonald v. U.S. De Casting & Dev. Co., 585
So. 2d 853 (Ala. 1991).

36
1110698 and 1110769
alta Lire ins. Corp. v. yonnson, 822 0. 2a 400, 404-09 (Ala.
2001).

Without a discussion from LMI of the specific definitions
in the policies, we cannot say that the trial court erred in
concluding that the policies were ambiguous and that the
Interpretation af the dafinitinns af Tacenrrence™ in the
policies should have been submitted to the jury.

This Court has addressed in other cases the term
"occurrence" and whether there had been more than one

occurrence. In United States Fire Insurance Co. Safeco

 

Insurance Co., 444 So. 2d 844, 846 (Ala. 1983), the insurance

policy provided that, "[£]or the puspoos of determining the

 

limit of the company's liab:lity, all bodily injury and
property damage arising out of continuous or repeated exposure
to substantially the same general conditions shall be
considered as arising out of one occurrence." When called on
to look at the definition in that policy, this Court
Revuyiized Ula insurance cuuLiacls, Like auy uLie: CunLLacly
must be construed to give effect to the intent of the parties

and that, if the terms of the contract are clear and

unambiguous, there is no need for judicial construction. The

7
1110698 and 1110769
excess insurer in sareco naa arguea tnat tne terms
"substantially" and "general" were ambiguous. The Court did
not find those terms to be ambiguous and construed them in
accordance with their common meaning and import.

In Safeco, water had leaked through the roof of a
Initding, damaging the marchandiae af the lasses arenpying the
building. Subsequently, the lessee incurred additional damage
by rainfall when the roofing crew repairing the roof failed to
effectively cover a portion of the roof on which it was
working. The excess insurer argued that these instances were
two occurrences because some of the damage resulted from
negligent acte of the roofing crew. The Court determined
that the issue was whether the definition of the term
"occurrence" in the policy involved the question whether
“substantially the same general conditions," 444 So. 2d at
846, existed at the time of the damage. The Court recognized
that the definition of "occurrence" in the policy contemplated
Ula one ULcuLLeHLY may Mave MULLIple aud disparale impacts on
individuals and that injuries may extend over time. The Court
went on to address the question whether the damage stemmed

from one proximate cause and concluded that there was a

38
1110698 and 1110769
separate intervening cause pecause tne initial water leaking
through cracks in a roof and the subsequent negligent act of
a roofing crew in failing to effectively cover a portion of
the roof so that further damzge resulted during additional
rains were two separate occurrences. "[I]f the cause is
interrupted ar replaced hy annther eanae, the chain nf

causation is broken and more than one accident or occurrence

 

has taken place." Safeco, 444 So. 2d at 847. The Court
recognized that a majority of courts have recognized the
"cause" theory rather than looking to the number of claimants
or injuries.‘ In short, a separate, intervening cause can
break the chain of causation 20 that there io more than one
"occurrence."

In Home Indemnity Co. v. Anders, 459 So. 2d 836 (Ala.
1984), the City of Mobile sought a judgment declaring its
liability under § 11-93-2, Ala. Code 1975 (limiting recovery
of damages against governmental entities), to numerous flood
victims why lad pending ayainst Une city actions seeking
compensation for property damage. Because there was no

‘the minority view "focuses on the effect of the insured's
action and considers each event or each injury a separate
eccurrence-" Quneze Ine. Co. vs Salmoneon, 266 .C. 936, 339,
622 8.B.2d 525, 526 (2005).

39
1110698 and 1110769
gerinition or “occurrence” in tne statute, tnis Court statea:

We recently had occasion to define the phrase
tone ocenrrence.! [Inited States Fire Insurance Co

Safeco Insurance Co., 444 So. 2d 844 (Ala. 1983).
We concluded that 'as long as the injuries stem from
one proximate cause there is a single occurrence.’
dd. at 8a» (quoting Appalachian Ins. Co. v. Lipert
Mut. Ins. Co., 676 F.2d 56, 61 (3rd Cir. 1982)).
While in Safeco we were attempting to give effect to
the intentian af the parties ta the inanrance
contract and here we are trying to give effect to
the intention of the Legislature, we find that
difference to be of no consequence, since in both
situations the drafting parties were attempting to
accomplich the camo objective. They cought to limit
liability by limiting recoveries for injuries that
result from a common source.

 

 

 

459 So. 2d at 843.

In St. Paul Fire & Marine Insurance Co. v. Christiansen

 

Marine, Inc., 893 So. 2d 1124 (Ala. 2004), this Court was
asked to determine the deductible applicable to a towing
company's claims against the buyer of seven barges where one
barge began taking on water caucing the tow to break apart.
The marine-insurance policy did not define "accident" or
"occurrence" so this Court looked to Black's Law Dictionary to
define those terms and to Sefeco, supra, for guidance in
determinina whether there had been one accident, event. or
continuing condition that resulted in property damage that was

nelle: expected uur luLended by Lue barge umes. The CouZL

40
1110698 and 1110769

statea:

"In this case, [the barge owner's] barges were
not operating separately and were not involved in
separate incidents; they were all bound together and
under the control of the same two tugboats.
Although the exact cause of the loss has not been
identified, the record re-iects that one or more or
[the barge owner's] barges took on water while being
towed and that this event caused the entire tow to
break apart. (The fowing company] snstained damage
as a result. The fact that all seven barges were
involved in the incident giving rise to [the towing
company's] damage does not establish that there were
seven ‘occurrences, ' for purposes of calculating the
deductible duc under the policy. Moreover, [the
insurer] has not offered any evidence to establish
that [the towing company's] damage resulted from
more than one proximate cause or that another cause
intervened to break the chain of causation created
by [the towing company's} tow taking on water."

292 60. 2d at 1137,

In the present case, Sonat presented testimony during
Phase I that it operated an integrated pipeline as a part of
which the compressor stations worked in unison to move natural
gas though the pipeline. Sonat presented testimony that
Pydraul was used to lubricate the engines at the compressor
statiuus alld Uual Pydiaul was Une uly material coutaLuiiy
PCBs used at the compressor stations. Sonat presented
testimony that Pydraul had leaked through the seals in the

air-compressor cylinders and had mixed with moisture in the

a
1110698 and 1110769
stream of compressea air anc tnat russ trom tne ryaraul
thereby had seeped into the soil and groundwater.

LMI contends that some of the compressor sites were
contaminated in different ways and that, because the
contamination was caused by different acts or omissions, there
was nn camman chain af cansatian at all the sites and,
therefore, there was more than one occurrence. LMI cites
testimony from Phase II of the trial that indicated that
contamination had occurred at different places at each
compressor station. LMI refers to testimony from Phase II of
the trial, indicating, for exanple, that contamination at one
bite had rcowlted from omploycco! washing rago contaminated
with PCBs or throwing rags contaminated with PCBs into a burn
pit after those rags had been used to lubricate the compressor
stations. We note that the jury in Phase I found that Sonat
proved that there had been an "occurrence" as that term was
defined in the applicable policies and that the jury in Phase
IT was bound by iat Cludiny. The Jury Lu Phase T found Chat
there had been one “occurrence” under the applicable policies.
‘The jury in Phase II answered the questions whether there was

a threat of contamination to a third party's property and

42
1110698 and 1110769
wnetner the rUs contamination was expected or intenaea at tne
remaining 11 compressor stations. Even if we limit our
discussion to evidence presented at Phase II as LMI has done,
IMI still has not shown that there was more than one
occurrence.

The taatimany from Phase TT froma retired Sanat engineer
explains how Pydraul was used in lubricating the compressor

stations:

 

In the utilization of the air compressor in
that system and that storage tank, do you ever have
occasion to have some of the lubricant actually end
up in the air system?

"A: Yes. You're lubricating the walls of a
rooiprocating compressor end thio comprcooor hao got
rings on it just like rings on a car, so with wear
and with time, you're going to get some oil
carryover into the air system. It's just a normal
part of the operation is to get some carryover, just
like you get some oil carryover in the rings of a
piston on a car engine and therefore have to
replenich the oil from tine to time.

 

I may have asked you this, if I have I
apologize. Do you also get water vapor or water
condensate that builds up in the storage or receiver
(awk for Chese al: Compressor systeus?

 

: Especially, with the humidity that we have
here in the south, when vou take air at atmospheric
pressure and compress it, then there's water
squeezed out basically. The air is not capable of
holding as much moisture in a vapor form at two
undred aud Cifly PSE ay LL is al almusphesie

43
1110698 and 1110769

pressure. so yes, you would nave some tree water
that would drop out typically in the air receivers
and it was common practice just to drain that water

nt of that receiver once a day so it didn't take np
space that could be occupied by the compressed air.

 

 

: What do you mean it was common procedures to
arain that water out? explain that ror us.

 

Well, you would have a valve in the bottom
of the air receiver, again, jnat Tike yon wanld have
in the bottom of an air compressor that you went to
Lowe's and picked up today, there's a little drain
cock in the bottom of those tanks and it's to drain
the water off that's going to accumulate in that
eank to keop it from cecupying epace and alco to
keep it from creating a corrosion problem in the
bottom of the vessel. These are steel tanks that
the air was stored in so any liquids that was in
there would over time cause some corrosion problems
if you weren't draining that out on a daily basis.

"or T undorotand thar in the mid to late 1800
that your procedures changed a little bit, but
before that time, was it the practice to remove the
condensate by opening the blowdown valve and letting
it go to the ground?

 

‘Ar Yes. It was typically just water. Like I
aid, occaoionally there would be a little oil in
that that had carried over into the tank, but
essentially, it was water that was being blown out
and it was a routine part of an operator's day is to
go by the tank, the air receivers periodically and
pen Lie valve aid blow iL wall Lieze was uULlLig
but air coming out and close the valve back off."

IMI's own expert testified that all compressors have to
be "blown down" and that doing so is part of the routine

uperation uf Lie compressu:. Sunal's early praclice was Lo

44
1110698 and 1110769
aiscnarge tne condensate plowdown onto the ground. vart or
the air-compressor-station operator's routine is wiping off
the machines and cleaning up the rags used in the blowdown
process. The operator would open the valve and discharge the
condensate, and the water containing Pydraul would go into the
gronnd. ‘The operatar wanld take the rags need in this process
and wash them and then the water they were washed in, which
contained Pydraul, would go into the ground at that location.

Based on the arguments before us, we cannot say that
there was a separate intervening cause. Sonat had cleanup
areas at each site where Pydraul (and the PCBs in that
lubricant) had contaminated the groundwatery that
contamination was caused by the use of Pydraul through a
unitary pipeline, and the manner of operating each compressor
station was the same. In Safeco, the excess insurer was not
liable under its policy for the additional damage to the
lessee that resulted from the intervening cause of the roofing
company's nol covering Ue 200f where Lt was perfurmluy Une
repairs. In the present case, some compressor stations
exhibited PCB at different places. In Safeco, we recognized

that the definition of “occurrence” in that policy

45
1110698 and 1110769
contemplatea that one occurrence may nave multiple ana
disparate impacts on individuals and that injuries may extend
over time. Accordingly, we cannot say that LMI has shown that
the trial court erred in finding that there had been one
"occurrence."

Next, IMT argnes that sane af the palietes provide
coverage for damage to Sonat's own property, including the
PCB-contaminated groundwater on Sonat's property, The
policies bar coverage of “any claim ... brought by the named

Assured for damages to or destruction of its property,” and

 

other applicable policies bar coverage of “property owned by
tho named inoured ...." IMT argues that the policice cxelude
coverage of Sonat's costs to clean up the contaminated
groundwater that had not migrated from Sonat's own property.

In Alabama Plating Co. v. United States Fidelity &
Guaranty Co., 690 So. 2d 331 (Ala. 1996), this Court addressed
the insurer's argument that the costs of performing
euvicoumental remediation ordered by Lie Alabama Departmen Of
Environmental Management are not "damages" under a
comprehensive-general liability ("CGL") policy and that the

“owned-property" exclusion in its CGL policy precluded

46
1110698 and 1110769

coverage ror cleanup or water or soil within tne pounaaries or
an insured's property. We stated:

‘This Court has not previously addressed these
specific issues, and the relevant terms are not
defined in the CGL policies at issue. However, as
noted previously, tne policies in question are
standard-form policies issued nationwide, so the
rulings of courts in other states are of some
omidance. Wa find that as ta each iaane ahve, the
clear majority of courts that have answered the
questions have ruled against the arguments made by
USF & G. Thus, we adopt the majority position on
each issue: environmental remediation costs are
damagee covered by CCL policice, and tho ‘owned
property’ exclusion does not exclude coverage for
the costs of remediating groundwater contamination.
‘These rulings are consistent with prior decisions of
this Court. We have prev-ously refused to narrowly
limit the type of costs covered as damages under a
liability policy. National Union Fire Ins. Co. v.
City of Leode, 630 Go. 24 206 (Als. 1988). Wo have
also held that a landowner's interest in the
groundwater beneath his property is a limited right,
see Martin v. City of Linden, 667 So. 2d 732 (Ala.
1995), not one of ownership.”

 

690 So. 2d at 336-37 (footnotes omitted) .

In support of our holding in Alabama Plating that the
owned-property exclusion does not preclude coverage for the
cools Uf emediaLing yruunlmile: CUnLaminaliony we ciled
numerous cases addressing groundwater spread. In Claussen v
etn rt i a» 754 F, Supp. 1576 (S.D. Ga.

1990), Aetna's insurance policy did not cover claims based

a7
1110698 and 1110769
solely on damage to its insurea’s property. accoraing to
Aetna, the pollution discharge from the property damaged only
the groundwater beneath the :nsured's own land, and Aetna
asserted that under Georgia law a property owner owns all that
is below and above his property. Accordingly, Aetna argued
that the anviranmantal diaastar at the site damaged anly the
insured's own property and that Aetna was not liable. The
Georgia court held that Aetna's argument failed for three
reasons. First, under controlling law, the insured did not own
the groundwater under the insured's land. Thus, the owned-
property exclusion did not bar coverage for any damage to the
groundwater. econd, the toxic dumping damaged not only the
insured's land, but also surrounding land and water. Third,
the EPA had required the insured to clean up the site to
prevent damage to third person's property as well as to the
insured's own property.

In Upiohn Co. v. New Hampshire Insurance Co., 178 Mich.

 

App. 706, 444 N.W.20 613 (1989), rev'd UH ULL grounds, 436
Mich. 197, 476 N.W.2d 392 (1991), the insured discovered
contamination and cleaned up its own subsoil as contaminants

Were slowly making their way into the groundwater. The Court

48
1110698 and 1110769
or Appeais or michigan notea:
"(We agree with the trial court that governmental
agencies conld have ordered lpjahn ta act and, had
they done so, Upjohn vould have been legally
obligated to pay the cost of cleanup .... We note
that the improper release of toxic wastes may cause
property damage not only to tne actual owner or tne
land, but also the government because of its
independent interest, behind the titles of its
citizens, in all the air and earth (ie, ite
natural resources) within its domain. We believe
that it makes no difference that Upjohn took the
remedial action it did before being ordered to do
so, and, in fact, we believe that such swift
romedial’ action ehould be encouraged, rathor than
discouraged.”
178 Mich. App. at 719-20, 444 N.W.2d at 819 (internal
citations omitted).
In Northorn States Powcr Co. vs Fidelity ¢ Caoualty Co.
of New York, 504 .N.W.2d 240 (Minn. Ct. App. 1993), aff'd, 523
N.W.2d 657 (Minn. 1994), the Court of Appeals of Minnesota
rejected an insurer's argument that certain environmental
cleanup costs were excluded from coverage by an owned-property
exclusion. The insurer argued that it did not have to pay for
aemuval Uf CUuLaminaled sud Crom ils insured"s properly
because no money had been spent to remedy the contamination of

the groundwater but only to excavate and remove contaminated

soil. The court held that "because groundwater pollution has

49
1110698 and 1110769
occurred, tne ‘own property’ exclusion aces not par coverage
for cleanup expenses needed to correct already existing soil
contamination which continues to damage the groundwater." 504
N.W.2d at 246.

This Court in Alabama Plating also cited Patz v. St. Paul
Fire £ Marine Insurance Co, 817 Fo Supp 781 (FN wis
1993), in which the insurer ergued that the owned-property
exclusion did not bar coverage of the costs of preventing
future harm to groundwater or adjacent property that might
arise from contamination that has already taken place, whether
such contamination had occurred on the insured's property or
on the property of others.

In the present case, testimony presented at Phase I and
Phase II showed that the soil and groundwater on Sonat's
property were contaminated with PCBs. Additionally, testimony
from both phases indicated an imminent threat to third
parties’ property based on the levels of PCBs found both in
Ure suLl aud sediment, Ue movement uf FEDS Lu Ute
environment, and the toxic nature of PCBs. Moreover, there
was testimony indicating that the PCB contamination at several

of the compressor stations had already migrated from Sonat's

50
1110698 and 1110769
property.

In conjunction with its argument that the owned-property
exclusion did not provide coverage for remediation of Sonat's
property, LMI argues that the trial court erred in instructing
the jury, over its objection, as follows:

"(W]ith ragard te the awn property qmeation an
insured may recover, notwithstanding the own
property exclusion, where the remediation was the
result of imminent threat of harm to third parties
or third party property."

In Arthur v. Bolen, 41 So, 3d 745, 749 (Ala. 2010), this
Court stated:

"A trial court has broad discretion in
formulating its jury instructions, provided those
inotructions accurately reflect the law and the
facts of the case.’ Pressley v. State, 770 So. 2d
115, 139 (Ala. Crim. App. 1999). Thus, ‘generally
speaking, the standard of review for jury
instructions is abuse of discretion." Pollock v. CCC
Invs. I, LLC, 993 So. 2d 572, 574 (Fla. Dist. Ct.
‘App. 2006) .”

 

This Court has also stated:

"Under Alabama law, '"[a] party is entitled to
proper jury instructions regarding the issues
pieseuled, aid an incursecl uz misleading charge may
be the basis for the granting of a new trial." King
v.W.A. Brown & Sons, Inc., 585 So. 2d 10, 12 (Ala.
1981) (citation omitted). When an objection to a
jury charge has been prorerly preserved for review
on appeal, as this one was, we ‘"look to the
entirety of the [jury] charge to see if there was
feversible wizur,°" gid seversal 1s wassauted unly

51
1110698 and 1110769

 

ne error 18 prejudicial. sing, 989 So. Za at

George H. Lanier Mem'! Hosp. v. Andrews, a9 Sn. 24 AN, ROK
(Ala. 2001).

in the present case, tne trial court‘s instruction is a
correct statement of the law as stated in Alabama Plating: The
owned-property exclusion does not bar coverage for the costs
of remediating groundwater contamination. We recognize, as
did the Court in Alabama Plating, that a landowner'e interest
in the groundwater beneath the landowner's property is a
limited right and not one of ownership. Accordingly, on-site
soil cleanup is not barred by an owned-property exclusion
where there is a threat that the contaminants in the soil on
the insured's property will migrate to groundwater or to the
property of others. Next, IMI argues that Sonat's costs for
ito voluntary remediation of the PCB contamination were not

recoverable under the terms o: the policies. Specifically,

 

LMI argues that Sonat's cleanup costs were not "damages" that
it was legally obligated to pay because the PCB-remediation
project was an internal business decision and not the result
of any compulsory process by a court or a state or federal

agency.

52
1110698 and 1110769
he applicable policies requirea im to

“indemnify the Assured for all sums which the

Assured shall he obligated to pay by reason of the

liability (a) imposed upon the Assured by law, (b)

assumed under contract or agreement by the Named

Assured ... for damages, direct or consequential and

expenses ... on account ot ... vroperty damage ...

used by or arising out of each occurrence happening
anywhere in the world."

IMI does not cite a definition of "damages" in its
policies; instead, it refers to the definition of damages
found in Jenolle Mime March ¢ Charlee W. Camblo, Alabama Law
of Damages § 1.1 (5th ed. 2004): "{A] pecuniary compensation
or indemnity which may be recovered in the courts by any
person who has suffered loss ... through the unlawful act,
omission, or negligence of another." We note that if a word
or phrase is not defined in an insurance policy, then a court
construing the policy should construe the word or phrase
according to the meaning a person of ordinary intelligence
would reasonably give it. Lambert v. Coregis Ins. Co., 950
So. 2d 1156 (Ala. 2006).

In Alabama Plating, 690 So. 2d at 336, besides addressing
the issue whether an owned-property exclusion barred recovery
of the costs to clean up the groundwater, this Court addressed

Uke question wuelue: envizonmenLal-semediation costs wese

53
1110698 and 1110769
“gamages” covered by the ULL policies. ne ULL policies
provided that they covered all sums the insured was "legally
obligated to pay as damages." 690 So. 2d at 333. This Court
adopted the majority position that environmental-remediation
costs were damages the insured was legally obligated to pay.

Th auppart af any halding in Alahama Plating, we cited
numerous cases from other jurisdictions, including Bausch §
Lomb Inc. v. Utica Mutual Insurance Co., 330 Md. 758, 625 A.2d
1021 (1993). In Bausch & Lomb, relevant environmental
statutes imposed strict liability upon the insureds to clean
up their polluted properties. Although the state had not
filed an adminictrative proceeding, it had lioted the
insured's property on a list of hazardous sites and later
conducted an investigation. ‘The insured cleaned up the site
before any action was filed. The Maryland Court took the
position that “response costs, undertaken in the regulatory
context, represented a sum the corporation was legally
Ubligated Lo pay" because Une “Lacit Ulmeat of formal state

intervention was always present." 330 Md. at 780, 625

 

A.2d at 1032.

We also cited Atlantic Wood Industries, Inc. v.

54
1110698 and 1110769
humpernan‘s underwriting Alliance, 198 Ga. App. 903, 398
$.£.2d 541 (1990), in which the term “damages” in the policy
was not being used in its legal and technical sense, and the
court held that it was a ter susceptible of more than one

definition.

 

Clearly there ia a specific, technical dafinitian
for the word ["damages"]: “payments to third person:
when those persons have a legal claim for damages.
[Cit.] If the insurer intended that "damages" have
only this meaning, it should have so indicated in
the policy. The incured vould then have undereteed
that cleanup costs incurred pursuant to government
mandate were not covered, and would have been able
to enter into other insuring agreements. Because
such a limiting definition was not included in the
policy, we must conclude that the parties did not
intend “damages” to have a specific technical
meaning in tho inowrancs policy. thor, they
intended to use its ordinary meaning.

   

 

196 Ga. App. at 505, 396 S.E.2d at 543 (quoting C.D. Spangler
Constr. Co. v. Industrial Crankshaft, Etc. Co., 326N.C. 133,
151, 368 6.8.24 557, S68 (19901).

Although not cited in Alabama Plating, we believe

Weyerhaeuser Co. v. Aetna Casualty & Surety Co., 123 Wash. 2d
891, 874 P.2d 142 (1994), conveys the reason remedial cleanup

beaun prior to aovernmental action or the actual filina of a
lawsuit should be treated the same as cleanup performed as a

gesull of yuverimental action vz Judicial dizectiow. Zu

55
1110698 and 1110769

Wevernaeuser, tne policy provicea coverage wnen tne

 

policyholder's legal obligation to pay was “imposed by law.
The insured argued that its liability was imposed by law by
its liability under pollution statutes and that it did not
need to await the overt threat of suit before cleaning up
pollntinn damage. The Snprame Conrt af Washington recagni zed
that "(i]nsurance coverage in the environmental claims area
may be quite different than in other insurance settings.
Environmental statutes impose liability, often without fault,
on polluters in order to safeguard society in general." 123
Wash. 2d at 909, 874 P.2d at 152. The court stated:

"A number of commentators have oxprcoocd the
concern that the environment will suffer severe harm
if owners have to postpone a cleanup until a clear
third party claim prompts a lawsuit. One recent
text explains that claims for coverage for
environmental cleanup arise in three contexts: the
insured may be held liable for the costs of cleanup
incurred by a third party (typically the federal
government or a state); the insured may incur
cleanup costs pursuant to administrative order,
judicial injunction, or consent decree directing
cleanup; or the insured nay voluntarily undertake
Cleauup, possibly in guticipation of iucurriuy une
of the forms of liability just described. The author
points out that if the three forms of liability were
treated differently for insurance coverage purposes,
the policyholder would have a strong incentive not
to undertake voluntary cleanup which, in turn, would
delay cleanup, exacerbate the degree of
conlaminallvn ald increase Lie ullimale cost of

56
1110698 and 1110769

cleanup. He also observea tnat it would severely
impede the ability of the federal and state
governments to accomplish cleanup at the thousands
of contaminated sites extant. This anthar notes
that most courts (either implicitly or explicitly)
have consequently, and he deems correctly, treated
all three contexts the sane.

 

123 Wash. 2d at 910, 874 P.2d at 910 (footnote omitted). The
court eanelnded that liahilities impnsed hy Taw can reasonahl y

ions taken at hazardous-waste

 

be read to encompass remedial
sites before liability to a third party is fixed.

Sonat presented testimony in Phase I of the case that the
Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.,

required Sonat to report PCB ccntamination to the EPA. Sonat

 

precented tcotimony regarding the goncral way the EPA handled
PCB contamination and remediation programs and testimony that
Sonat was on a list of companies against which the EPA would
pursue enforcement actions. Furthermore, Sonat also presented
evidence of a consent order issued in Mississippi in which the
Mississippi Commission on Environmental Quality had required
Sunal Ly clea up Une cumpiessu: slaliuis luvaled in
Mississippi.

Sonat presented evidence indicating that it had a legal

obligation to remediate the PCB contamination at its

37
1110698 and 1110769
compressor sites, anda we will not limit 1s aamages to tnose
arising out a suit, claim, or action by a third party.
Furthermore, in the present case, a third party had required
such action. Additionally, in its answer, IMI argued as an
affirmative defense that Sonat failed to mitigate, minimize,
fpr avaid seme af ar all the damage referancad in the
complaint. "(FJorcing a policyholder to both promptly act to
mitigate further environmental damage and to await formal
threat of legal action creates an unresolvable conflict and
results in destroying the contractual right to liability
coverage in many cases involving environmental pollution
damagco." Hoyorhscuocr, 123 Wooh. 2d at 913, 074 P.2d at 154.
In conjunction with its argument that the policies did
not provide coverage for damage Sonat was not legally
obligated to pay, LMI argues that he trial court in Phase I
erred in instructing the jury as follows:
"An insured is legally obligated for cleanup if
it was required to engage in such cleanup activities
by law. TU is nut mecessary Ulal auyuue actually
commenced a lawsuit to compel the cleanup. It is

sufficient that a statute or regulation imposed
responsibility for such a cleanup.

 

As we noted earlier, a trial court has broad discretion

Au Cormulaling Jury Lusteuctiuus, provided Ube Lusteuctions

58
1110698 and 1110769
accurately reriect tne law. Adaitionaliy, reversal 1s
warranted only if the error in the instructions is
prejudicial. Here, the trial court's jury charge regarding
damages is in accordance with our holding in Alabama Plating
and with the facts of this case as discussed above.

Next, TMT argnas that Sonar failed to prasant euherantial
evidence that LMI breached its contracts because, it says, LMI
simply reserved its rights to challenge its liability. IMI
argues that a reservation-of-rights letter does not amount to
a breach of contract.

IMI is correct that a reservation of rights allows the
Anourer to challenge ito Liability on the underlying claim
while still fulfilling its obligations under the policy. Twin
City Fire Ins. Co. v. Colonial Life & Accident Ins. Co., 839
So. 2d 614 (Ala. 2002). In the present case, Sonat presented
evidence at Phase I and Phase II indicating that LMI initially
received notice of Sonat's potential claims in 1991. on
Novewber 13, 1995, LMT seseived ils siylils Lo deny coveraye
while it decided whether the policies provided coverage. At
no time has LMI conducted an investigation into Sonat's

claims. In 1996, Sonat notified LMI that it would appear that

59
1110698 and 1110769
uui's policies would not pe impactea py tne rUs-remeaiation
project. However, Sonat reserved its rights to seek coverage
under the policies. At some point that is unclear in the
briefs, the parties began discussing coverage under the
policies. In 2001, IMI sued Sonat in Georgia, seeking a
Judgment daclaring whether the palieies provided eovarage far
Sonat's claims. During Phase I of the case in 2005, a
corporate representative for LMI testified that LMI had still
not formed an opinion on coverage and was awaiting more
information. We note that, in its order denying LMI's
postjudgment motion following Phase I, the trial court
concluded that the jury!o findings of LMI'o broachco of
contract could properly be based on the evidence indicating
that LMI had not acted reasonably in its delay after issuing
its reservation-of-rights letter. Under the facts of this
case, after being notified in 1991 of the PCB contamination,
IMI's 10-year delay after issuing its reservation-of-rights

letter (1999 Lo 2003) in detenm.

 

Hing whelle: Lv provide
coverage under the policies is not reasonable.
LMI argues that Sonat failed to present substantial

evidence that LMI breached its contracts when Sonat expressly

60
1110698 and 1110769
stated in 1996 that Limi could close its riles on tne claims.
In support of this argument LMI cites only one case for the
general proposition that a plaintiff is required to prove that
performance is due under a ccntract and that the defendant
failed to perform. | Authority supporting only general
propasitians af law is nat a anffieient argumant for reversal
Beachcroft Props. LLP v. City of Alabaster, 901 So. 2d 703
(Ala. 2004). Furthermore, Sonat, in notifying LMI that it
could close its files, specifically reserved its right to seek
coverage under the policies.

Last, LMI argues that three of the policies had not
attached beoaucc the remediation costs did not cxcced the
limits of Sonat's underlying insurance. Specifically, LMI
argues that three of the applicable polices did not reach the
attachment points of its umbrella and excess-liability
policies because Sonat had not exceeded the limits of the
underlying primary policies. LMI argues that the trial court
eiaed in submilting Lids issue Lo Ue jury because LL coutenus
that policies CU 1887, K 11477, and CU 10353 were unambiguous.
IMI cites a schedule of underlying insurance that it says is

similar to the schedules in the three policies. LMI then goes

a
1110698 and 1110769
on to aiscuss only CU 1887." We will likewise limit our
discussion to CU 1887.

CU 1887 is an umbrella policy. An umbrella policy is
different from an excess-liability policy in that they are
meant to fill gaps in coverage both vertically (by providing
execs coverage) and horizontally (hy providing primary
coverage). Roval Ins. Co. of America v. Thomas, 879 So. 2d
1144 (Ala. 2003). The schedule provides as follows:

"Schedule of Underlying Insurance
(1) General and Autonobile B.I. [bodily injury]

& P.D. (property damage] CSL (including $1,000,000

each occurrence Products and Watercraft) excess of

the following:

(A) General Liability (including Products and
Watercraft)

B.I. $50, 000/$100,060/$1, 000, 000
aggregate products

PD. $50, 000/$100,060 except opecial
B.D. C.C.C. $25,000/$100, 000

(B) Automobile Liability

B.I. §100,000/$500, 600

P.D. $50,000"

LMI's argument is that its policy was not triggered or

SLMI sometimes refers to "CU 1887" as "CV 1887."

62
1110698 and 1110769
aia not attach until tne damage incurrea under tne unaeriying
policies exceeded $1,050,000. According to LMI, there are two
underlying primary insurance policies: one insurance policy
attachment point with a $1,000,000 per occurrence limit, and
another policy identified in subsection (A) with a $50,000
aeenrrancea limit IMT antenda that the langnage i
unambiguous and, therefore, that the trial court erred as a
matter of law and should not have submitted the attachment-
point issue to the jury. We disagree.

First, IMI cites only cases concerning general
propositions of law regarding ambiguities. | "Authority

oupporting only 'goncral propooitions of law! doce not

 

constitute a sufficient argument for reversal." Beachcroft
Brops., 901 So. 2d at 708 (quoting Geisenhoff v. Geisenhoff,
693 So. 2d 489, 491 (Ala. Civ. App. 1997)). LMI does not
discuss the nature of umbrella policies or whether CU 1887 was,
the main or controlling umbrella policy for the period it was
An effecl. LMT dues HuL discuss “cSb," which is in section
(1) of the schedule and stands for "combined single limit."

IMI does not discuss “drop-down coverage" in the umbrella

policy. LMI does not discuss "split" limits of liability,

63
1110698 and 1110769
wnicn are rererrea to in tne scneaule witn property aamage
limited to a certain amount and bodily injury limited to a
certain amount. It is not the function of this Court to create
arguments for an appellant. McLemore v. Fleming, 604 So. 2d
353 (Ala. 1985). In order to secure a reversal, the
appellant has an affirmative duty of showing arrar upon the

record. Tucker v. Nichols, 431 So. 2d 1263 (Ala. 1983).

 

Second, in section (1), the schedule references
“underlying insurance." No underlying primary insurer or

insurers is referred to by name. Cf. American Res. Ins. Co

 

Y.-H & H Stephens Constr. Inc., 939 So. 2d 868 (Ala.
2006) (diccuscing coverage under an umbrella policy and the
schedule of underlying insurance policies where those policies
referred to the underlying primary-insurance carriers by
name). The failure to name the primary insurer alone would
not create an ambiguity because CU 1887 requires Sonat to
maintain insurance, but the schedule does not appear to refer
Lu Uwe primary Lusurers as LM argues. Section (1) referenves:
combined single limit of coverage in the amount of $1,000,000.
The schedule then refers to general liability in subsection

(A) and automobile liability in subsection (B). Under

64
1110698 and 1110769
subsection (a), the scheaule rerers to split limits petween
bodily injury and property damage involving general liability.
Subsection (A) refers to property damage "C.C.C." which stands
for property in Sonat's care, custody, or control but not
owned by Sonat and is not applicable here. Subsection (A)
refers te property damage af $80,000 far each arenrrance and
$100,000 where applicable and also is not involved in the
present case. The schedule could be interpreted as being
triggered by $50,000 in property damage where section (1)
refers to a combined single linit of $1,000,000 split between
bodily injury and property damage. Tellingly, section (1) has
2 oubocction (1) (A) and (1) (B), and it refero to a combined
single limit. CU 1887 was in force from 1962 to 1965, and the
underlying insurance referred to in the schedule could be read
to refer to a single $1,000,000 that sits over two underlying
limits, one of which is the $50,000 in property damage that
triggered LMI's liability. Accordingly, we cannot say, based
uu Ube arguments before us, Wat Ue Urlal court ened in
concluding that CU 1887 was ambiguous.
Sonat's Cross-Appeal (No. 1110769:

Sonat argues that the trial court erred in granting LMI's

65
1110698 and 1110769
partial-summary-Juagment motion.

This Court's review of a summary judgment is de
nove. Williams v. State Farm Mut. Ruka, Ins. Ca.,
886 So. 2d 72, 74 (Ala. 2003). We apply the same
standard of review as the trial court applied.
Specifically, we must determine whether the movant
has made a prima racie snowing that no genuine issue
of material fact exists and that the movant is
entitled to a judgment as a matter of law. Rule
Be(o), Ala R Civ. Pos Bine Croce g Bina Shield of
Alabama v. Hodurski, 899 So.2d 949, 952-53 (Ala.
2004). In making such a determination, we must
review the evidence in the light most favorable to
the nonmovant. Wilson v. Brown, 496 So. 2d 756, 758
(Ala. 1996), Once tho movant makee a prima facio
showing that there is no genuine issue of material
fact, the burden then shifts to the nonmovant to
produce "substantial evidence’ as to the existence
of a genuine issue of material fact. Bass v.
SouthTrust Bank of Baldwin County, 538 So. 24 794,
797-98 (Ala. 1989); Ala. Code 1975, § 12-21-12.
'[elubotantial evidence ie ovidence Sf ouch weight,
and quality that fair-minded persons in the exercise
of impartial judgment can reasonably infer the
existence of the fact sought to be proved.’ West v.
Founders Life Assur. Co. cf Florida, 547 So. 2d 870,
871 (Ala. 1989).

 

Dow v. Alabama Democratic Party, 897 co. 24 1025, 1020-29
(Ala. 2004).

During Phase III of the trial, the trial court granted a
motion in limine to exclude any reference to mercury sites
that had not been disclosed or documents that had not been
produced. The trial court also concluded that Sonat should

MUL be allowed Lu presen ayyzeyale costs of Is mezcury

66
1110698 and 1110769

remediation. A trial court nas broad aiscretion in
determining whether to grant a motion in limine. Jefferson
Cnty. v. Southern Natural Gas Co., 621 So. 2d 1282 (Ala.

1993).

 

Sonat argues that the trial court's requirement that
damages far the marenry ramadiatinn he proven an a aiteshy-
site basis would likely mislead the jury because such an
approach contradicts Sonat's single-occurrence theory. As
discussed earlier regarding tne damage arising out the PCB
contamination, Sonat presented evidence of its single-
occurrence theory where damages at the compressor stations
wore diccusced on a oite-by-oite baoic, Thio ic concietent,
with our caselaw that damage from a single occurrence may have
multiple and disparate impact on individuals and property and
that injuries may extend over time. Assuming that the leaking
of the mercury meters was a single occurrence, we cannot say
that the damage was the same at each site simply because Sonat
Wid Wel ULLcerenLiale Lie CusLs assuciated WLU Lie Cleanup of
each site.

Sonat argues that because the mercury remediation was

conducted in a uniform manner to address damage caused by the

7
1110698 and 1110769
systematic use or mercury at nunareas or tne metering
stations, it makes sense that contractors would account for
its activities by region rather than send several hundred
smaller invoices, Sonat cites the transcript from Phase I of
the trial for the proposition that it remains prepared to
prove cnats on a ragian-hy-reginn hasia for the mercury
remediation. This testimony regarded Sonat's ability to look
at accounting summaries and determine the specific costs for
specific compressor stations regarding the PCB remediation. We
cannot say that Sonat should get a second bite at the apple to
do the same now.

Sonat citce E.t. Du Pont De Nemours ¢ Co. vs Allotate
Insurance Co., (Ms. C.A. No. 99C-12-253 JTV, July 31, 2006)
(Del. Super. Ct. 2006)(not reported in A.2d), for the
proposition that overall costs from an occurrence need not be
divided or spread when costs were not originally accounted for
on that basis. Du Pont is distinguishable; it involved excess
policies Liat Covered Liligaliun expenses azisiny oul uf mass
tort claims and two of the insurers attempted to allocate
specific litigation expenses across multiple policy years when

all the insurers were jointly and severally liable and each

68
1110698 and 1110769
policy coverea tne ruil amount of tne expenaitures. sonar
also cites Newmont Mines, Ltd. v. Hanover Insurance Co., 784
F.2d 127 (2d Cir. 1986), for the proposition that a jury
should be allowed to decide damage on proof of a unitary
damage number as between two occurrences. In Newmont, the
Inanred annght enverage far damage te a hit lding canaed hy tun
separate roof collapses. The insurers argued that the insured
failed to prove the amount of damage that should be allocated
to each occurrence. The court disagreed, stating:

Because the two collapses were discovered only
three days apart, they were repaired simultaneously
and no effort was made at that time to allocate
repair costs between the two collapses. The parties
otipulated that the aggregate coot of repairing the
building was $6,600,000 (Canadian). In addition,
Newmont introduced the estimate of its engineering
expert, Calder, that the cost of repairing the hole
in the lower portion of the roof was $1,936,606; the
balance of the aggregate $6,600,000 (Canadian) cost
of repair, it followed, could be attributed to the
eccond collapse. Hence, the jury's finding of
damages in the amount of $4,663,394 (Canadian) for
the second collapse was arrived at not by
speculation, as Hanover and Utica contend, but by
simple subtraction ($6,600,000 - $1,936,606). The
Jury plaluly was eutitied Lo base its Couclusious on
Calder's estimate, see W.L. Hailey & Co. v. County
of Niagara, 388 F.2d 746, 753 (2d Cir. 1967), and we
find that the subtraction method described above
provided a rational basis for computing damages
attributable to the second occurrence with an
acceptable degree of certainty, see Lexington
Feuuucts, Lid. v. B.D. communications, iuc., 677

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1110698 and 1110769

Fiza 251, 293 (2a Lar. 1962).
784 F.2d at 137-38. Newmont indicates that the damages were
not speculative when there was an estimate upon which the jury
could base its damages.

Conclusion

Rased nn the faregaing, the duegmant af the trial ennrt
made the subject of LMI's appeal and of Sonat's cross-appeal
is due to be affirmed.

1110698--AFFIRMED.

Moore, C.J., and Stuart, Parker, Shaw, Main, Wise, and
Bryan, JJ., concur.

Murdock, J.) diocento.

1110769--AFFIRMED.

Moore, C.J., and Stuart, Parker, Murdock, Shaw, Main,

Wise, and Bryan, JJ., concur.

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1110698 and 1110769
MUMUULR, Justice (aissenting in appeal no. 1110698).

I respectfully dissent as to this Court's affirmance of
the trial court's judgment in case no, 1110698. I question
the rejection by this Court of more than one of the arguments
made by Certain Underwriters at Lloyd's, London, and Certain
London Marketing Insurance Conpanies (hereinafter "IMI") in
their appeal of this judgment. among other things, I disagree
with the main opinion's understanding and application of the
term "occurrence" in the IMI policies at issue. The release

of PCBs occurred at separate geographical locations at

 

separate times, resulting in separate "occurrences." Each
ocenrrance resnited from some practice in which the insured
engaged at each of the contaminated locations that was
specific to that location (notwitnstanaing tne ract tnat some
of these practices were repeated from one location to
another) .

I also question the application by the trial court and by
this Compt nf the Mowned-property" evelusian in the mut
policy, including this Court's approval of the trial court's
anstruction to the jury that an imminent threat ot narm to a
third party or to the property of a third party was sufficient
to avoid the application of this exclusion. I am concerned

n
1110698 and 1110769
that tnis application or tne “ownea-property” exclusion 1s

inconsistent with the language of the insurance policy

voluntarily agreed to by the insurer and the insured.

72