Case Title: Agency of Natural Resources v. United States Fire Insurance Co.

Citation: 173 Vt. 302, 796 A.2d 476

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2001-11-21T00:00:00Z

Document:
Agency of Natural Resources v. United States Fire Insurance Co. (2000-287);
173 Vt. 302; 796 A.2d 476

[Filed 21-Nov-2001]

[Motion for Reargument Withdrawn 08-Feb-2002]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                No. 2000-287

Agency of Natural Resources	                 Supreme Court
Harbour Management Corporation &
The Summit Management Corporation
On Appeal from
     v.	                                         Washington Superior Court

United States Fire Insurance Co. &	         June Term, 2001 
North River Insurance Company

Alden T. Bryan, J.

William H. Sorrell, Attorney General, William E. Griffin, Chief Assistant 
  Attorney General, and Bridget C. Asay, Assistant Attorney General, for 
  Plaintiff-Appellee.

John L. Putnam and David R. Putnam of Stebbins, Bradley, Wood & Harvey, P.A., 
  Hanover, New Hampshire, for Defendants-Appellants.

PRESENT:  Amestoy, C.J., Dooley, Morse, and Skoglund, JJ., and 
          Cook, D.J., Specially Assigned

       AMESTOY, C.J.   Defendant North River Insurance Company appeals a
  Washington  Superior Court order granting plaintiff's, Agency of Natural
  Resources',  motion for summary  judgment. (FN1)  Defendant contends that
  the court erred in ordering North River to pay restitution  to the State
  for costs incurred in the investigation and clean-up of an underground
  petroleum leak. 

 

  Defendant raises four arguments on appeal: (1) the State does not have a
  legal cause of  action under 10 V.S.A. §1941(f) and therefore does not have
  standing; (2) the relevant provision of  the North River insurance policy
  specifically excludes insurance coverage of costs arising out of a 
  State-directed clean-up of pollutants; (3) the trial court erred in finding
  liability without sufficient  facts to determine first, if the leak was an
  occurrence that triggered the policy and second, the  amount of the damages
  that should be allocated to North River; and (4) the trial court erred by
  not  enforcing discovery orders.  We affirm but remand in part for further
  findings on the allocation of  damages.

       In December 1993, the Department of Environmental Conservation (DEC)
  began  investigating reports of contaminated drinking water in Sherburne,
  (FN2) Vermont.  After testing  several wells, DEC identified the potential
  source of the contamination to be an underground fuel  tank on property
  owned by Harbor Management Corporation, hereinafter Summit Lodge.  DEC 
  contacted Summit Lodge in January of 1994 and directed that it clean the
  contamination. 

       Summit Lodge hired Marin Environmental, an environmental consulting
  firm, to handle the  contamination.  Marin Environmental removed the
  underground fuel tank and confirmed, after  testing the soil, that the tank
  was the source of a release of gasoline into the subsurface  contaminating
  the local bedrock aquifer and a total of thirty-two private wells. With
  DEC's approval,  Marin Environmental installed a ground water extraction
  and treatment system and a soil vapor  extraction system.  The extraction
  system was somewhat effective, reducing contamination, but  certain wells
  still test positive for pollutants above the level of drinking water
  standards.  In contrast, 

 

  the soil vapor extraction system put into place by Summit Lodge removed
  nearly all recoverable  contamination from the soils overlying the bedrock
  aquifer.      

       In 1994, Summit Lodge filed a claim with their insurance companies,
  United States Fire  Insurance (USFI) and North River.  USFI denied coverage
  based on an exclusion within the  Pollution Endorsement to the policy. 
  North River did not respond.   In the same year Summit Lodge  applied to
  the Petroleum Cleanup Fund for reimbursement.  The State reimbursed nearly
  all costs,  limiting Summit Lodge's liability to $10,000.  The State spent
  approximately $715,000 in the  investigation and clean-up of the site,
  including the costs of providing bottled drinking water to the  affected
  neighbors, and expects to spent an additional $100,000 to $200,000 before
  the clean-up is  complete.

       The State filed suit against USFI and North River in federal district
  court in 1997.   In 1998,  the parties agreed to dismiss the original
  action for lack of jurisdiction, and the State refiled in  Washington
  Superior Court.  The parties engaged in discovery and filed cross motions
  for summary  judgment in April of 1999.  In an order dated December 30,
  1999, Judge Teachout granted the State's  motion finding that the leak at
  Summit Lodge was an occurrence covered under the North River  policy and
  that defendants were liable for the costs that the State incurred.    

       Defendant filed a motion for reconsideration and on May 16, 2000,
  Judge Bryan denied the  motion concluding (1) the State has standing
  pursuant to 10 V.S.A. § 1941(f); and (2) that the  exclusion contained in
  the Pollution Endorsement of the North River policy does not exclude the 
  costs associated with clean-up of contamination on a third-party property. 
  On May 26, 2000,  judgment was filed against defendant for $714, 791.94 in
  costs, 12% prejudgment interest, and "all 

 

  future reasonable and necessary expenses for the remediation of the Summit
  lodge site."  This appeal  followed.  

                                     I.

       We review a trial court's decision to grant summary judgment de novo. 
  Hence, we will apply  the same standard as the trial court, and its
  decision to grant a motion for summary judgment will be  affirmed if there
  are no genuine issues of material fact and the moving party is entitled to
  judgment   as a matter of law.  Chapman v. Sparta, 167 Vt. 157, 159,