16-2511-cv Cincinnati Ins. Co. v. Roy’s Plumbing

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED

BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY

MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRON IC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY

OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated Term of the United States Court of Appeals for the Second Circuit, held at the 1 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the 2

31 st day of May, two thousand seventeen. 3

4 Present: PIERRE N. LEVAL, 5 ROSEMARY S. POOLER, 6 PETER W. HALL, 7 Circuit Judges. 8

_____________________________________________________ 9

10 THE CINCINNATI INSURANCE COMPANY, 11

12 Plaintiff-Counter-Defendant-Appellee

, 13

14

-v.- 16-2511-cv 15

16 ROY’S PLUMBING, INC., 17

18 Defendant-Counter-Claimant-Appellant

. 1 19

_____________________________________________________ 20

21 Appearing for Appellant: Robert E. Knoer, Buffalo, NY. 22

23 Appearing for Appellee: Daniel G. Litchfield (Vincent J. Velardo, on the brief ), Litchfield 24 Cavo, LLP, New York, NY. 25

26 Appeal from the United States District C ourt for the Western District of New York 27 (Skretny, J. ). 28

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1 The Clerk of Court is respectfully di rected to amend the caption as above.2 ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, 1

AND DECREED that the judgment of said District Court be and it hereby is AFFIRMED

. 2

3 Defendant-Counter-Claimant-Appellant R oy’s Plumbing, Inc. appeals a June 10, 2016 4 order granting Cincinnati Insu rance Company’s motion for summary judgment, and the 5 judgment order of June 13, 2016, both entered by the United States District Court for the 6 Western District of New York (Skretny, J. ). The district court ruled that the Cincinnati Insurance 7 Company (the “insurer”) had no duty to defend or indemnify Roy’s Plumbing in underlying state 8 court litigation related to chemical contaminati on at Love Canal near Ni agara Falls, New York. 9 We assume the parties’ familiarity with the underlying facts, the procedural history, and the 10 issues presented for review. 11

12 “In New York, an insurer’s duty to defend is ‘exceedingly broad’ and distinct from the 13 duty to indemnify.” Euchner-USA, Inc. v. Hartford Cas. Ins. Co. , 754 F.3d 136, 140-41 (2d Cir. 14 2014) (quoting Auto. Ins. Co. of Hartford v. Cook , 7 N.Y.3d 131, 137 (2006)). “The duty to 15 defend insureds . . . is derived from the allegati ons of the complaint and the terms of the policy.” 16 Technicon Elecs. Corp. v. Am. Home Assurance Co., 74 N.Y.2d 66, 73 (1989). “Where, as here, 17

the insurer seeks to be relieved of its duty to defend on the basi s of a policy exclusion, it bears 18 the heavy burden of demonstrating that the allegations of the complaint cast the pleadings wholly 19 within that exclusion, that the ex clusion is subject to no other r easonable interpretation, and that 20 there is no possible factual or legal basis upon which the insurer may eventually be held 21 obligated to indemnify the insu red under any policy provision.” City of Kingston v. Harco Nat’l 22

Ins. Co. , 848 N.Y.S.2d 455, 457 (3d Dep’t 2007) (int ernal quotation marks and brackets 23 omitted). 24

25 “The narrower duty to indemnify arises only if the claim for which the insured has been 26 judged liable lies within the policy’s coverage.” Allianz Ins. Co. v. Lerner , 416 F.3d 109, 115 (2d 27 Cir. 2005) (citing Frontier Insulation Contractors, In c. v. Merchs. Mut. Ins. Co. , 91 N.Y.2d 169, 28 178 (1997)). “Thus, while the duty to defend is measured against th e possibility of a recovery, 29 the duty to pay is determined by the actual basis for the insured’ s liability to a third person.” Id. 30 (internal quotation marks omitted). This question may be amenable to summary judgment where 31 no genuine question exists as to whether the policy covers the insured’s actions. See Servidone 32 Constr. Corp. v. Sec. Ins. Co. of Hartford , 64 N.Y.2d 419, 425 (1985). 33

34 The insurer has met its burden of showing that the allegations in the underlying state 35

action fall within the insuran ce policy’s pollution excl usion. The parties ag ree that the policy 36 excludes “[b]odily injury or property damage which would not have occurred in whole or part 37 but for the actual, alleged or thre atened discharge, dispersal, s eepage, migration, release, escape 38 or emission of pollutants at any time.” App’x at 180 (internal quotation marks omitted). And the 39 policy language gives “pollutant” a broad defi nition, covering both “substances which are 40 generally recognized in industry or government to be harmful or toxic to persons, property or the 41 environment” and “any solid [or] liquid . . . irrita nt or contaminant, including . . . waste.” App’x 42 at 144. Here, the state-court suit claims damages re lated to personal injuries, as well as damages 43 from contamination of property, caused by toxic chemicals. Although the pa rties dispute whether 44 the complained-of chemicals include sewage, and Roy’s Plumbing contends that sewage may not 453 constitute a “pollutant,” we ha ve no doubt that sewage is “gener ally recognized in industry or 1 government to be harmful or to xic to persons.” App’x at 144. 2

3 Roy’s Plumbing contends also that the state-court complaint speaks of “pressure,” and it 4 may thereby be seeking damages from harm caused by the force of liquids permitted to build 5 within the sewer rather than by chemical toxicit y. Read in context, however, the relevant passage 6 of the state-court complaint clarifies that pressure was merely the mechanism allowing chemicals 7 to escape from the sewer. App’x at 345. It is not alleged as an i ndependent cause of damage. 8

9 Roy’s Plumbing suggests that the pollution ex clusion is overbroad, and therefore creates 10 ambiguity, because if read liter ally it would deny coverage for most damages due to plumbing 11 work and thereby create tension with those part s of the policy clearly covering such work. New 12 York courts, however, limit the reach of pollutio n exclusions to “those cases where the damages 13 alleged are truly environmental in nature, or where the underlying complaint alleges damages 14 resulting from what can accurately be desc ribed as the pollution of the environment.” Belt 15 Painting Corp. v. TIG Ins. Co. , 742 N.Y.S.2d 332, 336 (2d Dep’t 2002), aff’d , 100 N.Y.2d 377 16 (2003). This construction eliminates the overbreadth that Roy’s Plumbing fears. 17

18 Because the allegations in the state-court complaint fall within the pollution exclusion, 19 the insurer has no duty to defend Roy’s Plumbing against those allegations, or to indemnify 20 Roy’s Plumbing for damages caused by the partic ular acts alleged in the complaint. 21

22 We have considered all additional argu ments made by Roy’s Plumbing and determine 23

them to be without merit. The district court’s order and judgment are therefore AFFIRMED. 24

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FOR THE COURT: 26 Catherine O’Hagan Wolfe, Clerk 27

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