Opinion ID: 2277625
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Heading: CONSTRUCTION OF CONDITION 4(a) OF THE INSURANCE POLICIES

Text: Stauffer purchased three standard-form CGL insurance policies from AMICO covering the period January 1, 1969 through March 1, 1971. [7] Each of the CGL policies contains a condition imposing a duty upon the insured to pay for the prevention of further damage once an accident or injury occurs. Condition 4(a) expressly states: 4. Insured's Duties in the Event of Occurrence, Claim or Suit (a) ... The named insured shall promptly take at his expense all reasonable steps to prevent other bodily injury or property damage from arising out of the same or similar conditions, but such expense shall not be recoverable under this policy. [8] RPB argues that the failure of the drafter to include the mitigation provision in the list of policy exclusions negates any intended preclusionary effect. RPB further contends that the real purpose of the clause was to require the insured to take prompt steps to avoid a similar but different injury-producing event. The insured concludes that the reasonable steps which must be taken can never apply to remedial determinations taken after the fact because liability-avoiding measures cannot logically be taken after liability for an injury has been assessed. Rejecting RPB's reasoning, the trial court construed the mitigation provision as precluding from coverage the cost of all preventive measures. The sole issue on this appeal is the proper construction of the mitigation provision in Condition 4(a). The proper construction of any contract, including an insurance contract, is purely a question of law. Aetna Cas. and Sur. Co. v. Kenner, Del.Supr., 570 A.2d 1172, 1174 (1990). Accordingly, we review de novo for legal error the Superior Court's decision. Rohner v. Niemann, Del.Supr., 380 A.2d 549, 552 (1977). Clear and unambiguous language in an insurance policy should be given its ordinary and usual meaning. Johnston v. Tally Ho, Inc., Del.Super., 303 A.2d 677, 679 (1973). Absent some ambiguity, Delaware courts will not destroy or twist policy language under the guise of construing it. Hallowell v. State Farm Mut. Auto. Ins. Co., Del.Super., 443 A.2d 925, 926 (1982). [W]hen the language of an insurance contract is clear and unequivocal, a party will be bound by its plain meaning because creating an ambiguity where none exists could, in effect, create a new contract with rights, liabilities and duties to which the parties had not assented. Id. To the extent that ambiguity does exist, the doctrine of contra proferentum requires that the language of an insurance contract be construed most strongly against the insurance company that drafted it. Steigler v. Insurance Company of North America, Del.Supr., 384 A.2d 398, 400 (1978). A contract is not rendered ambiguous simply because the parties do not agree upon its proper construction. Rather, a contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings. Hallowell, 443 A.2d at 926. Ambiguity does not exist where the court can determine the meaning of a contract without any other guide than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends. Holland v. Hannan, D.C.App., 456 A.2d 807, 815 (1983). Courts will not torture contractual terms to impart ambiguity where ordinary meaning leaves no room for uncertainty. Zullo v. Smith, Conn.Supr., 179 Conn. 596, 427 A.2d 409, 412 (1980). The true test is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant. Steigler, 384 A.2d at 401 (contracts should be read to accord with the reasonable expectations of a reasonable purchaser); see also, State v. Attman/Glazer, 323 Md. 592, 594 A.2d 138, 144 (1991). The different federal courts have similarly construed the mitigation clause presently at issue. The consensus strongly suggests that the clause is reasonably susceptible of only one interpretation. In the case of Chemical Applications Co., Inc. v. Home Indemnity Co., 425 F.Supp. 777 (D.Mass.1977), the mitigation provision was construed for the first time as impos[ing] a duty on [the insured] to take steps to prevent further injury  to correct the fault  [but] not to repair or restore what has already occurred. Id. at 778. The court carefully noted that the insurance carrier remained liable for damages that had already accrued, thus ensuring that the agreement to which the parties originally assented was preserved. The provision was next construed nearly seven years later in the case of Mraz v. American Universal Ins. Co., 616 F.Supp. 1173 (D.Md.1985), rev'd on other grounds sub nom., Mraz v. Canadian Universal Ins. Co., Ltd., 804 F.2d 1325 (4th Cir.1986). Galaxy Chemical, Inc. (Galaxy) was a corporation engaged in the recycling of chemical solvents. Mraz was the founder and president of Galaxy. Soon after the plant opened, fumes began emanating from drums of unprocessed chemicals stored at the facility and the plant was declared a public nuisance. Galaxy then arranged to dispose of the controversial drums with the assistance of state and county health officials. At that time it was widely believed that clay would form a natural barrier against any leaking of chemicals from the drums. 616 F.Supp. at 1176. Consequently, company and state officials disposed of the drums by burying them in a clay pit located on two acres of land known as the Leslie site. Although the drums were disposed of in the most technologically advanced method available at the time, the Environmental Protection Agency (EPA) declared the site a potential health hazard to area residents several years later. The site was eventually remediated by the State of Maryland and the EPA in 1982. In an effort to recoup remediation expenditures, Mraz and Galaxy were both subsequently sued in 1983 by the state and federal governments under CERCLA. When Mraz notified his insurance carrier of the litigation, it refused to indemnify and defend him and Galaxy under the policy it issued in 1969. In an action by the insureds for declaratory judgment against the insurance company, one defense the insurer raised was that coverage was precluded because Galaxy failed to comply with Condition 4 of the policy which required the insured to take steps to prevent further injury when an occurrence takes place. Id. at 1180. The insurer argued that Galaxy should have taken steps to prevent further leakage if the company was aware of the problem when it disposed of the drums. Although the insurer correctly construed the mitigation provision, it overlooked the fact that the disposal method Galaxy used was the most technologically advanced method available in 1969. Id. Viewing the disposal method used by Galaxy as a measure intended to prevent future environmental damage, the court held that Mraz took sufficient steps to satisfy the mitigation provision and thereby triggered the insurer's duty to defend. Id. RPB's reliance on this case is misplaced because Galaxy took steps to mitigate further personal injury or property damage from arising out of the same or a similar condition. Unlike Galaxy Chemicals, RPB completely disavowed its duty promptly to take any measures to mitigate further damages from arising out of the Tybouts Corner landfill. The provision at issue here was most recently interpreted by the United States District Court in Delaware in an early environmental liability case involving the Tybouts Corner landfill. In the case of New Castle County v. Hartford Acc. and Indem. Co., 685 F.Supp. 1321 (D.Del.1988), Senior District Judge Latchum examined an identical mitigation clause that was included in a policy New Castle County purchased from the Insurance Company of North America (INA). Citing Chemical Applications as persuasive authority, the Court held that under the mitigation provision the insured, at its expense, would normally be required to correct any fault necessary to prevent further injury. Id. 804 F.2d at 1331. The Court further classified the remedies sought into three categories: (i) compensation for injuries suffered by the plaintiffs; (ii) injunctive relief compelling the County either to clean up the contaminants released by the landfill or to compensate the plaintiffs for costs incurred by the same; and/or (iii) injunctive relief forcing the County to take actions necessary to prevent future harm. Id. at 1332. Discriminating among the various remedies sought, the court held that INA was liable only under the first two categories. The carrier was held to be exempt from liability under the third category because it involved remedial costs required to prevent the future release of contaminants from the site. Id. [9] In construing the mitigation provision, this Court cannot disregard other cases that have excluded coverage for preventive measures even in the absence of a mitigation provision in the insurance contract. See Aerojet-General Corp. v. San Mateo County Superior Court, Cal.Ct.App., 211 Cal.App.3d 216, 258 Cal.Rptr. 684 (1989); Boeing Co. v. Aetna Cas. & Sur. Co., Wash.Supr., 784 P.2d 507, 516 (1990) (costs owing because of property damages are remedial measures taken after pollution has occurred, but preventive measures taken before pollution has occurred are not costs incurred because of property damage); Aerojet-General Corp. v. San Mateo County Superior Court, Cal.Ct.App., 211 Cal.App.3d 216, 257 Cal.Rptr. 621, 635 (1989) (expenditures to prevent future pollution would not be causally related to property damage and would not be covered as damages under a CGL policy). These courts reasoned that the cost of preventive measures are not because of property damage as is required under standard CGL policies. Rather, as the trial court found, they are costs incurred to prevent the further release of contaminants. National Union Fire Insurance Co. of Pittsburgh v. Rhone-Poulenc Basic Chemicals Co., Del.Super., C.A. No. 87C-SE-11, slip op. at 37, Poppiti, J., 1992 WL 22690 (Jan. 16, 1992). Public policy clearly favors imposing upon insureds a duty to mitigate damages. In the absence of such a rule, insureds could sit back and allow environmental damage to accumulate until they are compelled to mitigate damages through litigation. The provision at issue here is consistent with that policy. The plain language of Condition 4(a), the consistency with which the three other jurisdictions noted above have construed the provision, and strong public policy concerns compel the conclusion that the mitigation clause is subject to only one reasonable interpretation. Thus, the doctrine of contra proferentum does not apply. In order for an insured to establish the contractual liability of an insurer for breach of an insurance contract, the insured must show that he has complied with all conditions precedent to the insurer's performance. Casson v. Nationwide Ins. Co., Del.Super., 455 A.2d 361, 365 (1982). By disregarding its duty to mitigate further damage, RPB failed to satisfy an express condition precedent to performance under the policy agreement. The Superior Court properly held that the mitigation provisions in the policies issued by AMICO and Travelers preclude coverage for the cost of measures taken or to be taken in order to prevent the further release of contaminants from Tybouts Corner.