Opinion ID: 2634716
Heading Depth: 3
Heading Rank: 2

Heading: Insurers' Duty to Indemnify Cotter

Text: We now address whether the insurers were entitled to grants of summary judgment on the issue of their duty to indemnify Cotter. Specifically, in light of our interpretation of qualified pollution exclusion clauses, we consider evidence of whether Cotter expected or intended the migration of contaminants off its property or into the groundwater. We find that the record contains conflicting evidence regarding Cotter's expectation and intention that contaminants would migrate off its property or into the groundwater. Therefore, we conclude that issues of material fact exist with respect to Cotter's expectation of containment that do not warrant summary judgment in favor of the insurers. An insurer's duty to indemnify arises when the policy actually covers the harm. Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294, 301 (Colo.2003). The determination of whether a duty to indemnify exists is largely a question of fact. Id. at 301-02. Initially, in reviewing the trial court and court of appeals' respective reasons for granting and affirming summary judgment in favor of the insurers, we note the inconclusive nature of much of the evidence cited by these courts. Several statements appear to be out of context and seem less determinative when the evidence is viewed as a whole. For example, an expert witness's statement, the ponds were designed to seep, and that's what happened, by itself ignores her testimony that at the time of their use, tailings ponds were expected to contain contaminants through seepage. See Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 64 P.3d 886, 891 (Colo.App.2002). Similarly, Cotter's statement, the very nature of the uranium milling process contemplates migration of certain contaminants off-site from the mill, appears in a response to a request to admit as an objection to the insurers' failure to define contamination. See id. Additionally, this statement may only acknowledge that the milling process creates a risk of off-site migration and does not distinguish uranium tailings from other contaminants generated in the milling process. Moreover, these statements appear inconclusive when viewed against the amount of overall evidence. The exhibits supporting the motions for summary judgment consist of hundreds of pages of documents and make up only a fraction of the entire record. Thus, we do not view a handful of phrases out of the volumes of record as demonstrating that no issues of material fact exist. More importantly, the trial court and court of appeals only considered whether Cotter expected seepage from the ponds. As we have explained today, to prevail on their motion for summary judgment, the insurers must establish that the undisputed facts show that contaminants migrated off Cotter's property or into the groundwater, and that Cotter expected or intended such migration. Thus, we now apply the standard articulated above to the facts of this case and evaluate whether the grants of summary judgment in favor of the insurers were warranted. Although the parties do not dispute that contaminants migrated into the groundwater and off Cotter's property, conflicting evidence exists as to whether Cotter expected or intended this migration. For example, the insurers point to a statement by Cotter that the very nature of the uranium milling process contemplates migration of certain contaminants off-site from the mill which is the basis for regulatory monitoring requirements imposed by government agencies. . . . Cotter, 64 P.3d at 891 (alteration in original). Similarly, Cotter has also stated that it may have expected migration of contaminants off its property or into the groundwater in safe or de minimis levels. This evidence suggests that Cotter expected and intended the migration of contaminants off its property. Yet evidence also indicates that Cotter did not expect and intend for contaminants to migrate off its property or into the groundwater. Mainly, Cotter points to evidence that it intended to contain contaminants when it placed them in the ponds. Cotter cites evidence that, at the time of their installment, the ponds were viewed as state-of-the art technology to control pollution. For example, passages from the federal publication Waste Guide for the Uranium Milling Industry state that general practice in the uranium industry to dispose of tailings was to place them in tailings ponds. A former employee of the state health department similarly testified in the Dodge litigation that disposal in tailings ponds was a standard industry practice. Furthermore, Cotter presents evidence of how the ponds were understood to safely remove contaminants. During the Boughton and Dodge litigation, experts testified that when wastes were placed in the ponds, liquid waste was expected to evaporate or seep into the ground. Dissolved solids and particles were then expected to be either absorbed by the dirt or precipitate out. Similarly, the federal uranium waste guide boasts that the ponds can successfully remove substantially all settleable solids, and describes them as a means of preventing water damage. Thus, Cotter proffered evidence that creates an inference that it intended to contain contaminants when it placed them in the ponds, and that any migration off its property and into the groundwater was unexpected and unintended. We find from this evidence that issues of material fact are disputed. For these reasons, we conclude that the evidence Cotter presents contradicts the insurers' assertion that Cotter expected or intended the migration of contaminants off its property and into the groundwater. Therefore, we hold that issues of material fact exist that preclude summary judgment and that the insurers were not entitled to summary judgment on the issue of their duty to indemnify Cotter.