Opinion ID: 1506273
Heading Depth: 1
Heading Rank: 3

Heading: Whether the costs of site measures are paid as damages because of property damages within the meaning of the ANI policies.

Text: Appellants, ANI, argue the costs of site measures are not paid as damages because of property damage. They contend: (1) none of the insureds' Maxey Flats response cost liability was spent to compensate third parties for a compensable loss; (2) no third party has sued any of the insureds alleging bodily injury or property damage to its property because of the nuclear energy hazard at Maxey Flats; and (3) the CERCLA liability was imposed for purely prophylactic measures for which ANI's policies do not provide coverage. Appellees, Hittman and Chem-Nuclear (position also adopted by Commonwealth) argue the response costs at issue are damages for three reasons: (1) the plain and ordinary meaning of the term damages encompasses any monetary liability for property damage, without regard to the form of action in which the liability is imposed, (2) 15 of 17 state supreme courts that have addressed this issue have held that legally mandated environmental remediation costs are damages, and (3) the term damages is at least ambiguous and must be construed in favor of coverage. In its policies, ANI promises to pay on behalf of the insured... all sums which the insured shall become legally obligated to pay as damages because of ... property damage caused by the nuclear energy hazard. CERCLA expressly permits responsible parties to insure against the costs of relief under this legislation. See 42 U.S.C. § 9607(e). Therefore, our task is to decide whether ANI's policies do provide coverage according to their terms despite damages being undefined within the policy language. As such, our reasons for affirming the Court of Appeal's decision that the cost of site measures are damages because of property damage mimic our considerations and reasoning regarding the prior issue of EPA proceedings being the functional equivalent of a suit. As damages are not defined within ANI's policies, and various authorities from dictionaries to court opinions define the term to encompass diverse aspects of monetary awards, we find the term ambiguous and subject to the reasonable expectations of the insureds. We believe the policy language, all sums which the insured shall become legally obligated to pay as damages because of property damage, can reasonably be interpreted to cover any claim asserted against the insured arising out of property damage, which requires the expenditure of money, regardless of whether the claim can be characterized as legal or equitable in nature. This interpretation is supported by the dictionary definition of damages which makes no distinction between damages at law and actions in equity. See Webster's Third New International Dictionary 571 (P. Gove ed.1961). We agree with the majority of state appellate courts that hold the ordinary meaning of damages is broad enough to, and does include, government mandated response or cleanup costs under CERCLA and similar state environmental protection statutes: as long as the purpose is to rectify, correct, control, lessen or stop ongoing injury of the premises. This purpose is met in this action. We are further persuaded by the reasoning of the Wisconsin Supreme Court in Johnson Controls, Inc. v. Employers Insurance of Wausau, 264 Wis.2d 60, 665 N.W.2d 257 (2003), wherein the Court explained: the nature of relief in CERCLA response cost actions is not confined to future injuries; it includes legal recompense for injuries sustained.... Thus, there is both a prospective and remedial element to an insured's response cost liability. Because CERCLA proceedings seek the costs of repairing damaged property, rather than the cost of conforming one's future conduct, the nature of the relief is, at least in part compensatory. Id. at 274. The Sixth Circuit Court of Appeals has also explained its interpretation of the term damages in the case of Anderson Development Co. v. Travelers Indem. Co., 49 F.3d 1128 (6th Cir.1995), wherein the Court wrote: The fact that the insured cooperates and assumes the obligation to conduct the clean-up, rather than forcing the EPA to incur the expenses of a clean-up and then bring a coercive suit, does not change the bottom line that a legal obligation exists. Accordingly, we... hold... government imposed environmental clean-up costs constitute damages. Id. at 1133. We would add, also, that if ANI intended a narrow technical definition of damages, it was their duty to define the term clearly within their policies. See Minnesota Min. & Mfg. Co. v. Travelers Indem. Co., 457 N.W.2d 175, 181 (Minn.1990). The second question we must answer before concluding ANI's policies provide coverage for the cost of site measures incurred by the insureds, is whether these costs are damages because of property damage within the meaning of the policies. Unlike standard form general liability policies, ANI's policies expressly define property damage to include radioactive contamination and also contemplate within the definition, the imminent danger of such contamination. Because radioactive contamination of property has unquestionably occurred at, in, and around Maxey Flats, we find property damage has occurred as the term is defined within the policies. We think the trial court explained its reasoning well when it wrote: The EPA response costs were triggered by, and can be seen by the ordinary insured to have been imposed because of the radionuclide levels which were discovered on the adjacent property. Since the radionuclide levels on the adjacent property triggered the liability, they were property damage from the standpoint of the insureds. The ambiguity of the provision allows nontechnical construction, and application in the insureds' favor. Thus, we affirm the Court of Appeal's decision that the insureds' costs of site measures are damages because of property damage as defined within ANI's policies.