Court Opinion

ID: 9487903
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:29:33.508788+00
Date Added: 2024-06-11T17:52:33.131799
License: Public Domain

RYAN, Circuit Judge,
concurring and concurring in the judgment.
Because we sit, in this case, under the limiting authority of our diversity jurisdiction, our duty is to decide this ease as we think the Michigan Supreme Court would. For that reason alone, I am compelled to agree with the result reached in the majority opinion on all three of the issues addressed, but to disagree with the reasoning offered in support of the second issue, and to add a further thought on the third issue. I reach these conclusions solely because of the Michigan Supreme Court’s decision in Michigan Millers Mutual Insurance Co. v. Bronson Plating Co., 445 Mich. 558, 519 N.W.2d 864 (1994). Although we are free to disagree, as indeed I do, with the reasoning and the result announced in Bronson Plating, we are not free to disregard it, and I’m afraid the majority opinion does.
I.
With respect to the first issue — the meaning of the term “suit” in the Travelers policy — I agree that the Michigan Supreme Court, which concluded that the term of art “suit” in the Michigan Millers Mutual Insurance policy involved in the Bronson Plating case includes a “potentially responsible party” (PRP) letter from the EPA, would take the same position with respect to the PRP letter in this case because the Travelers policy is essentially identical to the Michigan Millers policy.
II.
Bronson Plating also signals that the Michigan Supreme Court would likely hold that the term “damages” in the Travelers policy includes environmental cleanup costs mandated by the EPA, but not, I think, for the reasons the majority suggests.
A court that holds that a threatening letter from the EPA is a “suit,” as that term is used in a liability insurance policy indistinguishable from the Travelers’ in this case, because it thinks that a “typical layperson” would think so, would surely hold, on the same reasoning, that environmental cleanup costs are “damages” under' the same policy. Indeed, that is the conclusion reached by a sister circuit that referred to the lay dictionary definition of “damages.” Independent Petrochemical Corp. v. Aetna Casualty & Sur. Co., 944 F.2d 940, 945-46 (D.C.Cir.1991), cert. denied, 503 U.S. 1011, 112 S.Ct. 1777, 118 L.Ed.2d 435 (1992). But that is not the analytical route taken by the Michigan Court of Appeals in the several cases cited in the majority’s opinion. Rather, those cases simply declare that when the government incurs environmental cleanup costs, and then sues the insured to recover those costs, the insurer’s duty to pay “would be clear”; “[i]t is merely fortuitous” that the government might sometimes order cleanup rather than sue for recovery. E.g., United States Aviex Co. v. Travelers Ins. Co., 125 Mich.App. 579, 336 N.W.2d 838, 843 (1983). This dubious reasoning - is a far cry from the simple, if indeed remarkable, approach that the Michigan Supreme Court would likely take; viz, that the layperson’s understanding of “damages” includes costs incurred to restore the environment.
III.
Finally, I do riot think the Michigan Supreme Court would follow the reasoning of the Michigan appellate court authorities cited in the majority’s opinion with respect to the “owned property” exclusion issue. First, those cases hold that the state’s interest in groundwater renders the “owned property” exclusion in the Travelers policy inapplicable. “Owned property” exclusions ordinarily exclude not only coverage for property “owned” *1136by the insured, but also, property in the insured’s “custody or control”; the exclusion at issue in our case. employs that typical language. The Michigan appellate court cases misread the “owned property” exclusion by glossing over the “custody or control” language. Groundwater beneath the insured’s property is nevertheless under his “control” even if not “owned” by him — at least a “typical layperson” is likely to think so, and that is the standard the Michigan Supreme Court would apply.
But I agree with the majority that, rather than rely upon the state appellate court’s reasoning, the Michigan Supreme Court would probably hold the Travelers “owned property” exclusion inapplicable based on the reasoning of Patz v. St. Paul Fire & Marine Insurance Co., 15 F.3d 699, 705 (7th Cir.1994), which distinguishes between “liability” and “casualty” insurance coverage. Indeed, in my view, that is the more compelling ground, and, coincidentally, is consistent with the Michigan Supreme Court’s reliance on “typical laypersons” for construing the meaning of “ambiguous” insurance contract terms. The Travelers policy states that it provides “Comprehensive General Liability” insurance, and repeatedly refers to coverage for “liability.” Thus, the “typical layperson’s” reading of the “owned, property” exclusion, which excludes coverage for property damage, would interpret coverage for the response costs — a liability to the EPA — unaffected by the exclusion.
For the foregoing reasons, I concur in the result reached in the majority’s opinion.