Court Opinion

ID: 9721595
Source: CourtListenerOpinion
Date Created: 2023-08-26 09:02:56.254136+00
Date Added: 2024-06-11T18:24:27.529481
License: Public Domain

*178FINE, J.
¶ 100. (dissenting). A fundamental tenet of American law is that folks have a right to be heard " 'at a meaningful time and in a meaningful manner'" before they may be deprived of a property interest. Mathews v. Eldridge, 424 U.S. 319, 333-335 (1976) (quoted source omitted); see also Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). The insurance companies in this appeal (all of whom but one have, sadly in my view, settled) did not have that chance — either in 1998 when Appleton Papers assumed liability for NCR's pollution, or in the circuit court here.1 Accordingly, I respectfully dissent.
*179¶ 101. The main issue on this appeal is, as I see it, fairly simple. By order dated November 13, 2007, and designated as "Administrative Order for Remedial Action," the Environmental Protection Agency directed NCR Corporation and Appleton Papers, Inc., to remediate parts of the Fox River contaminated with polychlorinated biphenyls. (Uppercasing and bolding omitted.) The order was issued under the authority and pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601, et. seq. See 42 U.S.C. § 9606 (codifying § 106 of the Act). None of the parties dispute that NCR is hable, at least in part, for the ordered remediation. Also, insofar as Appleton Papers is concerned, none of the parties dispute that it is also responsible in part for the remediation. The issue boiled to its essence is whether Appleton Papers's insurance carriers may be forced to pay for Appleton Papers's liability under the 106 Order.
¶ 102. The 106 Order, tacitly acknowledging that Appleton Papers did not pollute the Fox River, pinned Appleton Papers's liability on its status as a "successor" to NCR. Thus, in paragraph 7.a.ii, the 106 Order recites, as material: "Appleton Papers, Inc., is a party that is liable for payment of response costs and performance of response activities at the [Fox River] Site because [Appleton Papers] is: (1) a successor to one or more corporate predecessors that, at the time of disposal of hazardous substances" released "hazardous substances to the [Fox River] Site." (Acronyms omitted, emphasis added.)2 The 106 Order's reference to Appleton Papers's status as a *180"successor" was based on the Order's further recitation, in paragraph 7.a.vi, that in 1978, Appleton Papers "acquired the assets of the Appleton Papers Division from NCR, and Appleton Papers . . . assumed certain liabilities in connection with the asset purchase."
¶ 103. The November 2007 Order was not, of course, the first indication that NCR and Appleton Papers might be responsible for the Fox River cleanup. Indeed, in 1995, NCR sued Appleton Papers in federal court seeking Appleton Papers's indemnification for "any and all of [NCR's] liabilities related to environmental contamination of the Fox River in Wisconsin." Although Appleton Papers would seek insurance coverage (which is what this case is all about) for whatever indemnification it owed NCR, it never told the carriers about the lawsuit. It did not, however, admit liability at that point, but, rather, counterclaimed against NCR seeking to have NCR indemnify it for the Fox River contamination. Three years later, without alerting the insurance companies, Appleton Papers settled the federal lawsuit with NCR, and assumed a large percentage of the liability for the Fox River cleanup. Six months later, Appleton Papers gave "notice" to the carriers.
¶ 104. Cutting this complex case to its bone, it has to be conceded by all that if the 1995 federal-court lawsuit had not been settled, but, rather, if the federal courts had ruled that Appleton Papers had no indemnification responsibilities, the carriers here, too, would be free of any liability for the Fox River remediation.
¶ 105. It is true, as the Majority recognizes, that pollution-responsibility vel non under the Act must be determined in federal court, and, as noted, NCR and Appleton Papers were on their way to having that issue *181decided in the appropriate forum.3 That journey, however, as we have seen, was ended when NCR and Appleton Papers settled — without notice to the carriers. Under the recognized right-to-be-heard principles already mentioned, the insurance companies had a right to intervene and be heard in the 1995 federal-court action if the result of that case would bind them. Given the back-alley settlement, they have a right to have their liability determined here. That is, if Appleton Papers improvidently settled with NCR and, under the law, would not have been liable to NCR for part of the remediation costs, the carriers are not liable to Appleton Papers under the insurance policies. Let me be clear: I am not saying that a state court can determine liability under the Act between potentially responsible parties — that, as already noted, must be litigated in federal court. A state court can, however, determine whether the insured did anything that either prejudices the carriers or in any other way forfeits the insured's right to collect on the insurance. The circuit court deprived the carriers of the chance to make that showing. The Majority says that this is OK. I respectfully dissent, and would remand for a trial on whether, under the rationale explained in this dissent, the carriers (or, *182in light of the settlement, Westport Insurance Corporation) Eire liable under their Appleton Papers policies.4

 I say "sadly" because whether an insurance company is responsible to an insured who voluntarily assumes liability without giving the insurance company a chance to object is a critical issue that should not be at least partially swept under the rug by the expediency of settlement. In short, permitting an insured to bind its insurer by blindsiding that carrier threatens the continued viability of the very concept of contracted-for insurance and, as a consequence, the whole insurance industry, upon which so much economic and social stability depends.
A simple hypothetical, albeit not wholly concurrent with the facts of this case, makes it clear. Assume that Sam Smith is driving a truck down a desert highway. He sees an accident ahead. He slows and stops. The drivers involved in the accident assume that he may have proverbial "deep pockets." They sue him in the local court. Believing that his personal auto-insurance policy does not cover his business use of the truck, he does not tell the carrier. He hires a lawyer and defends. The plaintiffs approach him with an offer: assume part of the liability. Although still believing that he should not pay anything because he had nothing to do with the accident, he settles (perhaps to avoid further litigation expenses) — much like Appleton Papers did here. He then "notifies" his insurance company. Under the Majority's decision in this case, the carrier could not contest Smith's assumption of liability.

 Subsection "(2)" reads: "a successor to one or more corporate predecessors that by contract, agreement, or otherwise arranged for [the] disposal or treatment of hazardous substances at a facility owned or operated by another party or *180entity and from which there has been a release of hazardous substances to the [Fox River] Site."

 The law in the Seventh Circuit is that an asset-purchaser is not responsible for a predecessor's remediation liability unless there are one of four reasons to affix that responsibility: "(1) the purchaser expressly or impliedly agrees to assume the liabilities; (2) the transaction is a de facto merger or consolidation; (3) the purchaser is a 'mere continuation' of the seller; or (4) the transaction is an effort to fraudulently escape liability." North Shore Gas Co. v. Salomon Inc., 152 F.3d 642, 651 (7th Cir. 1998), overruled on another ground by Envision Healthcare, Inc. v. PreferredOne Ins. Co., 604 F.3d 983, 986 (7th Cir. 2010). Apparently, the only element that applies here is the first—an express or implied assumption of liability.

 The Majority cites Leverence v. United States Fidelity & Guaranty, 158 Wis. 2d 64, 462 N.W.2d 218 (Ct. App. 1990), overruled on other grounds by Wenke v. Gehl Co., 2004 WI 103, ¶¶ 21, 29, 274 Wis. 2d 220, 235-236, 682 N.W.2d 405, 412-413, for the proposition that no notice was required until Johnson Controls, Inc. v. Employers Ins. of Wausau, 2003 WI 108, 264 Wis. 2d 60, 665 N.W.2d 257, was decided. In Leverence, however, it was a jury question whether the property damage in that case put the insured on sufficient notice that there might be covered losses. Id., 158 Wis. 2d at 75-76, 462 N.W.2d 218, 223 (the test is whether the insured had "reasonable grounds" to suspect that there might be coverage). The same test applies here. Further, and significantly, although Johnson Controls was not decided until 2003, Appleton Papers told its carriers in August of 1998, which, of course, was some six months after the settlement, that it expected the carriers to pay for that liability. Given the Majority's reliance on Leverence and Johnson Controls, it is helpful to look at this "notice" in some detail. The key part of the August "notice" recited:
The Fox River environmental matters involve the presence of PCBs in the land and water in the Fox River watershed in and around Green Bay, Wisconsin. Potential claimants include the Wisconsin Department of Natural Resources, the U.S. Environmental Protection Agency, the U.S. Department of the Interior, and private landowners. Potential claims could involve both remediation and natural resource injury components. Appleton's involvement arises out of allegations that facilities currently owned by Appleton were one possible source for the introduction of PCBs into the Fox River watershed. The use of PCBs in manufacturing at these facilities ceased in 1971. However, the involved governmental regulatory agencies are investigating whether the harm, if any, caused by the presence of PCBs in the watershed continues to the present day.
This is clarion evidence that Appleton Papers did not need Johnson Controls to tell it that it was, potentially at least, on the hook for the contamination of the Fox River.