Siltronic Corporation v. Employers Insurance Company of Wausau et al

Filing 535

ORDER by Judge Anna J. Brown The Court GRANTS Siltronic's Motion (# 495 ) for Partial Summary Judgment Regarding the Pollution Exclusion as stated herein and DENIES Granite State's Motion (# 487 ) for Partial Summary Judgment Regardi ng the Pollution Exclusion, and GRANTS in part and DENIES in part Siltronic's Motion (# 491 ) for Partial Summary Judgment Regarding Wausau's Affirmative Defenses as stated herein. The Court also denies as moot that part of Siltronic's Motion (# 491 ) challenging Wausau's impairment of subrogation rights defense because Wausau has withdrawn that defense. See Stipulation (# 501 ) Regarding Withdrawal of Affirmative Defense. (jy)

United States District Court
District of Oregon
MINUTE ORDER
Case Number:

3:11-cv-01493-BR

Dated: July 19, 2018

Case Name:

Siltronic Corp. v. Employers Insurance Co. of Wausau and Granite State
Insurance Co.

Presiding Judge:
Anna J. Brown
Courtroom Deputy: Jacob Yerke
______________________________________________________________________________
This matter comes before the Court on the following Motions:
1.
Defendant Granite State Insurance Company’s Motion (#487) for Partial
Summary Judgment Regarding the Pollution Exclusion;
2.
Plaintiff’s Siltronic Corporation’s Motion (#495) for Partial Summary Judgment
Regarding the Pollution Exclusion; and
3.
Siltronic’s Motion (#491) for Partial Summary Judgment regarding Wausau’s
Affirmative Defenses.
The Court heard oral argument on these Motions on July 18, 2018, and took them under
advisement at the conclusion of that hearing. The Court issues this summary Minute Order so
that the parties may consider the Court’s rulings on these Motions as they prepare for a
settlement conference scheduled for 8/3/18. This Order will be supplemented by an Opinion and
Order in due course.
I.

Motions Regarding the Pollution Exclusion

Scope of these Motions. In its Motion (#487), Granite State seeks partial summary
judgment against Siltronic on the basis that many of the releases of contaminants from which the
underlying environmental-cleanup actions arise are excluded from coverage as a matter of law
(and on an asserted record of undisputed facts) pursuant to the qualified pollution exclusion from
coverage in the policies Granite State issued to Siltronic from 1978 through 1985. In Siltronic’s
Motion (#495) against Granite State and Wausau, Siltronic seeks a ruling to confirm the meaning
of such qualified pollution exclusions and, thus, for the Court to rule on the particular legal
standard by which a jury will determine whether the qualified pollution exclusion applies to
particular releases of pollutants that gave rise to the contamination at issue in the underlying
environmental-cleanup matters. Unlike Granite State, however, Siltronic does not seek summary
judgment as to any factual determination regarding whether coverage for any particular
discharge or release of pollutants is or is not excluded under the pollution exclusions. In
addition, both Motions turn only on the qualified pollution exclusions and do not address
whether each of the releases were “occurrences” or gave rise to “property damage” within the
meaning of the grants of coverage during the relevant policy periods.
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Summary Analysis. As relevant to these Motions, the pollution exclusions in all of the
relevant policies contain an exception that provides: “[T]his exclusion does not apply if such
discharge, dispersal, release or escape is sudden and accidental.” According to Siltronic, the
question whether a “discharge, dispersal, release or escape” qualifies as “sudden and accidental”
is determined from the perspective of the insured. On the other hand, both Granite State and
Wausau argue that whether a “discharge, dispersal, release or escape” qualifies as “sudden and
accidental” is determined from the perspective of the original polluter at the time of the
discharge or release.
Thus, resolution of these Motions requires interpretation of the language in the pollution
exclusion of the applicable insurance policies. “‘The primary and governing rule of the
construction of insurance contracts is to ascertain the intention of the parties’ . . . based on the
terms and conditions of the insurance policy.” Hoffman Const. Co. of Ak. v. Fred S. James &
Co. of Or., 313 Or. 464, 469 (1992)(quoting Totten v. New York Life Ins. Co., 298 Or. 765, 770
(1985)). If a term in an insurance policy is expressly defined, the court must apply the provided
definition. Holloway v. Republic Indem. Co. of Am., 341 Or. 642, 650 (2006). If the word or
phrase is not specifically defined, the court must look to its plain meaning in light of its context
and the insurance policy as a whole to determine whether the word or phrase is susceptible to
only one plausible interpretation. Id. If, however, “two or more competing, plausible
interpretations prove to be reasonable after all other methods for resolving the dispute over the
meaning of particular words fail,” then the court must construe the term against the insurer.
Hoffman Const., 313 Or. at 470–71.
After considering the parties’ written and oral arguments, the Court concludes (1) Granite
State and Wausau have not established as a matter of law that the “sudden and accidental”
exception to the pollution exclusion is to be determined from the perspective of the original
polluter; (2) Siltronic has established as a matter of law that this language is ambiguous as to
whether the “sudden and accidental” nature of the “discharge, dispersal, release or escape” is to
be determined from the perspective of the insured or the original polluter, and, therefore, the
Court must construe this ambiguity against Granite State and Wausau; and (3) applying this rule
of construction, the Court holds the insured’s perspective is the relevant measure for whether a
“discharge, dispersal, release or escape” was “sudden and accidental.”
Nonetheless, the Court also confirms Siltronic bears the burden to prove each relevant
“discharge, dispersal, release or escape” was “sudden and accidental” from its perspective. See
Employers Ins. of Wausau v. Tektronix, Inc., 211 Or. App. 485, 509–15 (2007).
Finally, the Court also notes the factual record on these Motions is replete with genuine
issues of material fact as to whether any of the relevant discharges, dispersals, releases, or
escapes meet the applicable standard, and, therefore, it is not possible for these specific coverage
issues to be resolved by summary judgment.
Accordingly, on this record the Court GRANTS Siltronic’s Motion (#495) for Partial
Summary Judgment Regarding the Pollution Exclusion as stated herein and DENIES Granite
State’s Motion (#487) for Partial Summary Judgment Regarding the Pollution Exclusion.
II.

Siltronic’s Motion (#491) for Partial Summary Judgment Regarding Wausau’s

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Affirmative Defenses
Scope of these Motions. Following Wausau’s withdrawal of its impairment of
subrogation rights defense, see Stipulation (#501) Regarding Withdrawal of Affirmative
Defense, Siltronic’s Motion seeks summary judgment against two of Wausau’s other affirmative
defenses: impermissible assumption of voluntary payments and failure to cooperate. As the
basis of these defenses, Wausau asserts Siltronic breached its duties under the relevant policies
when it (1) impermissibly assumed voluntary payments and failed to cooperate when it requested
without Wausau’s consent that Foley & Mansfield take over for Davis Rothwell as “defense
counsel” after lead counsel moved from Davis Rothwell to Foley & Mansfield; (2) failed to
cooperate and impermissibly assumed voluntary payments when Siltronic retained additional
environmental consultants without first seeking Wausau’s input or approval; and (3) failed to
cooperate by responding to Wausau’s March 2017 inquiries for information about one of
Siltronic’s environmental consultants, Maul Foster.
Summary Analysis. Under Oregon law, an insured’s breach of a policy’s cooperation
clause is enforceable and can excuse the insurer’s obligations. “A court will enforce the
cooperation clause if: (1) the insurer diligently sought the insured’s cooperation; (2) the insured
willfully failed to cooperate; and (3) the insured’s failure to cooperate prejudiced the insurer.”
Assurance Co. of Am. v. MDF Framing, Inc., No. CV 06-169-MO, 2008 WL 361289, at *3 (D.
Or. Feb. 7, 2008). The elements of an improper assumption of voluntary payments claim are
similar to those that apply to a claim than an insured failed to cooperate. See Charter Oak Ins.
Co. v. Interstate Mech., Inc., 958 F. Supp. 2d 1188, 1208 (D. Or. 2013).
Siltronic contends Wausau’s affirmative defenses fail as a matter of law because (1)
Wausau complains of conduct that occurred during the period when Wausau was not
participating in the defense of the underlying environmental cleanup actions because it asserted
(erroneously) that its policy limits had been exhausted; and (2) Wausau has failed to establish
prejudice. Wausau, on the other hand, contends it should be permitted to proceed on these
affirmative defenses because its declaration of exhaustion was supported by a good-faith basis to
believe its policies were exhausted and because it has suffered prejudice as a result of Siltronic’s
actions.
The parties agree that Foley & Mansfield and the additional environmental consultants
were retained after Wausau maintained its policies were exhausted and, therefore, after Wausau
declined to participate in Siltronic’s defense. The parties also agree, however, that Siltronic’s
alleged failure to respond to Wausau’s inquiries regarding the activities of Maul Foster occurred
after Wausau re-engaged participation in Siltronic’s defense.
The Court agrees with Siltronic that Wausau cannot establish a failure to cooperate or
voluntary assumption of payments claim concerning activities that occurred while Wausau
declined to participate in Siltronic’s defense on the basis that Wausau maintained its policy
limits were exhausted. See Holloway v. Republic Indem. Co. of Am., 201 Or. App. 378, 380-81
(2005) (rev’d on other grounds by Holloway v. Republic Indem. Co. of Am., 341 Or. 642 (2006)).

The Court, however, finds Wausau has sufficiently raised an issue of material fact as to
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whether Siltronic failed to cooperate when it failed to respond to Wausau’s March 2017 inquiries
about Maul Foster’s activities. In particular, the Court concludes a rational trier of fact could
find Wausau’s abilities to determine the reasonableness and necessity of Maul Foster’s billings
and to keep up to date as to the results of Maul Foster’s consulting activities were prejudiced by
Siltronic’s failure to respond.
Accordingly, on this record the Court GRANTS in part and DENIES in part Siltronic’s
Motion (#491) for Partial Summary Judgment Regarding Wausau’s Affirmative Defenses as
stated herein. The Court also denies as moot that part of Siltronic’s Motion (#491) challenging
Wausau’s impairment of subrogation rights defense because Wausau has withdrawn that
defense. See Stipulation (#501) Regarding Withdrawal of Affirmative Defense.

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