Interstate Packaging Company v. Century Indemnity Company et al

Filing 210

ORDER DISMISSING CASE: The Court GRANTS Defendants' Motions for SummaryJudgment (Doc. Nos. 94 ; 126 ; 174 ; 193 ) as to Plaintiff's claims. The Court DECLARES (1) Defendants had no duty to defend and no duty to indemnify Plaintiff, and (2) Defendants have not committed any "bad faith refusal to pay" nor any violations of the TCPA. Additionally, the cross-claims raised by Defendants Century Indemnity Company, ACE Property & Casualty Insurance Company, and ACE Fire Under writers Insurance Companyall of which are only applicable if any Defendants are found to have a duty to defend and/or indemnify Plaintiff are DISMISSED AS MOOT. As such, Defendants GAIC and GANY's pending Motion for Summary Judgment on Defen dants' Cross-claims for Declaratory Relief (Doc. No. 101 ) is TERMINATED AS MOOT. This order terminates the Court's jurisdiction over the matter and the case is DISMISSED. It is so ORDERED. Signed by Senior Judge John T. Nixon on 9/25/13. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(la)

IN THE UNITED STATES DISTRICT COURT
THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
INTERSTATE PACKAGING COMPANY,
Plaintiff,
v.
CENTURY INDEMNITY COMPANY, et al.,
Defendants.

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No. 3:11-cv-00589
Judge Nixon
Magistrate Judge Knowles
JURY DEMAND

ORDER
Pending before the Court is Defendants American Casualty Company of Reading, PA,
and Continental Casualty Company’s Motion for Summary Judgment (“Motion No. 1”) (Doc.
No. 94); Defendants Century Indemnity Company, ACE Property & Casualty Insurance
Company, and ACE Fire Underwriters Insurance Company’s Motion for Summary Judgment
(“Motion No. 2”) (Doc. No. 126); Defendant the American Insurance Company’s Motion for
Summary Judgment (“Motion No. 3”) (Doc. No. 174); and Defendant United States Fire
Insurance Company’s Motion for Summary Judgment (“Motion No. 4”) (Doc. No. 193)
(collectively the “Defendants” and the “Motions”). For the reasons stated below, Defendants’
Motions are GRANTED.
I.

BACKGROUND1
A. Factual Background
1. Underlying Litigation
Plaintiff Interstate Packaging Company manufactures packaging, labels, bags, and

pouches for customers in the food and beverage, health and beauty, textile, household product,
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Unless otherwise indicated, the facts in this section are undisputed and taken from Plaintiff’s Responses to
Defendants’ Statements of Undisputed Material Facts (Doc. Nos. 182–84; 199) and Defendants’ Replies to
Plaintiff’s Statement of Additional Facts (Doc. Nos. 190; 206).

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and pet product industries in Tennessee. (Doc. No. 1-1 at 3.) On October 28, 2009, Natural
Resources Defense Council, Inc., Beatrice Holt, and Sheila Holt-Orsted (“NRDC Plaintiffs”)
filed suit against Interstate in this District (“NRDC Lawsuit”). The Complaint in the NRDC
lawsuit (“NRDC Complaint”) alleges that Interstate disposed of waste containing
trichloroethylene (“TCE”) and perchloroethylene (“PCE”) at a landfill owned and operated by
the City of Dickson, Tennessee, in the 1970s and 1980s.
The NRDC Plaintiffs claim that the TCE and PCE contaminated the Holts’ drinking well
and the subsurface of their property. They further claim that members of the Holt family have
experienced serious health problems that they believe are related to their long-term exposure to
the contaminated water supply. The NRDC Plaintiffs sought an order requiring various
defendants, including Plaintiff, to investigate the extent of contamination, remediate the present
contamination, and abate future contamination. The NRDC Plaintiffs subsequently settled their
claims, and the NRDC Lawsuit was dismissed in November 2011.
2. Insurance Policies
Defendants are insurers who—at various points relevant to the underlying litigation—
insured Plaintiff. Plaintiff’s insurance policies with Defendants each contained an identical
exclusion to coverage for injury or property damage caused by the insured’s polluting activities.
Specifically, the policies contain a “pollution exclusion” provision, which excludes from
coverage “bodily injury or property damage arising out of the discharge, dispersal, release or
escape of smoke, vapors, soot, fumes, acids, alkalis, tonic chemicals, liquids or gases, waste
materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any
water course or body of water;” however, the policies also contain an exception to the “pollution
exclusion” provision, such that the exclusion “does not apply if such discharge, dispersal, release

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or escape is sudden and accidental.” (Doc. No. 1-1 at 4–27.)2 Defendants declined to defend or
indemnify Plaintiff against the NRDC Lawsuit, on the basis that the NRDC Complaint alleged
polluting activities that were excluded from coverage, and did not fall within the “sudden and
accidental” exception to the exclusion. (See, e.g., Doc. No. 1-5 at 637.) Defendants’ denial of
coverage precipitated the instant case.
B. Procedural Background
Plaintiff filed the instant action in the Chancery Court of Dickson County on May 18,
2011, seeking a declaratory judgment that coverage for the NRDC Lawsuit exists under the
policies. (Doc. No. 1-1.) Plaintiff alleges generally that Defendants wrongfully denied
insurance coverage for the damages alleged in the NRDC Lawsuit and that Defendants are liable
for the policy limits, along with damages for their failure to defend and indemnify. (Id.)
Defendants removed the action to this Court on June 17, 2011, on the grounds of diversity
jurisdiction. (Doc. No. 1.)
Defendants Great American Insurance Company (“GAIC”) and Great American
Insurance Company of New York (“GANY”) filed a Motion for Summary Judgment (“Original
Motion”) on December 5, 2011 (Doc. No. 65), which the Court granted on March 14, 2012 (Doc.
No. 88). Of particular relevance, the Court held that (1) the exclusions contained in Plaintiff’s
insurance policies applied to bar coverage for the claims as alleged in the NRDC Lawsuit, and
(2) the “blanket rule” was applicable to the case, meaning that if the Court found GAIC and
GANY had no duty to defend, it must necessarily find GAIC and GANY had no duty to
indemnify. (Id. at 10–11.) The Court therefore found that neither policy gave rise to a duty to
defend or to indemnify. (Id.) The Court held, in the alternative, that it could not find a duty to

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Plaintiff concedes one of the umbrella policies issued by Defendant the American Insurance Company does not
contain the “sudden and accidental” exception.

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indemnify when no “true facts” had been determined in the NRDC Lawsuit prior to the suit’s
settlement. (Id. at 12.)
On April 9, 2012, Defendants American Casualty Company and Continental Casualty
Company filed a Motion for Summary Judgment on the same grounds as the previously granted
Original Motion. (Doc. No. 94.) Two days later, on April 11, 2012, Plaintiff filed a Motion for
Reconsideration of the Court’s Order on Summary Judgment, or in the Alternative, for
Certification of State Law Questions to the Tennessee Supreme Court. (Doc. No. 99.) The
remaining defendants in this matter all subsequently filed motions for summary judgment on the
same grounds as the previously granted Original Motion: (1) Defendants Century Indemnity
Company, ACE Property & Casualty Insurance Company, and ACE Fire Underwriters Insurance
Company on August 13, 2012 (Doc. No. 126); (2) Defendant the American Insurance Company
on February 20, 2013 (Doc. No. 174); and (3) Defendant United States Fire Insurance Company
on June 6, 2013 (Doc. No. 193). The Motions were filed with memorandums in support (Doc.
Nos. 95; 127; 175; 194), statements of uncontested material facts (Doc. Nos. 96; 128; 176; 195),
and multiple affidavits and exhibits in support.
On April 18, 2013, Plaintiff filed a Response in Opposition to Motion Nos. 1–3 (“Joint
Response”) (Doc. No. 181), along with responses to the respective statements of undisputed
material facts and statements additional facts (Doc. Nos. 182–84). On May 16, 2013, Replies to
Plaintiff’s Joint Response were filed by Defendants American Casualty Company, Continental
Casualty Company, Century Indemnity Company, ACE Property & Casualty Insurance
Company, and ACE Fire Underwriters Insurance Company (Doc. No. 189); and Defendant the
American Insurance Company (Doc. No. 191); along with a Reply to Plaintiff’s additional
statement of facts by Defendants (Doc. No. 190). On July 3, 2013, Plaintiff filed a Response in
Opposition to Motion No. 4 (Doc. No. 198), along with a Response to Defendant United States
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Fire Insurance Company’s statement of uncontested material facts and a statement of additional
facts (Doc. No. 199). Defendant United States Fire Insurance Company filed a Reply to
Plaintiff’s Response (Doc. No. 205), along with a Reply to Plaintiff’s statement of additional
facts (Doc. No. 206).
The Court ruled on Plaintiff’s Motion for Reconsideration on March 29, 2013, upholding
its previous grant of summary judgment in favor of Defendants GANY and GAIC. (Doc. No.
180.) In so doing, the Court held it had not committed clear error in (1) applying the “blanket
rule” and (2) finding Plaintiff could not establish a genuine issue of material act as to whether its
pollution activities were “sudden and accidental.” (Id. at 12, 14.) While the Court found its
previous ruling that no “true facts” had been established to be clear error, the Court explained
this error did not affect the final outcome as it was merely an alternative ground for finding no
duty to indemnify. (Id. at 10.)
II.

LEGAL STANDARD
Summary judgment is rendered when “there is no genuine dispute as to any material fact

and . . . the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The
moving party must demonstrate that the non-moving party has failed to establish a necessary
element of that party’s claim. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Summary
judgment will be granted if “the evidence is so one-sided that one party must prevail as a matter
of law.” Lexington-South Elkhorn Water Dist. v. City of Wilmore, 93 F.3d 230, 233 (6th Cir.
1996). The movant has the initial burden of informing the district court of the basis of the
summary judgment motion and identifying portions of the record which lack a genuine issue of
material fact to support the non-movant’s case. See Celotex, 477 U.S. at 323.
The non-moving party may not rest solely on the allegations in the complaint, but must
delineate specific evidence that shows there is a genuine issue for trial. See id. at 324. A “mere
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possibility” of a factual dispute is not sufficient to withstand a properly supported motion for
summary judgment. Baird v. NHP Mill Creek Apartments, 94 F. App’x 328, 330-31 (6th Cir.
2004) (quoting Gregg v. Allen-Bradley Co., 801 F.2d 859, 863 (6th Cir. 1986)). A dispute about
a material fact is genuine if a reasonable factfinder could find for the non-moving party.
Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). A party asserting or denying that a fact is
genuinely disputed may support its position by (1) citing to particular parts of materials in the
record, (2) showing that the materials cited by the opposing party do not establish the absence or
presence of a genuine dispute, or (3) showing that an adverse party cannot produce admissible
evidence to support a fact. Fed. R. Civ. P. 56(c)(1).
All reasonable inferences are to be drawn in favor of the non-moving party and the
evidence of the non-movant is to be believed. Anderson, 477 U.S. at 255. “Credibility
determinations, the weighing of the evidence, and the drawing of legitimate inferences from the
facts are jury functions, not those of a judge . . . on a motion for summary judgment.” Id. If the
court determines that a reasonable factfinder could not find for the non-moving party, summary
judgment must be granted. See Lexington-South Elkhorn Water Dist., 93 F.3d at 233.
III.

ANALYSIS
A. Duty to Defend and Duty to Indemnify
Defendants have moved for summary judgment regarding both the duty to defend and the

duty to indemnify. As to both duties, Defendants argue that the facts with respect to them are
identical to that of GAIC and GANY, whose Original Motion the Court granted and upheld on
Plaintiff’s Motion For Reconsideration. (Doc. Nos. 95 at 2; 127 at 2; 175 at 2; 194 at 2.)
Defendants argue they have not only presented substantially the same substantive arguments as
GAIC and GANY, but also that the Court’s previous rulings should be applied to the Motions
under the “law of the case” doctrine. (Doc. Nos. 189 at 9–11; 205 at 1–3.) Plaintiff agrees the
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policy language at issue in the Motions is exactly the same as the policy considered in the
Court’s previous orders in that all of the policies contain a “pollution exclusion” provision for
which there is an exception for “sudden and accidental” discharges.3 (Doc. Nos. 181 at 3; 198 at
2–3.) With regard to the duty to defend, Plaintiff has conceded in its Responses that, while it
continues to disagree with the Court’s previous ruling regarding the duty to defend, the Court has
“definitively rejected” Plaintiff’s arguments and does not raise any new issues concerning the
duty to defend. (Doc. No. 181 at 2 n.1.) Plaintiff argues the Court should, however, reject
Defendants’ Motions as to the duty to indemnify based on (1) the Court’s expression of doubt
regarding the applicability of the “blanket rule” in future cases, and (2) the fact that pollution
activities in this case qualify for the “sudden and accidental” exception to the “pollution
exclusion” provisions, as supported by Plaintiff’s additional evidence. (Doc. No. 181 at 6–15;
198 at 8–10.) Plaintiff further argues the “law of the case” doctrine does not compel the Court to
apply its prior rulings here. (Doc. No. 198 at 6–8.)
The “law of the case” doctrine states that “a decision on an issue made by a court at one
stage of a case should be given effect in successive stages of the same litigation.” United States
v. Cunningham, 679 F.3d 355, 376 (6th Cir. 2012) (quoting United States v. Todd, 920 F.2d 399,
403 (6th Cir. 1990)). The purpose of the doctrine is to “to maintain consistency and avoid
reconsideration of matters once decided during the course of a single continuing lawsuit.”
United States v. Graham, 327 F.3d 460, 464 (6th Cir. 2003) (quoting Rosales-Garcia v. Holland,
322 F.3d 386, 398 n.11 (6th Cir. 2003) (en banc)). Although a “court has the power to revisit
prior decisions of its own . . . in any circumstance, . . . as a rule courts should be loathe to do so
in the absence of extraordinary circumstances.” Todd, 920 F.2d at 403 (quoting Christianson v.

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As previously noted, one of the umbrella policies issued by Defendant the American Insurance Company does not
contain the “sudden and accidental” exception.

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Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988)). Generally, a “district court may
disregard its own earlier decision only under ‘extraordinary conditions’ where some ‘cogent
reason’ makes that decision inapplicable, such as if the prior decision was ‘clearly erroneous,’
based on substantially different evidence, or was followed by a contrary decision from a
controlling authority.” Omimex Energy, Inc. v. Blohm, 374 F. App’x 643, 652 (6th Cir. 2010)
(quoting In re Kenneth Allen Knight Trust, 303 F.3d 671, 677–78 (6th Cir. 2002)).
The Court previously reaffirmed in its order denying Plaintiff’s Motion for
Reconsideration that GAIC and GANY had no duty to defend or to indemnify. Specifically with
regard to the duty to indemnify, the Court held (1) the application of the “blanket rule” was not
clear error, and (2) the finding that the pollution activities in this case do not fall under the
“sudden and accidental” exception to the “pollution exclusion” provisions was not clear error.
(Doc. No. 180.) The Parties agree the policy language at issue here is exactly the same as the
policy language at issue in the Court’s previous order granting summary judgment, and Plaintiff
has not provided any evidence—other than its two newly filed affidavits—that the Court should
find Defendants or the Motions present a different situation or context such that the Court’s
previous rulings would not be applicable. The Court thus finds its prior rulings regarding the
duty to defend and to indemnify applicable here under the “law of the case” doctrine. As such,
the Court interprets Plaintiff’s opposition to the Motions to be a request for the Court to
reconsider its previous rulings, based in part on Plaintiff’s additional evidence.
Plaintiff concedes the Court has “definitively rejected” its previous arguments, which it
has incorporated by reference to preserve for appeal. Plaintiff has also offered no additional
arguments for why the Court should revisit its determination that the facts presented fail to
establish, under the policies at issue, a duty on the part of Defendants to defend Plaintiff.
Accordingly, the Court declines to reconsider its previous ruling regarding the duty to defend
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and adopts the reasoning set forth in its previous orders. (See Doc. Nos. 88; 180.) Under that
reasoning, the Court finds Defendants have met their burden to show that they are entitled to
summary judgment as a matter of law as to the duty to defend.
As to the applicability of the “blanket rule,” Plaintiff’s sole argument—that the Court’s
notation that it has “serious doubts about the rule and its compatibility with Tennessee law, and
will be reluctant to apply it in similar cases going forward,” (Doc. No. 180 at 14 (emphasis
added)), should lead the Court to refuse to apply it in the remaining stages of this case—is
unpersuasive. While Plaintiff correctly points out that trial courts may reconsider previous
prejudgment rulings at any point, the Court has reconsidered its previous ruling and found no
clear error. Further, the present Motions are part of the same case, not future cases to which the
Court previously alluded. As Plaintiff has offered no new arguments, and thus not shown any
“extraordinary circumstances” that would cause the Court to revisit its decision, the Court
declines to reconsider the applicability of the “blanket rule” a second time. The Court adopts its
reasoning in its previous orders, (see Doc. Nos. 88; 180), and finds the “blanket rule” applicable
here. Accordingly, as Defendants had no duty to defend Plaintiff, the Court finds Defendants
also had no duty to indemnify Plaintiff.
Even if the Court were to find the “blanket rule” inapplicable, Plaintiff still must show
that there are “extraordinary circumstances” requiring the Court to revisit its ruling that the
pollution activities in question were not “sudden and accidental.” The Court previously found
specifically that Plaintiff had failed to link any “evidence of a connection between the alleged
‘discrete events’ and its settlement with the NRDC Plaintiffs,” and as such “Plaintiff’s bald
assertion that its liability was premised on two discrete polluting events” was not enough to find
a material issue of genuine fact regarding whether the polluting activities were “sudden and
accidental.” (Doc. No. 180 at 15.) Plaintiff appears to have relied on the Court’s statement—
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that it had “not been presented with the settlement agreement itself, documentary evidence
related to the settlement agreement, or affidavits from participants in the settlement
negotiations,” (Id. (emphasis added))—in providing the affidavits of Michael Doochin and Jerald
Doochin to overcome the Court’s previous ruling. However, these affidavits merely reiterate the
“bald assertion” that Plaintiff’s liability was only premised on “discrete events,” stating simply
that any pollution activity on the part of Plaintiff was “unintended, unexpected, unforeseen, and
not consistent with [Plaintiff]’s practices and policies.” (Doc. Nos. 185 at 4; 186 at 3.) Such
statements fail to establish a genuine issue of material fact where Plaintiff has still not presented
the settlement agreement to the Court and the court in the underlying case rejected similar
arguments based on the “depositions of several Interstate employees who testified to polluting
activities occurring as part of Plaintiff’s normal course of business.” (Doc. No. 180 at 15 (citing
Natural Res. Def. Council, Inc. v. Cnty. of Dickson, No. 3:08-0229, 2011 WL 8214, at *10 (M.D.
Tenn. Jan. 3, 2011)).) Plaintiff’s additional evidence, which presents only “[Plaintiff]’s
perspective” regarding the pollution activity, (Doc. Nos. 185 at 4; 186 at 3), thus fails to meet the
high burden of “substantially different evidence” that might compel the Court to reconsider its
previous ruling. Accordingly, the Court adopts the reasoning in its previous orders, (see Doc.
Nos. 88; 180), under the “law of the case” doctrine, finding Plaintiff has failed to establish a
genuine issue of material fact as to whether the pollution activities qualify as “sudden and
accidental.” As Plaintiff’s polluting activities do not qualify for the “sudden and accidental”
exception to the “pollution exclusion” in its insurance coverage, the Court finds that,
notwithstanding the “blanket rule,” Defendants still had no duty to indemnify Plaintiff.
B. Bad Faith Refusal and Tennessee Consumer Protection Act
Defendants American Casualty Company of Reading, PA, Continental Casualty
Company, the American Insurance Company, and United States Fire Insurance Company have
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also moved for summary judgment on Plaintiff’s claims of “bad faith refusal to pay” and
violations of the Tennessee Consumer Protection Act (“TCPA”), Tenn. Code. Ann. § 47-18-101
et. seq. (2013), arguing that there can be no bad faith refusal to pay where there is no duty to
defend or to indemnify. (Doc. Nos. 95; 174; 193.) Plaintiff has offered no argument or
objection on these points. As the Court has found Defendants had no duty to defend or to
indemnify, it logically follows that Defendants cannot be liable for any “bad faith” refusal to pay
under their respective insurance policies. Accordingly, the Court finds Plaintiff’s claims for
“bad faith refusal to pay” and violations of the TCPA must also fail.
IV.

CONCLUSION
For the above-stated reasons, the Court GRANTS Defendants’ Motions for Summary

Judgment (Doc. Nos. 94; 126; 174; 193) as to Plaintiff’s claims. The Court DECLARES (1)
Defendants had no duty to defend and no duty to indemnify Plaintiff, and (2) Defendants have
not committed any “bad faith refusal to pay” nor any violations of the TCPA.
Additionally, the cross-claims raised by Defendants Century Indemnity Company, ACE
Property & Casualty Insurance Company, and ACE Fire Underwriters Insurance Company—all
of which are only applicable if any Defendants are found to have a duty to defend and/or
indemnify Plaintiff—are DISMISSED AS MOOT. As such, Defendants GAIC and GANY’s
pending Motion for Summary Judgment on Defendants’ Cross-claims for Declaratory Relief
(Doc. No. 101) is TERMINATED AS MOOT. This order terminates the Court’s jurisdiction
over the matter and the case is DISMISSED.
It is so ORDERED.
Entered this 25th day of September, 2013.
________________________________
JOHN T. NIXON, SENIOR JUDGE
UNITED STATES DISTRICT COURT
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