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Alabama Gas Corp. v. Travelers Cas. & Sur. Co.

United States District Court, N.D. Alabama, Southern Division

July 16, 2013

ALABAMA GAS CORPORATION, Plaintiff,
v.
TRAVELERS CASUALTY AND SURETY COMPANY, et al., Defendants

Page 1164

For Alabama Gas Corporation, Plaintiff: Fred R DeLeon, Jr., DeLEON LAW FIRM, Birmingham, AL; Rebecca W Pritchett, PRITCHETT ENVIRONMENTAL & PROPERTY LAW LLC, Birmingham, AL; W Scott Laseter, KAZMAREK GEIGER & LASETER, LLP, Atlanta, GA.

For Travelers Casualty and Surety Company, Defendant: Andrew J Sinor, Jr., John S Johnson, HAND ARENDALL LLC, Birmingham, AL; Frank Winston, Jr, Paul E Janaskie, STEPTOE & JOHNSON, LLP, Washington, DC; Ruth S Kochenderfer, STEPTOE & JOHNSON LLC, Washington, DC.

For St Paul Fire & Marine Insurance Company, St Paul Surplus Lines Insurance Company, St Paul Mercury Insurance Company, Defendants: Andrew J Sinor, Jr., John S Johnson, HAND ARENDALL LLC, Birmingham, AL; Frank Winston, Jr, STEPTOE & JOHNSON, LLP, Washington, DC; Ruth S Kochenderfer, STEPTOE & JOHNSON LLC, Washington, DC.

Page 1165

MEMORANDUM OPINION

INGE PRYTZ JOHNSON, SENIOR UNITED STATES DISTRICT JUDGE.

Pending before the court are cross- motions for summary judgment filed by the parties. Each of the claims in this case arises out of defendants' refusal to defend or indemnify plaintiff on a claim for which the plaintiff asserts the insurance policies in question should provide coverage.

As previously set forth by the court, the facts relevant to this case began before 1900. The lengthy, relevant facts are not in dispute, and the court summarizes the same here. The Huntsville Gas Light Company incorporated in 1856 and manufactured gas. That company and its operations moved to the site relevant to this action prior to 1886, under the name Huntsville Gas Light and Coke Company (" HGLC" ). See e.g., doc. 130-3 (Exhibit B) at 3. HGLC, under several different names, provided gas produced from various sources to customers until 1946. Spills, leaks and emissions released substances classified as hazardous into the environment. [1] In 1946, the Huntsville facility was converted to a propane air system, and then plaintiff (a corporate successor to the Huntsville company) sold the

Page 1166

plant and distribution system to the City of Huntsville in 1949. Depo. of Dennis Unites (doc. 144-1), at 37-38. Although a natural gas pipeline was installed in March 1952, ending the need for the propane system, the City of Huntsville used the site for various utility service purposes until 1967. In 1967 ownership of the site was transferred for purposes of constructing public housing. The plant was demolished, and the Searcy Homes public housing project was completed in 1971, with title to the land passing to the Huntsville Housing Authority at that time. Doc. 133-1 at 6, ¶ 9.h.

From 1947 until 1984, plaintiff allegedly was insured under liability policies issued by various subsidiaries of defendant Travelers Casualty and Surety Company. [2] In 2008 plaintiff received an " information request" letter from the EPA and a pollution report regarding this site . See e.g, doc. 130-20 (Exhibit N) at 3. Plaintiff forwarded the same to the defendants along with a demand for coverage in October 2008. Id., at 1. In November 2008 defendants notified plaintiff that there was no " formal claim" and thus there could be no coverage until " such a claim or lawsuit is received." Doc. 130-22 (Exhibit P). In June 2009 the plaintiff received a formal PRP letter, which it again forwarded to the defendant. [3] Doc. 130-21 (Exhibit O). On February 3, 2010, the defendants informed plaintiff that there was no " suit" and hence there was no defense obligation on its part. See Memorandum Opinion of December 7, 2010 (doc. 51), at 8-9; see also doc. 130-23 (Exhibit Q). The plaintiff's claims include Declaration of Duty to Defend; Reimbursement for Defense Costs; Bad Faith; Declaration of Duty to Indemnify; and Waiver and Estoppel. In sum, this case concerns whether defendants' denial of insurance coverage to plaintiff was reasonable, and if not, whether such denial was in bad faith. [4]

Because the parties agreed that " no Alabama state court or any federal court applying Alabama law ha[s] ever addressed whether a PRP letter from the EPA satisfies the " suit" requirement under a liability policy," [5] the court certified this question to the Alabama Supreme Court. See Travelers Casualty and Surety Company v. Alabama Gas Corp.., 117 So.3d 695, 2012 WL 6720790 (Ala.2012). The Supreme Court of Alabama responded by stating " [w]e answer this question in the affirmative." [WL] at *1. With this background, the court considers

Page 1167

the pending motions on the duty to ...


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