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Siltronic Corp. v. Employers Insurance Co. of Wausau

United States District Court, D. Oregon, Portland Division

January 2, 2018

SILTRONIC CORPORATION, a Delaware corporation, Plaintiff,
v.
EMPLOYERS INSURANCE COMPANY OF WAUSAU, a Wisconsin corporation; and GRANITE STATE INSURANCE COMPANY, a Pennsylvania corporation, Defendants.

          FINDINGS AND RECOMMENDATIONS

          Youlee Yim You United States Magistrate Judge.

         In these Findings and Recommendations, the court considers plaintiff Siltronic Corporation's (“Siltronic”) Motion for Partial Summary Judgment Regarding Separate Limits (ECF #335) (“Siltronic's Motion”). For the reasons set forth below, the motion should be DENIED.

         BACKGROUND

         Siltronic has been investigating and remediating environmental contamination at 7200 N.W. Front Avenue, its 85-acre property within the Portland Harbor Superfund Site (“the Site”) along the Willamette River, since October 2000 pursuant to orders from the Oregon Department of Environmental Quality (“Oregon DEQ”). The court will not recite the broad facts underlying this dispute because they have been fully set forth in previous opinions.[1] However, the following facts are pertinent to resolution of the present motion:

         Oregon DEQ has issued three orders to Siltronic relating to contamination on its property within the Site.[2] All three DEQ orders contain six “Conclusions of Law and Determinations” that differ in precise wording but state nearly the same things, to wit:

1. The substances described in Subsection [**] are ‘hazardous substances' within the meaning of ORS 465.200(15).
2. The presence of hazardous substances in soil groundwater, and other environmental media at and near the Siltronic property constitutes a “release” or threat of “release” into the environment within the meaning of ORS 465.200(22).
3. The contaminated Siltronic property is a facility within the meaning of ORS 465.200(13).
4. Siltronic is a “person” within the meaning of ORS 465.200(21).
5. As the owner and operator of the facility, Siltronic is strictly liable under ORS 465.255, and therefore may be required by DEQ to conduct any removal or remedial action necessary to protect public health, safety, and welfare and the environment, pursuant to ORS 465.260 (4).
6. The activities required by this Order are necessary to protect public health, safety, and welfare and the environment.

See 2000 DEQ Order at 4, ECF #336-5; 2004 DEQ Order at 3-4, ECF #336-7; 2016 DEQ Order at 5-6, ECF #336-15. Each order is premised on Siltronic's strict liability under ORS 465.255 as the owner and operator of contaminated property.

         However, the “hazardous substances” described in each DEQ Order are different. The 2000 DEQ Order alleged that groundwater samples contained benzene, polycyclic aromatic hydrocarbons, cyanide, and lead. 2000 DEQ Order at 2-3, ECF #336-5. The previous owner of the Siltronic property-Portland Gas and Coke Company (now Northwest Natural Gas Company (“NW Natural”))-disposed of the waste generated at the plant, Manufactured Gas Product (“MGP”), from 1940-41 until 1956 when the MGP operations ceased. Second Amended Opinion and Order at 3, September 2, 2015, ECF #194. The 2004 DEQ Order identified trichloroethene (“TCE”) and its associated hazardous substances (e.g., cis 1, 2-dichloroethene and vinyl chloride). 2004 DEQ Order at 2-3, ECF #336-7. Siltronic's production of silicon wafers created the TCE waste. Second Amended Opinion and Order, at 3, September 2, 2015, ECF #194.

         The 2016 DEQ Order identified pesticides “in groundwater in fill material.” 2016 DEQ Order at 4, ECF #336-15. The pesticide or “dioxin-related contamination” was caused by the manufacture of pesticides and herbicides at the nearby Rhone-Poulenc property for over 40 years beginning in 1943. Barber Decl. at 6-7, ECF #383-4; Horkovich Decl., Ex. I, at 5, ECF #336-9. The Rhone-Poulenc property is located at 6200 N.W. St. Helens Road, situated across from railroad track and North Doane Lake to the south east of the Siltronic property. Horkovich Decl., Ex. J Pt. 1, at 93-94, ECF #336-10; Horkovich Decl., Ex. J Pt. 2, at 6, ECF #336-11. The size of North Doane Lake has varied over time, but runoff and seepage emanating from the lake through various creeks and outfall pipes has contaminated the groundwater underneath the Siltronic property. Horkovich Decl., Ex. J Pt. 1, at 93-94, ECF #336-10; Horkovich Decl., Ex. J Pt. 2, at 6, ECF #336-11.

         Wausau sold Siltronic seven general liability insurance policies covering consecutive policy periods from August 17, 1978, through January 1, 1986. The first four policies-those covering the period from 1978 through 1983 (“1979-83 Policies”)-are at issue here.[3] Each of the 1978-83 policies provided a $1 million aggregate limit of liability. ECF #336-1, at 7. However, Wausau included an endorsement to each policy-the Separate Aggregate Limit Endorsement-which “deleted and replaced” the “limits of liability provision, ” and provides an aggregate limit of $1, 000, 000 that “shall apply separately with respect to each project away from premises owned by or rented to the named insured.” ECF #336-1, at 6-7; ECF #336-2, at 8-9; ECF #336-3, at 8-9; ECF #336-4, at 9-10.

         Siltronic seeks an order from the court declaring that:

1. Under each of the 1978-83 policies that Wausau sold to Siltronic, a separate “aggregate limit of liability” applies to Siltronic's losses incurred to investigate and remediate pesticide, herbicide, and dioxin-related contamination in connection with the Oregon Department of Environmental Quality's Unilateral Order No. OPSR-NWR-16-02; and
2. Under the 1978-83 policies, the pesticide, herbicide, and dioxin-related contamination in connection with Unilateral Order No. OPSR-NWR-16-02 arose out of a separate “occurrence” related to the manufacture of pesticides and ...

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