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Siltronic Corp. v. Employers Insurance Co. of Wausau

United States District Court, D. Oregon

July 19, 2018

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

          MINUTE ORDER

          PRESIDING JUDGE ANNA J. BROWN

         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.

         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 ...


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