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Nucor Corp. v. Employers Ins. Co. of Wausau

United States District Court, D. Arizona

September 27, 2013

Nucor Corporation, Plaintiff,
v.
Employers Insurance Company of Wausau, Defendant. Employers Insurance Company of Wausau, Counter-claimant,
v.
Nucor Corporation, Hartford Accident & Indemnity Company, and Travelers Casualty & Surety Company, Counter-defendants

For Nucor Corporation, a Delaware corporation, Plaintiff, Counter Defendant: Christopher L Callahan, LEAD ATTORNEY, Fennemore Craig PC - Phoenix, AZ, Phoenix, AZ; Craig Christopher Crockett, Scott Phillip DeVries, Yelitza V Dunham, LEAD ATTORNEYS, Winston & Strawn LLP - San Francisco, CA, San Francisco, CA.

For Employers Insurance Company of Wausau, a Wisconsin corporation, Defendant, Counter Claimant: Allan S Cohen, James E Fitzgerald, LEAD ATTORNEYS, Stroock & Stroock & Lavan LLP, Los Angeles, CA; Bryan Barber, LEAD ATTORNEY, Barber Law Group PC, San Francisco, CA.

For Hartford Accident and Indemnity Company, Counter Defendant: Corey Israel Richter, William Francis Auther, LEAD ATTORNEYS, Bowman & Brooke LLP - Phoenix, AZ, Phoenix, AZ; Thomas M Klein, LEAD ATTORNEY, Bowman & Brooke LLP, Phoenix, AZ; David C Capell, Gordon & Rees LLP - San Francisco, CA, San Francisco, CA.

For Travelers Casualty and Surety Company, Counter Defendant: Julie Kristin Moen, Myles Patrick Hassett, LEAD ATTORNEYS, Hassett Law Firm PLC, Phoenix, AZ.

OPINION

Page 1049

MEMORANDUM OF DECISION AND ORDER

Stephen M. McNamee, Senior United States District Judge.

Before the Court are several related motions:

(1) Counter-defendant Travelers Casualty and Surety Company's Motion for Summary Judgment Re: Equitable Contribution (Doc. 80);

(2) Defendant/Counter-claimant Employers Insurance Company of Wausau's Motion for Partial Summary Judgment (Doc. 83);

(3) Counter-defendant Hartford Accident and Indemnity Company's Motion for Summary Judgment Re: Equitable Contribution (Doc. 85);

(4) Plaintiff/Counter-defendant Nucor Corporation's Cross Motion for Partial Summary Judgment (Doc. 124); and

Page 1050

(5) Defendant/Counter-claimant Employers Insurance Company of Wausau's Motion to Strike (Doc. 125).

The motions are fully briefed. (Docs. 115, 118, 120, 127, 129, 132, 135, 136.) After considering the parties' briefing, and having determined tat oral argument is unnecessary, [1] the Court issues the following ruling.

BACKGROUND

This insurance coverage dispute arose from a federal environmental liability lawsuit filed against Plaintiff/Counter-defendant Nucor Corporation (" Nucor" ). In 2010, the Roosevelt Irrigation District (" RID" ) filed suit against Nucor alleging that Nucor and dozens of other potentially responsible parties (" PRPs" ) are responsible for releasing pollutants into Phoenix groundwater from the 1960s to the 1980s, resulting in contamination to wells owned and operated by RID. The underlying suit (hereafter referred to as the " RID action" or " RID suit" ) seeks recovery of the costs associated with remediation of the groundwater contamination and damage to RID's real property.

A. Previous related litigation against Nucor.

For slightly over four years in the 1960s, Nucor owned and operated a manufacturing facility located on West Osborn Road in Phoenix, Arizona (hereafter " the Site" or " the WOR facility" ), where it manufactured electronic components. (Doc. 1-1 at 2-3.) As part of its manufacturing process, Nucor used a solvent called trichloroethylene (" TCE" ) to clean and degrease parts, tools, and machines. (Id. at 3.) During the 1980s, TCE was discovered in the groundwater in the west-central area of Phoenix. (Id.) As a result, Nucor has been sued in four separate lawsuits, including most recently the RID action. (Id.) The four lawsuits are:

(1) An enforcement action brought by the Arizona Department of Environmental Quality (" ADEQ" );
(2) the Baker v. Motorola, et al., class action lawsuit (hereafter " Baker" ) alleging property damage and medical surveillance claims;
(3) the consolidated lawsuit Lofgren v. Motorola, et al. (hereafter " Lofgren" ), which consisted of individuals alleging personal injury; and

(4) the RID action.

(Id.) Nucor retained the law firm of Fennemore Craig to defend it in connection with all four lawsuits. (Id. ¶ 16.)

Defendant Employers Insurance Company of Wausau (hereafter " Wausau" ) issued four primary liability insurance policies to Nucor for the period from January 1, 1968 to January 1, 1972. (Doc. 84 ¶ 1.) Each of the Wausau policies at issue in this case included the following provision:

[T]he company [Wausau] shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability

Page 1051

has been exhausted by payment of judgments or settlements.

(Id.)

Defendant Travelers Casualty & Surety Company (hereafter " Travelers" ) issued five primary liability insurance policies to Nucor for the period from January 1, 1961 to January 1, 1966, and ten primary liability insurance policies for the period from January 1, 1975 to January 1, 1985. (Id. ¶ 2.) Defendant Hartford Accident and Indemnity Company (hereafter " Hartford" ) issued three primary liability insurance policies to Nucor for the period from January 1, 1972 to January 1, 1975. (Id. ¶ 3.)

In 1997, Nucor filed a coverage action in Maricopa County Superior Court against insurers who provided liability insurance to Nucor in the 1960s to 1980s (hereafter referred to as " Nucor I" ). (Doc. 84 ¶ 25.) In Nucor I, which was litigated over the course of 13 years, Nucor argued that the environmental claims arising out of the alleged contamination at the WOR facility involved a continuous trigger of coverage and thus involved their insurers from 1961 to 1984. (Id.) The state court issued final judgments in Nucor I in 2010; the judgments were subsequently appealed to the Arizona Court of Appeals, which issued a published opinion and an unpublished memorandum decision on November 23, 2010. (Id.) Nucor filed a petition for review with the Arizona Supreme Court as to two rulings of the appellate court, but neither of the issues Nucor appealed are relevant to the issues presented by the motions currently before this Court. (Id.)

One of the central issues of dispute in Nucor I was the extent of Nucor's primary insurers' obligation to contribute to the payment of Nucor's defense costs in the various environmental actions that had been brought against Nucor. (Id. ¶ 26.) In 2005, During the pendency of Nucor I, but prior to the entry of judgment, Nucor entered into settlement agreements with both Travelers and Hartford. (Id.) The settlement between Nucor and Travelers provided that Travelers' payment to Nucor would " exhaust all coverage potentially available to Nucor under the Policies for Environmental Contamination Claims Arising out of the [WOR] Site." (Doc. 81 ¶ 11.)

The settlement between Nucor and Hartford provided that in exchange for the payment by Hartford, Nucor " fully and forever releases and discharges Hartford from Claims . . . that Nucor has or may have against Hartford with respect to . . . the Nucor Policies. . . . Furthermore, by virtue of the foregoing releases, Hartford shall have no duty to defend or indemnify Nucor with respect to any Claim." (Doc. 87 ΒΆ 9.) The Hartford settlement also stated that " [t]he Parties agree that the Settlement Sum will exhaust any ...


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