Eastern Concrete Materials v. ACE American Insuran
18-11043
5th Cir.Jan 20, 2020Background
- Eastern Concrete, a New Jersey quarry subsidiary of U.S. Concrete (Texas), sought coverage under a commercial umbrella policy issued by Great American Insurance Company (GAIC) that contained an "absolute pollution exclusion."
- At Eastern Concrete’s Glen Gardner, NJ quarry, an accidental pumping event discharged large quantities of crushed-stone "rock fines" into Spruce Run Creek; NJDEP ordered remediation and found statutory violations.
- Eastern Concrete notified GAIC through its Texas broker and sought reimbursement for cleanup and defense costs; GAIC filed a declaratory-judgment action in the Northern District of Texas asserting the pollution exclusion barred coverage.
- The federal district court denied Eastern Concrete’s motion to dismiss for lack of personal jurisdiction, applied Texas law, and granted GAIC summary judgment holding rock fines are "contaminants" excluded by the policy.
- Eastern Concrete appealed; the Fifth Circuit affirmed both the exercise of specific jurisdiction by Texas courts and the grant of summary judgment for GAIC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction | Eastern: no purposeful availment; Texas contacts attributable to parent only | GAIC: policy negotiated, issued, and brokered in Texas; Texas broker pursued the claim; contacts attributable | Specific jurisdiction exists—GAIC made prima facie showing; contacts tied to policy procurement and enforcement; jurisdiction fair and reasonable |
| Choice of law | Eastern: New Jersey law should apply because harm and insured are in NJ | GAIC: Texas law governs because the policy was negotiated, brokered, and issued in Texas | Texas law governs insurance-coverage dispute (place of contracting predominates) |
| Pollution-exclusion scope | Eastern: rock fines are inert rock particles, not "contaminants" or "waste material" | GAIC: rock fines fit the policy definitions (solid/contaminant/waste) and rendered habitat unfit | Rock fines qualify as "contaminants" under the exclusion (impaired habitat; NJDEP remediation required) |
| Duty to defend / indemnify | Eastern: GAIC must defend/indemnify remediation and defense costs | GAIC: absolute pollution exclusion removes duty | No duty to defend or indemnify; summary judgment for GAIC affirmed |
Key Cases Cited
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (U.S. 1980) (contacts must make litigation foreseeable to establish specific jurisdiction)
- Walden v. Fiore, 571 U.S. 277 (U.S. 2014) (specific jurisdiction must arise from defendant’s own forum contacts)
- Daimler AG v. Bauman, 571 U.S. 117 (U.S. 2014) (limits on general jurisdiction; agency may bear on specific jurisdiction)
- Cleere Drilling Co. v. Dominion Expl. & Prod., Inc., 351 F.3d 642 (5th Cir. 2003) (nonhazardous substances like sand/salt water can be “contaminants” under contractual pollution exclusions)
- Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429 (5th Cir. 2014) (three-step specific-jurisdiction analysis)
- Mullins v. Testamerica, Inc., 564 F.3d 386 (5th Cir. 2009) (prima facie standard for personal-jurisdiction showings without evidentiary hearing)
- Maxus Expl. Co. v. Moran Bros., Inc., 817 S.W.2d 50 (Tex. 1991) (choice-of-law factors for contracts; state with most significant relationship governs)