Scottsdale Insurance Co. v. Morrow Land Valley Co.
2012 Ark. 247
| Ark. | 2012Background
- Scottsdale issued a CGL policy to Morrow Valley (Dec 9, 2008–Dec 9, 2009) insuring a Tennessee poultry operation; Waldron, Arkansas farm added Jun 1, 2009.
- Underlying Tennessee CAFO nuisance/trespass suit alleged noxious emissions harmed nearby properties.
- Scottsdale denied defense on Oct 1, 2009, citing the pollution exclusion.
- Appellee filed declaratory-judgment action Dec 22, 2009; amended Jan 5, 2010; Scottsdale answered Jul 9, 2010.
- Trial court granted partial summary judgment Apr 6, 2011: Arkansas had the most significant relationship; pollution exclusion deemed ambiguous, creating a potential defense obligation; fee-related rulings followed; Scottsdale appealed and appellee cross-appealed.
- Amended order and fee orders led to notices of appeal/cross-appeal in June 2011; Rule 54(b) issue addressed; cross-appeal on attorney’s fees ultimately dismissed for lack of final, appealable order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law governing the contract | Scottsdale argues Tennessee law applies | Appellee argues Arkansas law governs | Arkansas law applies; no effective choice-of-law provision; Crisler factors apply |
| Pollution exclusion ambiguity and duty to defend | Pollution exclusion is unambiguous and defeats defense | Words are ambiguous; exclusion may cover alleged emissions | Pollution exclusion ambiguous; duty to defend exists due to possible coverage |
| Attorney’s fees and cross-appeal finality | Fees for Stubbs should be awarded; cross-appeal valid | No final order on Stubbs or cross-appeal; not within Rule 54(b) finality | Cross-appeal dismissed for lack of final, appealable order; Fee portion denied insofar as not final |
| Scope of appellate review for choice-of-law | Standard of review for choice-of-law questions | Review limited to de novo application of law to undisputed facts | De novo review; in a summary-judgment context, apply law to undisputed facts; concur with majority on standard of review |
Key Cases Cited
- Crisler v. Unum Ins. Co. of Am., 366 Ark. 130 (2006) (five-factor test for most-significant relationship; governs choice of law in contract)
- Minerva Enterprises, Inc. v. Bituminous Cas. Corp., 312 Ark. 128 (1993) (pollution exclusion ambiguous; ejusdem generis applied to determine scope)
- State Auto Prop. & Cas. Ins. Co. v. Ark. Dept. of Envtl. Quality, 370 Ark. 251 (2007) (pollution exclusion ambiguity; extrinsic evidence considered)
- Anderson v. State Auto. Mut. Ins. Co., 84 Ark.App. 310 (2004) (pollution exclusion ambiguity; insurer liable if coverage possible)
- Smith v. Prudential Prop. & Cas. Ins. Co., 340 Ark. 335 (2000) (ambiguity generally resolved in insured's favor; policy language control if unambiguous)