Visteon Corporation v. National Union Fire Insurance
2015 U.S. App. LEXIS 1064
| 7th Cir. | 2015Background
- Visteon, headquartered in Michigan, bought a worldwide liability policy from National Union covering 2000–2002; policy contains a broad pollution-exclusion but carves out a "Completed Operations Hazard."
- A Connersville, Indiana plant leaked the solvent TCE into soil and groundwater during the policy period; neighboring landowners sued and Visteon paid millions in settlements and cleanup costs.
- National Union refused to defend or indemnify Visteon; Visteon sued in Indiana state court and National Union removed to federal court.
- Dispute over governing law: Visteon urged Indiana law (which limits/enforces pollution exclusions narrowly), National Union urged Michigan law (which enforces general pollution exclusions); the district court selected Michigan law and denied coverage.
- The central coverage question under Michigan law: whether the TCE contamination falls within the Completed Operations Hazard exception to the pollution exclusion (i.e., whether the pollution resulted from "completed work").
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which state's law governs interpretation of the worldwide insurance contract? | Indiana law should apply because the pollution and underlying torts occurred in Indiana. | Michigan law should apply because the contract is a single worldwide policy and Michigan has the most insured sites and contract contacts. | Michigan law governs under Indiana's uniform-contract-interpretation approach (most insured sites, HQ/contract contacts in Michigan). |
| Does the Completed Operations Hazard exception cover the TCE contamination (i.e., was the pollution from "completed work")? | Visteon: each completed sale/contract for parts from the plant constitutes "completed work," so contamination liability is covered. | National Union: plant operations continued past the policy period; contamination arose from ongoing manufacturing/operations, not completed operations. | Exception does not apply; courts interpret Completed Operations narrowly and pollution from ongoing manufacturing is excluded. |
| Was National Union obligated to defend Visteon under the policy? | Visteon: policy ambiguity and Completed Operations exception require coverage/defense. | National Union: pollution-exclusion is unambiguous under Michigan law; no duty to defend or indemnify. | Pollution-exclusion unambiguous; no duty to defend or indemnify. |
Key Cases Cited
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (choice-of-law in federal diversity actions follows forum state law)
- National Union Fire Ins. Co. of Pittsburgh, PA v. Standard Fusee Corp., 940 N.E.2d 810 (Ind. 2010) (Indiana follows uniform-contract-interpretation approach for multi-site environmental-insurance disputes)
- State Auto. Mut. Ins. Co. v. Flexdar, Inc., 964 N.E.2d 845 (Ind. 2012) (Indiana requires pollution exclusions to specify covered pollutants)
- City of Grosse Pointe Park v. Mich. Mun. Liab. & Prop. Pool, 702 N.W.2d 106 (Mich. 2005) (Michigan enforces general pollution-exclusion clauses)
- Liberty Mut. Ins. Co. v. Triangle Indus., Inc., 957 F.2d 1153 (interpretation of Completed Operations Hazard as protection for defective workmanship/finished services)
- West Bend Mut. Ins. Co. v. U.S. Fid. & Guar. Co., 598 F.3d 918 (7th Cir.) (Completed Operations exemption does not cover pollution from ongoing operations)
- Hydro Sys., Inc. v. Continental Ins. Co., 929 F.2d 472 (Completed Operations generally construed narrowly)