*1
City
Ins v
Auto-Owners
1994]
OF CLARE
v CITY
INSURANCE COMPANY
AUTO-OWNERS
by
July
application
the
1994.
No.
Decided
On
Docket
96191.
Court,
Supreme
appeal,
in lieu
plaintiffs
of
leave to
the
Appeals
leave,
of
and
granting
the orders of the Court
vacated
case to the circuit court for
remanded the
the circuit court and
Rehearing
proceedings.
denied
factual is assessment this factual and required, disposition peremptory ap- assessment is and not propriate. Appeals remanding The Court of did not err in genuine case to the circuit court to address whether there are regarding temporal issues element for a to be sudden. Cavanagh, dissenting, Chief Justice concurred with Justice deny appeal. and would leave to Levin Willingham (by Yeager Coté, & P.C. John A. Anthony Kogut), Linsey, S. Strain & VanderWal), (by Larry Worsfold, D. P.C. for the plaintiffs. Winter) (by
Bicknell & Winter Jack L. Var- Riddering, (by num, Schmidt & Howlett Allard), Matthew D. Zimmerman and Mark S. Special Counsel, for the defendant. plaintiffs compa-
Per Curiam. are insurance declaratory judgment concerning nies that seek a obligations they municipality their to a in- City of Clare Ins 1994] Opinion the Court sought dispo- they summary court, sure. In circuit their the insurance contracts sition of claim that coverage this under the circumstances of exclude summary disposi- court denied case. The circuit Appeals tion, ordered circuit Court but plaintiffs’ motion. court to reconsider in its inter- hold that the circuit court erred We language, pretation policy and we vacate Appeals and the order which the Court order plaintiffs’ denied the motion disposition. summary
i operated by the This case concerns a landfill Township County.1 of Clare in Hatton operation began on a 79- as five-acre landfill parcel a man named Wil- acre liam property, of land owned *3 purchased City Bauer of the Bauer. The Clare including by a 1974 land the the began operating city year, That the contract. warranty city 1975. The deed in landfill. received a expanded city 1975, the the five-acre In 1974 and Department of landfill to 28.3 acres. The Natural permit city 1974, to Resources issued a the per- allowing operate Later, the it to the landfill. through September 1979. mit was renewed Legislature 1978, the enacted the Solid Waste In repealed prior Management the act3 Act,2 which had been licensed. under which the landfill open, and was used landfill remained Among persons. many itself, the the users was dnr disposed parks occasionally from its trash which stipulated seq. consideration 1 [2] 3 1965 PA This case 1978 PA statement 641, 87, has as amended MCL not been tried. plaintiffs’ 299.401 et facts MCL 325.291 et motion for seq.; However, MSA summary 13.29(1) seq.; parties disposition. et MSA seq. to 14.435(1) executed use in its et a Mich Opinion of the Court happened other This facilities. fourteen times paying 1984, between with the dnr a total of in fees. $100.25
Representatives of the with dnr met the Clare They Commission in June 1980. informed the city upgrade that it needed either to landfill sign compliance schedule, a or to close the invited the facility. city follow-up letter, In a the dnr "arrange meeting prospective
to a with a required hydrogeo- consultant to discuss details of logical work . . . .” early 1980,
In October the dnr reminded the city that it license, did not have a and that it had completed required hydrogeologic survey. not a city 1980, Later in October told that dnr require- the landfill did ments for meet not the minimum improve- licensure, and that substantial necessary ments would be at the order site to requirements. meet the minimum The dnr advised city seeking it other alterna- should.be taking part tives, and that it should be an active management planning process in the solid waste way County. then under in Clare again The dnr noted the lack of a license in January outlining steps 1982, that would be necessary gain one. May city, saying the dnr wrote "adequate provided time has been for operating
to determine its desire to continue response landfill.” asked for to its dnr earlier communications.
In December the dnr told the *4 monitoring continued use of the landfill without could increase the seriousness of a contamination problem, if one existed. years passed city completing
Several without the necessary hydrogeological study. the Therefore the requested city’s and obtained the consent in dnr
1994] Ins v Opinion of the Court JulyA 1985 letter from do test itself. 1985 to the department’s expectation that the dnr stated the contaminating ground water. This the landfill was requested city landfill and the to close the letter cap regardless site, dnr activities. of other the explained the that 1986 letter from A June dnr investigations department’s hydrogeological the emanating the from land- indicated city the to terminate landfill fill. The was advised immediately. operation that the The dnr said given an closed and unlicensed landfill rnust be generation cap prevent impermeable to the from the landfill. The dnr added further leachate be neces- actions” would also that "other remedial engineer city sary, retain an to and the should DNR-approved preparation a closure in the assist plan. meeting representa- During subsequent a with city the in dnr officials charac- tives of terized the landfill as June
illegal and unlicensed. The contaminating city was told that landfill was ground might polluting waters, surface also be recognition city its water. landfill stated law, of state but indi- violation operation of the cated its desire to continue land- located. The until an could fill alternative site be permit turn, it would not said dnr, illegal operation continued pre- city needed to take immediate action to appeared to contamination of both vent what be ground water and surface water. say that, to
In late June the dnr wrote "responsible had to because failed take operation illegal unlicensed, action resolve landfill,” the dnr not renew its would forgo recovering from investi- offer gative costs. Township early July 1986, sued Hatton *5 446 1 Mich Opinion of the Court
City alleging Clare,4 of of violations the Solid Management Michigan Waste Act and the Envi support ronmental Act.5 In Protection of its com plaint, Township Hatton filed the affidavit of a toxicologist, explained that who two residen dnr tial wells close to the landfill had found to been be contaminated, other contaminants had seeping been detected in surface water from the landfill. following August month, the Direc-
tor issued a formal order to cease and dnr problems desist. The order recited the dump, with the resulting and the of surface ground city water and water. The was ordered to operation immediately cease of the landfill and to begin making preparations to the site close up clean the contamination. August City Manager
Later in the Clare question by projecting answered a dnr a volume of approximately yards 65,000 cubic of waste ma- entering terial the landfill in 1986.
In connection with the lawsuit filed Hatton Township, partial a. entered con- judgment city sent in December 1986. The required dump operation to close the its cease by January city 1, 1987. The was also to complete hydrogeological study identify to ground horizontal and vertical extent of the water contamination. repeated
A March 1987 letter from the dnr department found had that contamination had been landfill released at the site. This letter noti- city potential liability, fied the of its and encour- aged replace voluntarily the water Clare, Twp City Hatton Clare Court Circuit Docket No. intervening plaintiff. 86-7650-CE. The dnr is an 14.528(201) seq.; MCL seq. 691.1201 et MSA et Ins v
1994] Opinion Court supply contaminated houses with for the two wells. had commissioned
The firm investigation hydrogeological issued conduct regions May report distinct 1987. Two its *6 aquifer under- in the found were contamination lying determined (which It also was landfill. drainage had been new fill area from the 1974) operating as far as have traveled could since 2,500 its source. feet from against Attorney suit filed a second General alleged complaint city 1987.6 in October city operation through landfill, the that, its and had environmental had caused statutes. violated several July 1988, In were consolidated. The two suits parties to take cer- court ordered the circuit closing proper steps of the landfill. to ensure tain capping landfill, the order Another nearby potable providing resi- water steps. dences, other remedial n taking During years were events these city companies place, had insured three —Auto- Company, Insur- Mutual Insur- Home Owners Insurance Owners Company, Farm Bureau ance Company.7 ance September these carri- 1987, the notified against Hatton it in the of the claims made
ers
Clare,
Docket No.
Attorney
Circuit Court
Clare
General
87-8108-CE.
from
were in effect
policies
Farm Buréau
issued
Various
policy
24,
24, 1972,
through April
A Home Owners
April
1978.
1, 1978,
An Auto-Owners
applicable
July
1984.
to October
from
1, 1978,
1984.
applicable
July
to October
policy
(No
from
was likewise
coverage
gap
concerning
possible
raised
issue has been
1978.)
apparently
Michigan Municipal
carried
during
Risk has
1,1984,
present.
to the
from October
The three insurance each had issued policies that contained a standard exclu- However, sion. there was a "sudden and acciden- policies tal” to the exclusion. The stated coverage apply that the did not bodily injury or property damage arising out of [t]o discharge, dispersal, the smoke, chemicals, escape release or soot, vapors, fumes, acids, alkalis, toxic liquids gases, or waste materials or irritants, other pollutants contaminants or into or water course or land, upon atmosphere any or water; body of but this apply exclusion does not if discharge, such dispersal, escape release or is sud- den and accidental ....
Ill Seeking they obliged to establish that were nei- provide city Twp ther to a defense in Hatton Attorney indemnify and General, nor to if it were suits, found liable in those the three insur- companies declaratory ance filed this action for judgment. declaratory The counterclaimed for judgment, seeking ruling a the insurers do responsibilities. bear these parties summary filed cross-motions for dis-
position,
initially
which held in
abeyance pending this Court’s decision in Polkow v
Co,
Citizens Ins
(1991).
438
174;
Mich
1994] Ins v Opinion of the Court (1991); 154; 476 NW2d Woodhaven, 438 Mich Hampshire Co, Mich Upjohn Ins Co v New (1991). 197; 476 NW2d Woodhaven, Polkow, decided this Court After again Upjohn, considered court the circuit summary opinion, disposition. In its motions matter, determined, as a threshold the court of contaminants the release concerns this case city’s initial action landfill, not the from the pollutants placing potential into the landfill. pollution then considered circuit court applies policies. plaintiffs’ It in the exclusion escape dispersal, discharge, or release "the upon pollutants into or or . of . . land, contaminants body atmosphere any course or water or ground . . . .” Because of water usage everyday pollution within water is exclusionary that the term, language court found the circuit applied in this instance.
However, to the under the apply if not such exclusion, "does the exclusion escape dispersal, discharge, is sudden or release regard to the "sudden With and accidental.” exception, stated: the court accidental” of fact as there is an issue The Court finds expected the contamina- Defendant to whether the tion from there therefore is question to whether the contamination as meaning within the sudden and accidental im- pursuant to the policy. Although, insurance puted-collective-knowledge forth in set standard col- responsible for the Defendant Upjohn, the it not been employees, has knowledge of its lective offi- that Defendant’s conclusively demonstrated *8 enough collectively possessed employees cers and to occur. expect to information issue, factual of this Pending the final resolution as to a determination cannot make the Court 1 Mich Opinion op the Court obligated whether the Plaintiffs are indemnify to the Defendant. regard defend, duty With to the to Supreme Polkow, opinion supra, Court’s in makes it clear the insurer duty against any has a to defend coverage arguable. claim where was even 438 Mich "[A]ny pertaining at 180. the application doubt to duty to defend is to be resolved favor of the
insured.” Id. The Court finds that Plaintiffs have a duty to defend and duty their extends from they the time received notice of the underlying litigation until it is they determined whether are obligated indemnify to the Defendant. Partial sum- mary disposition hereby granted to the Defen- dant on the issue of the duty insurer’s [sic] defend. reasons, For those the court denied the insurers’ summary disposition. city’s motion for for motion summary disposition partially granted— plaintiffs provide against city. a defense in the two suits joint application The three insurers filed a appeal Appeals. leave to in the Court of In lieu of granting application, per- the Court issued a emptory order8 that remanded the matter to the question circuit court to address the whether there genuine regarding awas the contamination.9 issue the suddenness of 8Unpublished Appeals, order of the Court of entered October (Docket 152495). No. pursuant 7.205(D)(2), The Court orders the circuit court to MCR plaintiffs’ summary to reconsider disposition motion for connection with the "sudden and accidental” to the provisions exclusion in the insurance Al contracts. though genuine the circuit court has held that there are issues of material fact in connection with the claim that the contami accidental, appears nation was the court not to have addressed question any genuine regarding whether there is issue the the alleged contamination, i.e., suddenness of the whether suddenly abruptly initial gradually. occurred or application appeal for leave to is otherwise denied for *9 City Ins 1994] Opinion op the Court rehearing or filed a motion The insurers filing motion, of that how- Before the clarification. ever, Appeals responded of to the Court court the circuit issuing supplemental opinion. order reiterating arises from this case After not the from release of contaminants placement landfill, the circuit into the of material Upjohn regard- referred to the discussion court ing meaning The circuit of the word "sudden.” that, contaminants are "in cases where court said from the sur- them stored or contained to isolate question rounding environment, whether leakage any subsequent 'sudden,’ as that term is is upon dependent legally it defined, whether was is expected.” issue”
The circuit court saw the "determinative dispute being the Defendant in this as "whether the waste or should have known knew proximately discharged into the landfill materials nearby underlying caused contamination question, Regarding groundwater.” soils party had concluded that neither genuine of material of a issue shown the absence fact. supplemental court issued its
After the circuit opinion, Appeals its initial vacated the Court again However, the case to it remanded order. directing court, the lower court to this time circuit address "whether ing regard genuine issues there are temporal for a element to be sudden.”10 appel- persuade the need for immediate the Court of
failure late review. jurisdiction. retains no further This Court rehearing granted, motion for The Court orders that 7.216(A)(7) 7.205(D)(2) pursuant and MCR to MCR and November is vacated Circuit Court 1992 order of the Clare 1 Mich Opinion op the Court companies joint ap- The insurance have filed a plication appeal. in this Court for leave to
IV agree Because we with the circuit court that this pollutants case involves the release of into land applies water, exclusion unless *10 the release was "sudden and accidental.” The question may obliged whether the insurers be indemnify applicability thus turns on the exception. of the "sudden and accidental” phrase unambig- The "sudden and accidental” is Upjohn 201, uous. at 206-208; Woodhaven at 167. temporal The word "sudden” includes both a ment and a sense of the ele- unexpected; the word unexpected "accidental” means and unintended. Upjohn at 201. We conclude that when considered in plain its sense,
and easily understood
"sudden” is defined
and
motion for
plaintiffs’
the case remanded for further consideration of
summary disposition.
The
provision
to the
exclusion
of the
requires
insurance
discharge
contracts
that a
be both sudden
discharge
"sudden,”
and accidental. In order for a
to be
discharge
happen,
be,
quickly,
must
come to
or occur
without
warning
Hampshire
unexpectedly,
abruptly.
Upjohn
or
or
Co v New
Co,
197, 207;
(1991).
Ins
438 Mich
ducing into a ten- pumped which were by-products, toxic by- tank. The amount gallon storage thousand an daily by in the tank was measured products employee. Upjohn 16, 1982), (August particular day one
On significant tank showed a measurement have the amount should discrepancy from leak, of a this indication Despite been there. *11 additional in for at least two tank remained use weeks. that, indeed, there had it
When was determined tank, the issue arose whether a leak from the been and accidental.” This release was "sudden the apply. did not As found that the Court law, information had sufficient Upjohn matter 1982, that a August expect it on available in from a leak escaping was by-product chemical Further, informa- had sufficient Upjohn the tank. continue release would expect tion to that the Upjohn being was used. longer until the tank no 212-213. at it did case, emphasized that
In we analyzing the case a leak to take knowledge of require not 1Mich Opinion op the Court outside the "sudden unexpected” exception. The fact that Upjohn must have expected the leak was sufficient to remove the case from the "sudden and unexpected” exception. at Upjohn n 13. We concluded: Since the release of by-product chemical was not
unexpected, as a matter of law it cannot be "sud- Therefore, den and accidental.” pollution- exclusion clause apply, Upjohn does and the Com- pany is not coverage entitled to under the [insur- policy. [Upjohn at ance] 216-217.] The same analysis applies in the present case. While the city’s expectation of environmental con- tamination does not come from daily measure- ments as it Upjohn, is equally clear that Clare must have expected the release of pollutants into nearby lands and waters. For years, the dnr had been telling landfill did not satisfy requirements of law and the better course would be to close and seal When, the site. after interminable delay obtain- ing the results, necessary test it was con- finally firmed that ground both water and surface water contaminated, were it was far too late for to prevail on a claim that the release un- expected,11 or that it was "sudden and accidental.” Polkow, we denied summary disposition to the insurer because there was some evidence that the contaminants at issue may have been unre- 11Relying Superintendent Works, on an affidavit from its of Public city argues employees personal its held the belief that adequate landfill Further, site was and that no would result. employees the tion the ques intended no release of contaminants. We do not good superintendent employees. faith of the or his question here is whether the release was "sudden and accidental” meaning within ployees policies, of the insurance not whether the em appropriately. meaning policy, acted Within the this *12 expected, release was not sudden and accidental.
1994] Ins v op Opinion the Court Further, the record to Mr. Polkow’s business. lated was regard dis- to what had been unclear with charged, un- at 179-181. While or where. Polkow involving necessarily any case attend certainties (and underground that there- that occurs release observation), by ordinary cannot be detected fore the present unlike Polkow. case is long this landfill was It evident that had been disposal proper of waste materi- for the not a site necessary situation, it not In such a is als. identify release first to the hour when one occurred, region able be spot precise the affected or the within escaped.12 Here, there where material first regarding the of the contamina- is no issue source previously explained, Neither, tion. for the reasons any must have ex- is there pected doubt problems these to occur. law, hold, that the
We therefore as a matter of to the "sudden and accidental” inapplicable in this case. exclusion is duty explained Polkow, that an insurer’s we indemnify. duty It than the to to defend is broader argu- coverage even in which arises able, instances groundless though may or frivo- claim be 159- at lous. Polkow at 178. See also Woodhaven 160. proposed appli- city’s reject indicated,
As we exception and accidental” cation of "sudden rule,” argue plaintiffs an "initial there is failing 160-163, that the lower courts erred Woodhaven at is, analysis plaintiffs to focus apply on the want the it in this case. That city’s placement pollutants into an unlicensed subsequent contaminants from release of rather than on years disposal would cer of material landfill. Since intentional accidental,” tainly in this case would the result not be "sudden Thus, analysis. reach the we do not be the same under either question. *13 1Mich Dissenting by Opinion Levin, J. pollution Further, exclusion. we are unable to underlying conclude that the claims made in Hat- Twp Attorney arguably ton and General are even coverage city by within the extended to the plaintiff insurers. As with the claims in Wood- say haven, "[t]here we can that is no doubt coverage possible. . . . whether is It is not.” Wood- haven at 160. determining
Thus, the circuit court also erred in regarding uncertainty applicability of the exception "sudden and accidental” warranted a finding plaintiffs obliged were to offer a city. defense to the
VI reasons, For these we vacate the order Appeals, Court of and the order in which the plaintiffs’ circuit court denied the mary disposition motion for sum- indemnity on the issue of granted partial summary disposition to the defen- duty dant on the issue of the insurers’ to defend. We remand this case to the circuit court for proceedings opinion.13 further MCR consistent with this 7.302(F)(1). Brickley, Boyle, Riley, Griffin, JJ., concurred. Mallett, (dissenting). deny J. I would leave to
Levin, appeal. peremptory I adhere to the view that reversal should be reserved for cases in which the is law settled and no factual assessment is re- opinion This concerns the exclusion and "sudden remand, exception. parties may pursue and accidental” preserved On other concerning language poli but unresolved issues of the cies.
1994] Ins v by Dissenting Opinion Levin, J. case, in the per as indicated In the instant quired.1 legal assessment opinion, factual curiam appropri- is not Peremptory disposition required. ate. law, a matter "hold[s], as majority pollu- to the and accidental’ 'sudden case.”2 That this inapplicable
tion exclusion is law,” is based on matter holding, "as a emphasized the words findings indicated factual curiam per following paragraphs in the opinion: *14 city’s expectation of environmental While daily measure- not come from contamination does Co, Hampshire Ins Upjohn v New
ments as
[Co
197, 207;
(1991)], it is
476
392
438 Mich
equally
NW2d
Clare must have
clear that
nearby
pollutants
into
release of
expected the
had been
years,
the dnr
and waters. For
lands
satisfy
did not
telling
city that the landfill
1
(1992) (Levin, J.,
914,
People Wright,
dissent
v
439 Mich
914-915
Ed,
314, 322;
Valley
Chippewa
Bd of
ing);
Mich
422 NW2d
Roek v
430
Co,
(1988) (Levin, J., separate opinion);
Ins
Grames v Amerisure
680
434 Mich
Little,
People
(1990) (Levin, J.,
867,
752,
dissenting);
v
868-875
(1990) (Levin, J.,
dissenting);
dissenting);
769-770;
It had been evident that this landfill was proper disposal not site for the of waste materi situation, necessary als. one be able to such a it is not identify the hour when release first occurred, precise spot or the within the affected n region Here, escaped. where material first there is regarding no issue tion. is there the source of the contamina Neither, explained, previously the reasons any doubt that must have ex occur.[3] pected problems these Appeals remanding The Court of did not err in ques- the case to the circuit court to address the genuine regarding tion "whether there are issues temporal element for a again, deny appeal. would, be sudden.” I leave to I C.J. concur with Justice Levin Cavanagh, *15 deny appeal. would leave to [3] Ante, pp 14-15.