ORDER
This matter is before the court on cross motions for summary judgment. The Plaintiff, Governmental Interinsurance Exchange (“GIE”) filed its motion for summary judgment on October 15, 1997, and the Defendant, City of Angola, Indiana (“the City”) filed its motion on October 17. Briefing was completed on November 18, 1997, with the exception of a filing of supplemental authority by the City on December 15, 1997. For the following reasons, GIE’s motion for summary judgment is DENIED and the City’s motion for summary judgment is GRANTED.
STATEMENT OF FACTS 1
GIE is an Illinois reciprocal insurer with its principal place of business in Blooming-ton, Illinois. Joint Statement of Undisputed Material Facts, p. 1. The City of Angola is organized under the laws of the State of Indiana and is located in Steuben County. Id GIE issued annual Local Government Comprehensive General Liability Policies to the City from June 4, 1986 through January 1,1997. Id Policy No. 1LG09094 was issued to the City for the policy period from January 1, 1996 to January 1, 1997. Id, Exh. A (“the Policy”). On November 22, 1995, the City filed a notice with the Indiana Department of Environmental Management (“IDEM”) stating that it intended to close a 300-gallon underground storage tank (“UST”). Id, Exh. B, Underground Storage Tank System Closure Request Form. In a letter dated November 28, 1995, IDEM approved initiation of the closure and instructed the City as to the applicable state and federal regulations, testing protocols, and the additional documentation that would be required. Id, Exh. C, letter from Victoria Kelly to Jennifer Bruner. The tank was located at the City’s garage on 300 West Mill Street (“the Site”), which was owned by the City and was used for fueling city vehicles and lawn care equipment. Id, Exh. D, Results of Underground Tank Closure and Closure Site Assessment Report (“Results Report”) dated June 1, 1996. GIE did not receive copies of these letters or the Report until August 25,1997.
During the course of removing the 300-gallon UST, the City’s contractor discovered an additional 1,500-gallon UST previously unknown to the contractor or to City officials. Exh. D, Results Report, p. 1; Exh. E, June 10, 1997 Corrective Action Plan Progress Report (“CAP Report”). GIE did not receive copies of the Report or CAP Report until August 25, 1997. Both underground storage tanks at the Site were removed at the direction of the City by Knapp Environmental Construction Services, Inc. (“Knapp”). The tanks were removed on May 2,1996. Knapp was retained by the City and forwarded its invoice for payment directly to the City. Id, Exh. F, May 6, 1996 Invoice from Knapp to the City.
During and after removal of the USTs, visual inspection of the internal and external tank shells indicated significant corrosion;
Following the underground storage tank removal, the City initiated an investigation of the Site and then undertook remedial efforts. Id, Exh. G, Invoices from Knapp to the City dated June 24, 1996, July 12, 1996, August 19, 1996, September 23, 1996 and October 1, 1996. According to these invoices, the Site was assessed to determine the extent of environmental contamination, “free product” and water were recovered, and drums and “contaminated soils” were removed. Id. In addition to the removal of contaminated soils, the remedial efforts included the installation and monitoring of nine groundwater monitoring wells (Exh. E, CAP Report, p. 2) and the installation of a free-phase product recovery system on July 15, 1996 to “prevent further migration of free-phase product and impacted groundwater.” Id. GIE did not receive a copy of the CAP Report until August 25, 1997.
Samples from the monitoring wells originally indicated that the groundwater was contaminated with benzene, toluene, ethyl-benzene and xylenes (“BTEX”). Exh. E, CAP Report, p. 3. On June 21 and July 31, 1996, the City submitted a 20 Day Abatement Report and an Initial Site Characterization Report to IDEM. Id, Exhs. H and I. By letter dated December 6, 1996, IDEM informed the City that additional site characterization information was still needed and that the City's failure to comply with IDEM’s demand for this information could result in civil penalties not to exceed $25,000 per day in addition to the recovery of all costs incurred by the state related to the Site. Id, Exh. J, IDEM’s December 6, 1996 letter. GIE did not receive copies of these documents until August 25,1997. By letter dated July 17, 1997, IDEM acknowledged that the City’s site characterization was* complete. The agency requested that the City develop and submit a final Corrective Action Plan within 45 days. Id, Exh. K, July 17, 1997 letter from Roy Harbert to William Boyer. GIE did not receive a copy of this letter until August 25, 1997. The City’s monitoring and remedial efforts are ongoing. Id, Exh. E, CAP Report.
By letter dated May 3, 1996, Jennifer Bruner, the City Engineer, and Scott Lehman, the City Fire Marshall, informed Don Roe, of Croxton & Roe Insurance Company, that two underground storage tanks had been removed from Angola Street Department located at 300 West Mill Street. Id, Exh. L, May 3, 1996 correspondence to Roe from Bruner and Lehman. According to this letter, at the time of the removal at the Site, “staining of the soil and free product” were observed and “[o]dors were also evident.” Id By notice dated May 28, 1996, Don Roe informed GIE’s. claims office of the removal of the two underground storage tanks due to “possible gound [sic] contaminated.” Id, Exh. M, May 28, 1996 Accord Notice. GIE informed the City that its loss was not covered under the Policy due to the operation of the Policy’s Pollution Exclusion Endorsement by letter dated June 25, 1996. Id, Exh. N, June 25, 1996 correspondence to Mayor Bill Selman from Robbin Peeken. On June 28, 1996, the City informed Roe that while, in fact, free product was not evident during the initial excavation (thus, correcting a statement in the May 3, 1996 letter), free product was discovered in a monitoring well on May 31, 1996. This was reported to IDEM and the Site was changed to a “high priority” site. Id, Exh. O, June 28, 1996 letter from Bruner to Roe. GIE' did not receive a copy of the June 28 letter until August 25,1997.
On January 7,1997, the City reasserted its claim for insurance coverage by submitting a letter from counsel to Peeken, the Claims Examiner for GIE who originally denied coverage for the claim.
Id,
Exh. P, January 9, 1997 letter from Jeffrey Claflin to Peeken. By letter dated February 11, 1997, and in response to the City’s January 7 letter, GIE denied coverage a second time — again based
SUMMARY JUDGMENT STANDARD
Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). However, Rule 56(e) is not a requirement that the moving party negate his opponent’s claim.
Fitzpatrick v. Catholic Bishop of Chicago,
Initially, Rule 56 requires the moving party to inform the court of the basis for the motion, and to identify those portions of the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which demonstrate the absence of a genuine issue of material fact.”
Celotex,
DISCUSSION
Indiana has certain well-established rules regarding the interpretation of insurance contracts.
2
“Under Indiana law, the
The grounds for GIE’s motion for summary judgment are summed up in the second and third paragraphs of the company’s memorandum in support of its motion. Those paragraphs state, in relevant part, as follows:
In this ease, the environmental contamination complained of is clearly the result of pollutants, and therefore, the Pollution Exclusion Endorsement is applicable. ■
In addition, other policy provisions likewise preclude coverage for the City’s claim. For example, according to the policy’s insuring agreement, the policy only provides a defense to “suits” and only provides coverage for sums the City becomes “legally obligated to pay as damages.” Because no “suit” has been filed in connection with this claim and the City has not been called upon to pay “damages,” this provision further precludes coverage for the City’s claim. Finally, the policy also explicitly states that the City shall not “voluntarily” make any payment or assume obligations without GIE’s consent. Here, the City chose to investigate and remediate its own property without notice to GIE, and as a result, there is no coverage for this claim to the extent the City incurred liability without notice to or the consent of GIE.
Memorandum in Support of Governmental Interinsurance Exchange’s Motion for Summary Judgment (“Plaintiffs Memorandum”), pp. 1-2.
A. The Pollution Exclusion Endorsement
The pollution exclusion endorsement in the policy reads, in its entirety, as follows: This policy does not apply to:
(1) Bodily Injury, Property Damage, Personal Injury (including, without implied limitation Personal Injury arising out of violations of Civil or Constitutional Rights or Assault or Battery), loss, injury or damage arising out of any negligent or intentional act, error or omission, or other similar or dissimilar loss, injury or damage, arising out of the actual, alleged, potential or threatened emission, discharge, dispersal, release, escape or existence of pollutants, or any costs, expenses, payments or other obligations arising out of such actual, alleged or threatened emission, discharge, dispersal, release, escape or existence of pollutants.
(2) Any loss, cost, expense payment or other obligation arising out of any direction or request by or for any government, or branch or agency thereof, that the insured or any other person or entity tests for; monitors; stops, controls or reduces the emission, discharge, escape,release, dispersal or existence of; cleans up; removes; contains; treats; detoxifies; or neutralizes pollutants.
(3) Claims arising out of the insureds’ failure to detect, regulate, control, or prevent acts, operations, or omissions which have caused or may be alleged to have caused the emission, discharge, dispersal, release, escape or existence of pollutants, or other claims arising out of the insureds’ failure to take action or to take appropriate action to detect, regulate, prevent, reduce, or control damage or injury to persons or property resulting from such discharge, dispersal, release or escape of pollutants.
(4) Claims arising put of the provision of water, gas or any other product or substance which is or is alleged to be contaminated or potentially contaminated with pollutants.
Pollutants means (a) any solid, liquid, gaseous or thermal irritants, toxicants, toxi-eoids, mutagens, teratogens or contaminants, including, without implied limitation, smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste material, waste material includes, without implied limitation, materials which are intended to be or have been recycled, reconditioned or reclaimed, (b) any other chemical compound or element (including, without implied limitation, any radioactive chemical or element or any subatomic particle) which does or may potentially cause or result in any form of loss, injury or damage to persons or property or which is or may potentially be a threat or hazard to or cause loss, injury or damage to the public or individual health or safety, (c) any sound or noise, (d) any light or other electromagnetic forces, and (e) any odor or smell.
Joint Statement of Facts, Exh. A, Policy (emphasis in original). The parties agree that this endorsement is a type commonly referred to as an “absolute” pollution exclusion. GIE, in arguing that the language of the exclusion is clear and unambiguous, and therefore precludes the City’s claim, relies predominantly on the cases of Muncie Sanitary Dist. v. The Harleysville Ins. Cos., et al., Cause No. IP-94-1401-C-D/G (S.D.Ind.1996) and Employers Mutual Cas. Co. v. DFX Enterprises, et al., Cause No. 20D03-9505-CP-046 (Elkhart Superior Ct.1997). In Muncie, GIE, as a third-party defendant, moved for summary judgment. GIE argued that pollution exclusions in insurance policies it issued to the Muncie Sanitary District precluded coverage for claims arising out of the contamination of a landfill. One of the pollution exclusion clauses at issue was identical to the one at issue in the present case. In his unpublished opinion, Judge Dillin, after setting forth the exclusionary language, and without any discussion of any applicable case law, concluded that “examination of the language in these pollution exclusion clauses leads us to conclude that such language is thorough and unambiguous.... Consequently, we must accord the policy language its ordinary meaning. In so doing we find that the seven policies issued by GIE do' not encompass the damages in issue in the present case.” Defendant’s Memorandum, Exh. A, Slip Op., p. 7.
In
Employers Mutual,
tenants of a mobile home park sued the park’s owner alleging that they had been exposed to “harmful bacteriological and virological agents and harmful and/or disease causing matter...”
Id.,
Exh. B, Slip Op., p. 1. The wording of the pollution exclusion at issue in that case (at least that portion of it actually quoted by the trial court) was very similar to the language being discussed in the present case. The trailer park’s owner’s insurance carrier moved for summary judgment on the basis that the pollution exclusion precluded coverage. The defendants, including the park’s owner, argued that since the pollution exclusion did not define “pollutant” to include “bacteriological” or “virological” agents it was therefore not applicable and did not preclude coverage. The Elkhart Superior Court held that notwithstanding that fact, the pollution exclusion did include in its definition of pollutant the words “contaminant” and “waste.” The court further found that the water supply in the trailer park had been polluted by the introduction of raw- sewage. Concluding that raw sewage constitutes a contaminant and waste (the trial court engaged in a lengthy discussion of dictionary definitions of the various terms at issue), and since the definition of pollutant in the policy included those two teims, the court held that
The City counters GIE’s position by distinguishing
Muncie
and
Employers Mutual,
and then arguing that the Indiana Supreme Court has expressly ruled that the very “absolute” pollution exclusion language at issue in the present case is ambiguous. The City first points out that Judge Dillin did not even mention the cases of
American States Ins. Co. v. Kiger,
In support of its contention that “absolute” pollution exclusions are ambiguous as a matter of law in Indiana, the City cites the cases of Kiger and Seymour. In Kiger, the insured owned a gasoline service station, which was the source of ah underground gasoline leak. The insurance policy at issue contained a pollution exclusion clause and defined “pollutants” as:
any solid, liquid gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Id. at 948. The Kiger court stated that:
Clearly, this clause cannot be read literally as it would negate virtually all coverage. For example, if a visitor slips on a grease spill then, since grease is a “chemical” there would. be no insurance coverage. Accordingly, this clause requires interpretation. ... We are particularly troubled by the interpretation offered by American States, as it makes it appear that Kiger was sold a policy that provided no coverage for a large segment of the gas station’s business operations....
In any event, since the term “pollutant” does not obviously include gasoline and, accordingly is ambiguous, we once again must construe the language against the insurer who drafted it. Appellant claims that in common parlance gasoline is sometimes referred to as a pollutant. That may be correct, but the ambiguity remains. If a garage policy is intended to exclude coverage for damage caused by the leakage of gasoline, the language of the contract must be explicit.
Id. at 948-49.
In
Seymour,
the EPA filed suit against the company, which was involved in the business of disposing of solid waste, alleging that Seymour had improperly stored barrels of waste at a site and that hazardous materials spilled and leaked into the soil. In
Seymour,
the Indiana Supreme Court discussed its decision in
Kiger
with approval, acknowledging that it had found the term “pollutant” in the pollution exclusion provision in general liability policies to be ambiguous.
Seymour,
Based on those cases, the City takes the position that the “absolute” pollution exclusion at issue in this case “is the same exclusion that the Indiana Supreme Court found ambiguous and unenforceable — not once, but twice — [in Kiger and Seymour].” Defendant’s Brief, p. 7. The City claims that Kiger is directly analogous to the present case in that both instances involved an unintended leak of petroleum products from USTs located on the policyholder's property and both insurance policies contained very similar pollution exclusion clauses. Accordingly, the City argues, the pollution exclusion provision at issue in this case is ambiguous as a matter of Indiana law. Thus, according to well established principles, such ambiguity must be construed against the insurer and in favor of coverage.
GIE does cite several cases in which it claims courts have “refused to find absolute pollution exclusions ambiguous in the manner called for by the City.” Governmental Inter-insurance Exchange’s Brief in Opposition to City of Angola’s Motion for Summary Judgment (“Plaintiffs Response”), p. 7, n. 6. However, none of those cases is as closely analogous to the present case as is
Kiger.
More importantly, all of those cases cited by GIE are from other states so none of them involve Indiana law, which is of course controlling. Finally, all of the cases cited were decided prior to
Kiger,
so even to the extent that they may have been helpful or instructional in the past, they are not so now in light of
Kiger
(and
Seymour).
The Indiana Supreme Court’s holding in
Kiger
is clear and controlling. “Absolute” pollution exclusions of the type included in the policy purchased by the City have been determined by that court to be ambiguous. The remedy to GIE and other insurers is to draft a more narrowly tailored exclusionary clause or to successfully lobby for legislation to offset the impact of
Kiger
and
Seymour.
3
,
Even if one were able to distinguish
Kiger
from the present case, the very fact that Indiana courts have interpreted the “absolute” pollution exclusion differently renders the clause ambiguous (at least as far as those courts are concerned). Since Indiana law requires that any ambiguity be construed against the drafter and in favor of coverage,
Alexander,
B. Other Policy Provisions Allegedly Precluding Coverage
As noted previously, GIE argues that several other provisions in the policy preclude coverage in this case. The City, however, argues that GIE has waived its right to rely on any of these additional policy provisions. The City argues that GIE never raised these additional policy provisions— including the lack of “suit,” “voluntary payments,” and “owned property” provisions— until it filed its declaratory judgment action on May 14, 1997. Thus, the City claims that “[ujnder the doctrine of ‘mend the hold’ or waiver, GIE should be barred from raising those defenses now.” Defendant’s Brief, p. 4. In support of this argument, the City cites the case of
Harbor Insurance Co. v. Conti
GIE does not contest that the “mend the hold” doctrine exists, to one extent or the other, but maintains that “ ‘[t]he reach of the “mend the hold” doctrine is .uncertain.’” Plaintiffs Response, p. 9 (quoting
Harbor,
1. The Absence of a Lawsuit
The policy issued to the City contains the following provision:
[GIE] will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages ... and [GIE] shall have the right and duty to defend any suit against the insured seeking damages ...
Joint Statement of Facts, Exh. A. GIE argues that since the City was not a party to any lawsuit regarding the UST contamination, the company is not obligated to reimburse the City for the cleanup costs. GIE admits that “there is no appellate level authority construing Indiana law concerning what constitutes a suit within liability insurance policies ...” Plaintiffs Memorandum, p. 16. In support of its position, GIE cites an unreported Indiana county court case,
Ulrich Chemical, Inc. v. American States Ins. Co.,
However, the unreported state trial court case cited by GIE cannot withstand the authority presented by the City to support the contrary position. The City argues that “GIE’s narrow interpretation of the term ‘suit’ is inconsistent with Indiana’s rules of construction for insurance contracts and contrary to sound public policy.... [T]he vast majority of courts around the .United States, including Indiana trial courts, have found that all kinds of coercive .administrative actions ... are ‘suits’ covered by general liability insurance policies .... ” Defendant’s Brief, p. 16. The City cites several cases in support of its position.. In Sam Winer & Company, Inc. v. Commercial Union Ins. Cos., Cause No. 20D0-19207-CP-347 (Elkhart Sup.Ct.1994), the court held as follows:
Because there is a substantial dispute as to the meaning of ‘suit’ that ambiguity must be construed in favor of the plaintiff insured and against defendant insurer. Ae-cordingly, ‘suit’ includes administrative actions under CERCLA and creates a duty of defendant to defend under its CGL policies. This result would not only be consistent with the Indiana rules of construction, but would place Indiana in the mainstream and along side the majority of jurisdictions.
Defendant’s Brief, Exh. 15, Slip op. at 18. The City also cites the case of
Riverside Oil, Inc., et al., v. Federated Mutual Ins. Co.,
The defendant contends that because Indiana ... [has] not brought administrative or judicial enforcement proceedingsagainst the plaintiffs no “suit seeking damages” exists. This logic, however, would encourage insureds like the plaintiff to resist legitimate government demands that sites be cleaned up pending official actions. The parties could not have intended such a result. The defendant does cite an Indiana trial court ease that found that an ... IDEM proceeding where the insured was requested to perform certain clean up measures was not a “suit seeking damages.” See Ulrich ... The court finds that an Indiana appellate court would be more likely to follow Sam Winer than Ulrich as it is more consistent with Indiana’s treatment of insurance cases. Similarly, the court rejects the eases from other jurisdictions that GIE the term “suits seeking damages” a narrow reading thereby encouraging uncooperative behavior by insureds seeking coverage. Therefore, the court finds that the ... IDEM demands at issue in this case are “suits seeking damages.”
Riverside,
As the City points out, GIE makes “a passing reference in its discussion of the
Ulrich
case to the separate but related issue of ‘damages.’ ” Defendant’s Response, p. 10, n. 17. GIE writes-in its Memorandum that •the court in
Ulrich
held that “ ‘[t]he plain and ordinary meaning of the term “damages” does not include environmental cleanup costs incurred to comply with injunctive or regulatory requests or orders.’ ” Plaintiffs Memorandum, p. 17. To the extent this argument was intended to bolster GIE’s argument about the absence of a “suit,” or to the extent that it was intended as a separate coverage defense, it fails. That is because the Indiana .Court of Appeals specifically held in
Hartford
that “the ‘ordinary meaning of damages
2. The Owned Property Exclusion
In its Complaint GIE stated that one of its grounds for denying coverage was the policy’s so-called “owned property” exclusion. Complaint, p. 4. GIE also raised this policy defense in its May 15, 1997 letter to the City. Joint Statement of Facts, Exh. S. However, GIE does not present argument regarding this exclusion in any of its briefs. Rather, GIE states that:
In its Complaint, GIE also relied on the owned property exclusion of the Policy as an additional basis for its denial of coverage. However, only after suit was filed did GIE learn for the first time that there was also groundwater contamination present at the site. Because GIE does not know the extent of this contamination or if it has migrated away from the City’s property, GIE has not moved for summary judgment on this issue because of those factual issues.
Plaintiffs Memorandum, p. 20, n. 2. This footnote implies that GIE believes that if contaminated groundwater migrated onto property owned by persons or entities other than the City, the company may be liable for any resulting property damage. In light of this court’s determination that the pollution exclusion endorsement does not bar coverage in this ease, this conclusion (or at least speculation) by GIE would certainly appear to be correct. However, the footnote also implies (or at least the court infers) that GIE maintains that coverage would not be available for damages incurred as a result of contamination that affected only property owned by the City. In other words, GIE decided not to address the “owned property” provision because it was not' 'yet certain whether, or precisely how, the provision would apply to the facts of this case. The City, however, does address the “owned property” excision in its brief in support of its own motion for summary judgment. Defendant’s Brief, pp. 13-16. In any case, because the court does not find this to be a legitimate ground for the denial of coverage in any event, a brief discussion of the exclusion is warranted.
The “owned property” exclusion in the policy states, in relevant part:
This insurance does not apply:
(h) to property damage to
(1) property owned or occupied by or rented to the insured,
(2) property used by the insured, or
(3) property in the care, custody or control of the insured or as to which the insured is for any purpose exercising physical control ...
Joint Statement of Facts, Exh. A. Like many of the other policy provisions at issue in this case, this exclusion may, at first glance, seem to preclude coverage, since the damages incurred by the City were the result of the UST leakage which occurred on City-owned property. However, as the City argues, many courts, including this one, have held that the “owned property” exclusion does not bar coverage in circumstances such as those presented in this case. In
Indiana Gas Company, Inc. v. Aetna Casualty & Surety Co.,
St. Paul’s alternative ground is that the policy excludes coverage for property damage to property owned by the insured, and to date the only contamination from the waste materials generated by the painting operation is to soil and groundwater within the boundaries of the Patzes’ own land. But the Patzes are not attempting to obtain an insurance award for a reduction in the value of, or other damage to, their land. How could they? It is a policy of liability insurance, not casualty insurance, on which they have sued. They seek to recover the cost of complying with a government order to clean up a nuisance. The fact that the clean up occurred on their land is irrelevant. For all we know, the damage to the land was much less than the cost of cleaning it up.
We do not understand St. Paul to be arguing that the only liability against which the policy insures is liability to pay damages obtained by a lawsuit (or threat of suit) against the insured. St. Paul does argue that its policy stops short of reimbursing an insured for voluntarily undertaking to reduce potential liability, and we agree. The owner of an automobile cannot charge the expense of a fancy new braking system to his liability insurer on the ground that the system will make it less likely that he will injure someone in an accident. But the Patzes incurred the clean-up costs for which they seek reimbursement under the policy involuntarily.
Patz,
Several of Liberty’s arguments address the issue of so-called “owned property.” Even if Liberty were not estopped from raising these points, recent caselaw demonstrates that the arguments are without merit. Joslyn is seeking to recover the costs of complying with an Illinois order to clean up contamination, so that the fact that the cleanup occurred on Joslyn’s land is irrelevant. Patz v. St. Paul Fire & Marine Ins. Co.,15 F.3d 699 , 705 (7th Cir.1994). As explained by the Patz court, the plaintiffs there, like Joslyn here, were not seeking to recover for damage to their property but rather to recover the cost of liability imposed on them by a state agency-
See also, Anderson Development Co. v. Travelers Indem. Co.,
3. The Voluntary Payment Provision
Finally, GIE argues that coverage is barred as a result of the policy’s “voluntary payments” provision. That provision states: “The insured shall not, except at [its] own cost voluntarily make any payment, assume any obligations or incur any expense other than for first aid to others at the time of the accident.” Joint Statement of Facts, Exh. A. GIE argues that the City “on its own initiative, investigated and remediated its own property. As a result, the ‘voluntary payments’ provision of the Policy is also implicated.” Plaintiffs Memorandum, p. 19. GIE admits that while “there is no Indiana authority construing this provision, other jurisdictions have considered it.” Plaintiffs Memorandum, p. 19. GIE then cites one case,
Coil Anodizers, Inc. v. Wolverine Ins. Co.,
[Voluntary payments] clauses are usually found in liability insurance policies giving the insurer the right to defend and settle any claim made against its insured and prohibiting the insured from voluntarily settling any claims without the insurer’s consent. The purpose of such clauses is to prevent collusion between the claimant and the insured and to GIE the insurer control over settlement negotiations.
Wausau Chemical counters that invitations by the EPA can hardly be termed “voluntary” because of the consequences that await potentially responsible parties who decline to participate in negotiations and force the EPA to remediate the site itself and sue later to recover costs. These consequences include punitive damages penalties of up to three times the cleanup costs ... and civil penalties of up to $25,000 per day ...
The majority of courts addressing this issue have held that costs incurred when an insured engages voluntarily in cleanup activities in advance of litigation are covered under comprehensive general liability policies ... Although Wausau Chemical did appear to have;á choice of engaging in negotiations with EPA or holding back and refusing to comply until fully forced, this choice was superficial at best. The legislative history of CERCLA provides evidence that the stiff penalties for failure to negotiate with EPA were intended to make the primary force behind cleanup efforts voluntary settlements, rather than drawn-out litigation ... To hold that such settlements are “voluntary” for purposes of an insurance policy exclusion would frustrate the intent of Congress.
Wausau Chemical,
CONCLUSION
For the reasons discussed above, the Motion for Summary Judgment filed by Plaintiff Governmental Interinsurance Exchange is DENIED and the Motion for Summary Judgment filed by Defendant City of Angola is GRANTED.
Notes
. The facts of this case as set forth herein were taken, virtually verbatim, from the Joint Statement of Undisputed Material Facts ("Joint Statement of Facts”) submitted by the parties on August 27, 1997.
. In their briefs, both GIE and the City apply Indiana law to the issues in this case, so there is obviously no choice of law dispute. In any case, this is a diversity action and neither party has raised a choice of law challenge. Accordingly, the governing law is that of the forum state.
Transamerica Ins. Co. v. South,
. As the City points out, the Insurance Institute of Indiana did in fact lobby for legislation that would, in its words, "attempt to repair the commercial insurance market place before the impact of two Supreme Court decisions is felt.... The Indiana Supreme Court in two recent decisions, [Kiger] and [Seymour], have created serious consequences for the commercial insurance market in Indiana.” Defendant's Brief, Exh. 3, statement prepared by Insurance Institute of Indiana. Legislation codifying the pollution exclusion language was in fact drafted (and it specifically listed "petroleum” in the section defining "pollutant”). Id., Exh. 2, House Enrolled Act No. 1583. The bill passed both houses of the Indiana legislature, but was vetoed by Governor Frank O’Bannon on May 13, 1997. Id., Exh. 4, Veto Message From the Governor. In his veto message, the Governor stated that such a "bill could adversely affect large and small Indiana business who manufacture or use products that would be considered pollutants under this bill.... The insurance industry can address the problem by drafting a clear and unambiguous contractual pollution exclusion.” Id.
. The City cited the trial court decision in Hartford in its briefs. It was a copy of the appellate ■ decision in that case that was included in the City’s Submission of Supplemental Authority filed on December 15, 1997.