Lead Opinion
|!Appellant, Scottsdale Insurance Company (Scottsdale), appeals a grant of partial summary judgment in favor of Morrow Valley Land Company, LLC (Morrow Valley), and Ben Cain (Morrow Valley and Cain referred to collectively herein as ap-pellee). In granting summary judgment, the Washington County Circuit Court concluded that Scottsdale had a duty to defend appellee as its insured in an action for nuisance and trespass. On appeal, Scottsdale claims that the circuit court erred in granting summary judgment on the duty-to-defend claim because the pollution-exclusion provision in the insurance policy is unambiguous and excludes defense of pollution
On September 11, 2009, sixty-six plaintiffs filed the underlying lawsuit in Warren | gCounty, Tennessee, against Ben Cain, Morrow Valley Land Company, LLC, Hale Mountain Land Company, LLC, Tyson Foods, Inc., Tyson Farms, Inc., and Sun-best Farms, Inc.
Appellee provided notice of the lawsuit to Scottsdale on September 21, 2009, and demanded that Scottsdale defend and indemnify it based on its insurance coverage with Scottsdale. In 2008, Scottsdale issued a commercial general-liability (CGL) insurance policy to Morrow Valley on its business described as “Broiler Chicken Houses.” The policy’s effective dates were from December 9, 2008, to December 9, 2009 (Policy No. CLS1562044). The initial policy included only the business located in Morrison, Tennessee. On June 1, 2009, Scottsdale added Morrow Valley’s business located in Waldron, Arkansas, to the policy.
Scottsdale notified appellee by letter dated October 1, 2009, that it would not provide defense or indemnification coverage basing its denial in part on the pollution-exclusion provision contained in the insurance policy.
On December 22, 2009, appellee filed a petition for declaratory judgment in the | .Washington County Circuit Court, which it amended on January 5, 2010, adding Scottsdale’s insurance agent, Regions Insurance, Inc. (Regions), and seeking damages for breach-of-contract claims against Scottsdale and Regions. Scottsdale filed an amended and substituted answer to ap-pellee’s second amended petition on July 9, 2010.
On June 8, 2010, appellee moved for summary judgment. Scottsdale filed a response to appellee’s motion for summary judgment on August 13, 2010. The circuit court conducted a hearing on the motion on October 1, 2010. On April 6, 2011, the court granted partial summary judgment to appellee on the duty-to-defend claim. In granting partial summary judgment in favor of appellee, the circuit court, citing to Crisler v. Unum Insurance Company of America,
On April 12, 2011, appellee filed a motion for supplementary relief, requesting attorney’s fees and expenses related to its defense of the lawsuit. Appellee requested attorney’s fees for three firms or attorneys: (1) $87,897.90 in fees and expenses incurred by the Leader, Bulso & Nolen Firm, of Nashville, Tennessee; (2) $4,077.89 in fees and expenses incurred by Steven Palley with Howrey, LLP, of Washington, D.C.; and (8) $72,033.24 in fees and expenses incurred by David Stubbs, General Counsel of Morrow Valley, of Lincoln, Arkansas. On April 15, 2011, Scottsdale filed a motion for Rule 54(b) certification and to stay the action pending appeal.
The circuit court held two hearings, and on June 16, 2011, the court issued two orders — one order addressing the two pending motions (Fee Order) and one amended and substituted order granting and denying summary judgment in part (Amended Order). The Fee Order agreed to grant appellee’s legal fees and expenses as to the first two firms, but the court declined to award attorney’s fees based on Stubbs’s representation. In its June 16, 2011 Fee Order, the court stated that it would not award fees charged by Stubbs because Stubbs was in-house counsel for Morrow Valley, as well as other entities owned by Richard Latta; he was paid a salary for his role as in-house counsel; the evidence did not show that the fees Stubbs charged were related to the duty to defend and were unrelated to his capacity and role as in-house counsel; and the evidence did not show that the fees were reasonable and customary.
|Jn the Fee Order, the court also granted Scottsdale’s motion for Rule 54(b) certification and to stay the case pending appeal, upon Scottsdale’s posting of a su-persedeas bond in the amount of $91,475.79. The court stated that it would enter an amended and substituted order granting partial summary judgment and including the Rule 54(b) certificate.
In the Amended Order, the court added a Rule 54(b) certificate, finding “that an immediate, interlocutory appeal on the order finding a duty to defend in the above order is necessary in order to avoid hardship and injustice that will result if an appeal is not allowed.”
Scottsdale filed a notice of appeal on June 21, 2011, from the Amended Order. Appellee filed a notice of cross-appeal on June 24, 2011, from the Amended Order and the Fee Order regarding its request for attorney’s fees and expenses paid to Stubbs.
For reversal, Scottsdale argues that (1) Tennessee law, not Arkansas law, governs the interpretation and application of the Scottsdale CGL policy; and (2) under either Tennessee or Arkansas law, the pollution exclusion unambiguously applies and operates to preclude coverage and defense obligations for the persistent and widespread industrial pollution released from an industrial-poultry farm.
I. Choice of Law
In its order granting partial summary judgment, the circuit court found that Arkansas has the most significant relationship to the issues in the case and, therefore, Arkansas law governed the insurance
We must first determine whether the insurance contract should be analyzed under our choice-of-law rules. Crisler,
We first look at the contract at issue, Policy No. CLS1562044. Appellee asserts on appeal that the insurance policy contains an effective choice-of-law designation, directing us to the endorsement that states that Scottsdale “will submit to the jurisdiction of any court of competent jurisdiction within the United States of America” at the request of Morrow Valley. The endorsement further provides that “[a]ll matters which arise will be determined in accordance with the law and practice of the Court. In a suit instituted against any one of them under this contract, [Scottsdale] agrees to abide by the final decision of the Court or of any Appellate Court in the event of an appeal.” Scottsdale correctly counters that appellee first raises this issue on appeal; therefore, this court is precluded from considering it. See Jordan v. Diamond Equip. & Supply Co.,
|7The insurance policy does not contain an effective choice-of-law provision; therefore, we apply the significant-relationship analysis. In Crisler, supra, we set forth the following list of five factors to determine which state has the most significant relationship to a particular case when the parties’ contract does not contain an effective choice-of-law- provision: “(1) the place of contracting; (2) the place of negotiation of the contract; (3) the place of performance; (4) the location of the subject matter of the contract; (5) the domicile, residence, nationality, place of incorporation and place of business of the parties.”
Scottsdale argues that Tennessee law should apply because the policy was purchased to insure a single property located entirely in Tennessee against losses occurring in Tennessee. This argument is not supported by the facts in this case. In the affidavit of James R. Latta filed in support of appellee’s motion for summary judgment, Látta, as the managing member of Morrow Valley, stated that Morrow Valley purchased the insurance policy from its insurance agent, Eric Herget, a Regions
II. Summary Judgment on Duty to Defend
We then turn to whether, under Arkansas law, the circuit court erred in granting summary judgment. A party is entitled to summary judgment if “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, shows 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” on the issue set forth in the party’s motion. Ark. R. Civ. P. 56(c)(2) (2011). The burden of proving that there is no genuine issue of material fact is upon the moving party. Ryder v. State Farm Mut. Auto. Ins. Co.,
Where the appeal is from the grant of summary judgment in cases involving an insurance policy, we liberally construe any ambiguities in the policy in favor of the insured. State Auto Prop. & Cas. Ins. Co. v. Ark Dep’t of Envtl. Quality,
Scottsdale argues that no duty to defend arose because the unambiguous language of the policy’s pollution exclusion negated its duty to defend appellee from the claims in the underlying lawsuit. We must first apply the test for determining a liability carrier’s duty to defend. See Murphy Oil USA, Inc. v. Unigard Sec. Ins. Co.,
To trigger a duty to defend under a CGL policy, the complaint must allege
Scottsdale provided a CGL-insurance policy during the relevant period alleged in the complaint. The policy stated that Scottsdale was obligated to defend appel-lee against any suit seeking damages because of bodily injury or property damage to which the coverage applied. However, Scottsdale relied on the policy’s pollution exclusion, which follows, to deny coverage:
This insurance does not apply to:
f. Pollution
(1) “Bodily injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants.”
The policy defined the term “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.”
To determine whether a duty to defend arises in this suit, we must examine the language in the contract from which the purported duty arises. A critical part of this Inexamination turns on whether the language in the insurance contract is ambiguous. Where the terms of the insurance policy are clear and unambiguous, the policy language controls. Essex Ins. Co. v. Holder,
Language is ambiguous when there is doubt or uncertainty as to its meaning and it is fairly susceptible to more than one reasonable interpretation. Elam v. First Unum Life Ins. Co.,
The critical language for this court to examine is the pollution-exclusion provision in the insurance contract. Scottsdale argues that the language is plain and unambiguous; therefore, the claims in the underlying lawsuit are excluded by the express terms of the pollution exclusion. In the alternative, Scottsdale argues that if
We first look to whether the pollution exclusion is ambiguous. Appellee argues that we have held that pollution exclusions are ambiguous as a matter of law. On the other hand, Scottsdale contends whether pollution exclusions are ambiguous always depends on the context, citing Madison Constr. Co. v. Harleysville Mut. Ins. Co.,
Although the meaning of an ambiguity may become a question for the fact-finder if parol evidence has been admitted to resolve that ambiguity, see Minerva Enter., Inc. v. Bituminous Cas. Corp.,312 Ark. 128 ,851 S.W.2d 403 (1993), where the meaning of the language of a written contract does not depend on disputed extrinsic evidence, the construction and legal effect of the contract are questions of law. See Duvall v. Massachusetts Indem. & Life Ins. Co.,295 Ark. 412 ,748 S.W.2d 650 (1988); Security Ins. Co. v. Owen,252 Ark. 720 ,480 S.W.2d 558 (1972).
Smith v. Prudential Prop. & Cas. Ins. Co.,
Arkansas appellate courts have interpreted pollution exclusions similar to the present exclusion in three cases, Minerva, supra; State Auto, supra; and Anderson, supra. In each case, the court concluded that the pollution exclusion at issue before it was ambiguous.
In Minerva, the insured owned a mobile-home park, and the park’s septic system backed up into a tenant’s home, flooding the home with solid and liquid sewage. Minerva, |13312 Ark. at 129,
The court of appeals
peals concluded that the language of the pollution exclusion was ambiguous because the term “gasoline” was not included in a policy’s definition of “pollutants” and the terms “irritant” or “contaminant” could reasonably be construed as either including or excluding the term “gasoline.” Anderson,
In State Auto, supra, we were again presented with a dispute over the interpretation of a pollution-exclusion clause; however, the appeal involved the duty to indemnify, which is not as broad as the duty to defend. There, the insurer argued that the circuit court erred in granting summary judgment in favor of the insured because the court relied on Minerva and Anderson, which were wrongly decided, and because the circuit court failed to consider the parol evidence that the insurer offered to remove any alleged ambiguity. State Auto,
In the present case, we have a pollution exclusion that is substantially similar to the exclusions we reviewed in Minerva and State Auto. Scottsdale contends that Morrow Valley 11Bis a persistent, industrial polluter, which takes this within the contemplation of this court’s distinction regarding the ambiguity in Minerva. While the Minerva court deemed the industrial-polluter argument a “plausible” one, such an argument does not resolve the holding that the language is ambiguous. By our own definition, language is ambiguous if it is susceptible to more than one reasonable interpretation. Elam,
Then, we turn to the second part of the analysis under Minerva. We must determine whether the parties have submitted any extrinsic evidence in support
Here, an examination of the record on appeal does not reveal that the parties submitted extrinsic evidence in support of their interpretation of the word “pollutant” in the clause before us. Accordingly, we conclude that the trial court did not err in finding that the pollution exclusion was ambiguous and that appellee was entitled to summary judgment on the duty to defend because there is a possibility that the injury or damage may fall within the policy coverage, and we affirm.
III. Cross-Appeal on Denial of Attorney’s Fees
In the Fee Order, the circuit court denied appellee’s motion for attorney’s fees for services rendered by Stubbs, its in-house counsel. Appellee had requested reimbursement for Stubbs’s representation in the amount of $72,033.24 in time and expenses.
However, this issue is not properly before us because there is not a final, appeal-able order with respect to the cross-appeal. The circuit court entered two orders on the same date, June 16, 2011: the Fee Order ruled on appellee’s motion for supplemental relief, which included its request for attorney’s fees, and Scottsdale’s motion to stay pending Rule 54(b) certification and appeal; however, the Amended Order was the only order that included a 117Rule 54(b) certificate, and it solely certified the issue involving the duty to defend. It is clear that Scottsdale appeals from the Amended Order, and appellee appeals from the Fee Order. Appellee claims in its notice of cross-appeal that it appeals from the Amended Order and the “order on plaintiffs’ request for supplementary relief entered in this matter of June 16, 2011.” Appellee states in its notice that it particularly appeals the portion of that order that denied it complete reimbursement for its attorney’s fees and costs paid to Stubbs; however, that issue was resolved in the Fee Order. Although Rule 54(b) provides that the trial court may direct final judgment with regard to fewer than all of the claims or parties by an express determination, supported by specific factual findings, that there is no just reason for delay, the circuit court did not make such a determination here with respect to its denial in part of appellee’s motion for supplemental relief. See, e.g., Richardson v. Rodgers,
We dismiss the cross-appeal without prejudice because the Fee Order is not a final, appealable order within the requirements of Rule 2 of the Arkansas Rules of Appellate Procedure-Civil.
Affirmed on direct appeal; dismissed without prejudice on the cross-appeal.
Notes
. All plaintiffs in the underlying lawsuit are referred to as the plaintiffs, and all defendants in the underlying lawsuit are referred to as the defendants.
. Herget's employment relationship is shown through the affidavit of Kimberly K. Pergeson, the chief financial officer of all of Latta's companies, including Morrow Valley.
Concurrence Opinion
concurring.
|1SI am in full agreement with the majority opinion to affirm on direct appeal and to dismiss the cross-appeal. However, I write separately on the choice-of-law issue to clarity the standard of review that is applicable in this case.
In conflict-of-law disputes for causes of action arising in contract, this court applies the law of the state with the most significant relationship to the issue at hand. Ducharme v. Ducharme,
Thus, in any given case, a circuit court is called upon to apply these factors to the specific facts of the case in order to determine which state has the most significant relationship to the contract. Recognizing that this is a fact-based inquiry, this court in the past has applied the clearly-against-the-preponderance-of-the-evidence standard of review to a circuit court’s findings on a choice-of-law question. McMillen v. Winona Nat’l & Sav. Bank,
While the issue of which state has the most significant relationship is ordinarily a question of fact, this case comes to us from an order of partial summary judgment, where the parties agree that there are no facts in dispute. Accordingly, our review must focus on the circuit court’s application of the law to the facts. Harasyn v. St. Paul Guardian Ins. Co.,
CORBIN and DANIELSON, JJ., join.