Xl Insurance America, Inc. et al v. Craig R. Jalbert et al

NOTICE OF MOTION AND MOTION for Summary Judgment as to coverage for the bodily injury and property damage claims alleged

C.D. Cal.July 3, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 SINNOTT, PUEBLA, CAMPAGNE & CURET, APLC Randolph P. Sinnott, #107301 rsinnott@spcclaw.com Randy M. Marmor, #074747 rmarmor@spcclaw.com 550 S. Hope St., Suite 2350 Los Angeles, California 90071-2618 Tel: (213) 996-4200; Fax: (213) 892-8322 Attorneys for Zurich American Insurance Company, American Zurich Insurance Company, and American Guarantee and Liability Insurance Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION XL INSURANCE AMERICA, INC., a Delaware corporation; and ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Connecticut corporation, Plaintiff, vs. CRAIG R. JALBERT, a Massachusetts citizen, as Trustee of the Vernon Tort Claims Trust; ACE PROPERTY AND CASUALTY INSURANCE COMPANY, a Pennsylvania corporation; ACE AMERICAN INSURANCE COMPANY, a Pennsylvania corporation; ZURICH AMERICAN INSURANCE COMPANY, a New York corporation; AMERICAN ZURICH INSURANCE COMPANY, an Illinois corporation; AMERICAN GUARANTEE & LIABILITY INSURANCE COMPANY, a New York corporation; GREAT AMERICAN INSURANCE COMPANY OF NEW YORK, a New York corporation, AMERICAN HOME ASSURANCE COMPANY, a New York corporation; and NATIONAL Case No. 2:16-CV-08318-GW-JEM ZURICH AMERICAN INSURANCE COMPANY’S AMERICAN ZURICH INSURANCE COMPANY’S, AND AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT Filed concurrently with: 1. Memorandum of Points & Authorities; 2. Joint Statement of Uncontroverted Facts and Conclusions of Law; 3. Declaration of Erin L. Brewer; 4. Joint Request for Judicial Notice; 5. Insurers’ Appendix of Exhibits; 6. [Proposed] Judgment Date: July 31, 2017 Time: 8:30 a.m. Crtrm.: 9D The Hon. George H. Wu Complaint Filed: November 8, 2016 Case 2:16-cv-08318-GW-JEM Document 84 Filed 07/03/17 Page 1 of 3 Page ID #:1153 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, a Pennsylvania corporation, Defendant. DISCOVERY CUTOFF: None Set MOTION CUTOFF: None Set TRIAL DATE: None Set AND RELATED CROSS-ACTIONS TO: ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that on July 31, 2017, at 8:30 a.m., or as soon thereafter as the matter can be heard, in the courtroom of the Honorable George H. Wu, United States District Court in the Central District of California, at 350 West First Street, Los Angeles, California 90012, Courtroom 9D, 9th Floor, defendants Zurich American Insurance Company (“Zurich American”), American Zurich Insurance Company (American Zurich”), and American Guarantee and Liability Insurance Company (“AGLIC”) will move for summary judgment against defendant Craig R. Jalbert, as Trustee of the VERNON TORT CLAIMS TRUST pursuant to Rule 56 of the Federal Rules of Civil Procedure and Local Rules 7 and 56. This Motion is made on the grounds that the alleged bodily injury and property damage claims of the underlying plaintiffs in the Vernon Litigation against Exide Technologies, Inc. arising out of the operations of its Vernon Plant are barred as a matter of law by the pollution and lead exclusions contained in the Zurich American, American Zurich and AGLIC policies at issue in this matter.1 Based on these exclusions, there is no coverage for the underlying plaintiffs’ claims and damages in the Vernon Litigation and Zurich American, American Zurich and AGLIC are entitled, as a matter of law, to summary judgment in their favor on the 1 As agreed amongst the parties and approved by the Court at the initial status conference, this early motion for summary judgment is limited to the application of the pollution and lead exclusions contained in the subject policies and does not address any other coverage defenses that the various insurers may have against the Trustee and/or their respective insureds. Case 2:16-cv-08318-GW-JEM Document 84 Filed 07/03/17 Page 2 of 3 Page ID #:1154 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 sole cause of action asserted in the complaint--declaratory relief. This motion is based on this Notice of Motion, the Memorandum of Points and Authorities filed concurrently with this Notice, the Declaration of Erin L. Brewer filed concurrently with this Notice and the Joint Statement of Uncontroverted Facts and Conclusions of Law in Support of Insurers’ Motion for Summary Judgment, the Insurers’ Request for Judicial Notice, the Joint Appendix of Exhibits filed on behalf of the Insurers, the [Proposed] Judgment in Favor of Zurich American, American Zurich and AGLIC, filed concurrently with this Notice, and on such other and further written and oral argument and authorities as may be presented at or before the hearing on this motion. This motion is made pursuant to L.R.7-3 following various conferences of counsel regarding the insurers’ intent to move for summary judgment, including the parties’ scheduling conference on January 23, 2017 to discuss early summary judgment motions, which was memorialized in the Joint Rule 26(f) Report submitted by all parties on February 9, 2017 and endorsed by the Court on February 13, 2017, the insurers’ email dated March 13, 2017 proposing a briefing schedule, and the parties’ conference on June 2, 2017. DATED: July 3, 2017 Respectfully submitted, SINNOTT, PUEBLA, CAMPAGNE & CURET, APLC By: /s/ Randolph P. Sinnott Randolph P. Sinnott Randy M. Marmor Attorneys for Zurich American Insurance Company, American Zurich Insurance Company, and American Guarantee and Liability Insurance Company Case 2:16-cv-08318-GW-JEM Document 84 Filed 07/03/17 Page 3 of 3 Page ID #:1155 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 SINNOTT, PUEBLA, CAMPAGNE & CURET, APLC Randolph P. Sinnott, #107301 (rsinnott@spcclaw.com) Randy M. Marmor, #074747 (rmarmor@spcclaw.com) 550 S. Hope St., Suite 2350 Los Angeles, California 90071-2618 Tel: (213) 996-4200; Fax: (213) 892-8322 Attorneys for Zurich American Insurance Company, American Zurich Insurance Company, and American Guarantee and Liability Insurance Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION XL INSURANCE AMERICA, INC., a Delaware corporation; and ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Connecticut corporation, Plaintiff, vs. CRAIG R. JALBERT, a Massachusetts citizen, as Trustee of the Vernon Tort Claims Trust; ACE PROPERTY AND CASUALTY INSURANCE COMPANY, a Pennsylvania corporation; ACE AMERICAN INSURANCE COMPANY, a Pennsylvania corporation; ZURICH AMERICAN INSURANCE COMPANY, a New York corporation; AMERICAN ZURICH INSURANCE COMPANY, an Illinois corporation; AMERICAN GUARANTEE & LIABILITY INSURANCE COMPANY, a New York corporation; GREAT AMERICAN INSURANCE COMPANY OF NEW YORK, a New York corporation, AMERICAN HOME ASSURANCE COMPANY, a New York corporation; and NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, a Pennsylvania corporation, Defendant. Case No. 2:16-CV-08318-GW-JEM ZURICH AMERICAN INSURANCE COMPANY’S, AMERICAN ZURICH INSURANCE COMPANY’S, AND AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT Filed concurrently with: 1. Notice of Motion; 2. Joint Statement of Uncontroverted Facts and Conclusions of Law; 3. Declaration of Erin L. Brewer; 4. Joint Request for Judicial Notice; 5. Insurers’ Appendix of Exhibits; 6. [Proposed] Judgment Date: July 31, 2017 Time: 8:30 a.m. Crtrm.: 9D The Hon. George H. Wu Complaint Filed: November 8, 2016 DISCOVERY CUTOFF: None Set MOTION CUTOFF: None Set TRIAL DATE: None Set AND RELATED CROSS-ACTIONS Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 1 of 28 Page ID #:1156 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 i ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 TABLE OF CONTENTS Page I. INTRODUCTION ................................................................................................ 1 II. FACTURAL SUMMARY ................................................................................... 2 A. Exide’s Operations At The Vernon Plant .................................................. 2 B. The California State Agencies’ Involvement In Regulating The Vernon Plant............................................................................................... 3 C. Exide’s Bankruptcy And The Vernon Litigation ....................................... 4 D. Exide’s Chapter 11 Plan Of Reorganization .............................................. 6 E. The Zurich Policies And Relevant Policy Provisions ................................ 6 1. Zurich American’s General Liability Policies ................................. 6 2. American Zurich’s Following Form Excess Policies ...................... 8 3. AGLIC’s Following Form Excess Policies ................................... 12 III. LEGAL ARGUMENT ....................................................................................... 14 A. Zurich American’s Policies Do Not Afford Coverage For The Claims And Damages Alleged In The Vernon Litigation ....................... 14 1. Zurich American’s Total Pollution Exclusion ............................... 14 2. The “Products-Completed Operations” Exception ........................ 16 B. American Zurich’s Following Form Excess Policies Do Not Afford Coverage For The Claims Or Damages Alleged In The Vernon Litigation ..................................................................................... 19 1. The XL Underlying Pollution Coverage ....................................... 21 2. National Union’s Underlying Pollution Coverage ........................ 22 3. ACE’s 2011 and 2012 Underlying Pollution Coverage ................ 23 C. AGLIC’s Following Form Excess Policies Do Not Afford Coverage for the Claims or Damages Alleged in the Vernon Litigation .................................................................................................. 24 IV. CONCLUSION .................................................................................................. 24 Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 2 of 28 Page ID #:1157 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ii ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 TABLE OF AUTHORITIES Page CASES Allen v. Scottsdale Ins. Co. 307 F. Supp. 2d 1170, 1179 (D. Haw. 2004) .................................................... 16 American Casualty Company of Reading, PA. v. Miller 159 Cal.App.4th 501, 515 (2008) ....................................................................... 15 Ayden Corp. v. First State Insurance Co. 18 Cal.4th 1183, 1188 (1998) ............................................................................. 17 Cold Creek Compost, Inc. v. State Farm Fire & Casualty Co. 156 Cal.App.4th 1469, (2007) ...................................................................... 15, 16 CPS Chem, Co. Inc. v. Continental Insurance Co. 489 A.2d 1265 – 1270 (M.J. Law Div. 1984) ................................................... 18 Hydro Systems, Inc. v. Continental Ins. Co. 929 F. 2d 472, 474 – 76 (9th Cir. 1991) ................................................. 16, 17, 18 Lewis v. Hartford Casualty Ins. Co. No. 05-2969, 2006 U.S. Dist. Lexis 3754 at *15-16 ......................................... 15 MacKinnon v. Truck Insurance Exchange 31 Cal.4th 635, 644 (2003) ................................................................................. 15 Palmer v. Truck Ins. Exchange 21 Cal.4th 1109, 1120 (1999) .............................................................................. 2 Park-Ohio Industrial, Inc. v. Home Indemnity Company 975 F. 2d 1215, 1222 (6th Cir. 1992) ................................................................. 16 STATUTES California Code of Regulations, Title 22, §66260.1 ..................................................... 3 OTHER AUTHORITIES Federal Resource Conservation & Recovery Act, 42 U.S.C. §6928(d)(2) ................... 4 Health & Safety Code §5100 ......................................................................................... 3 Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 3 of 28 Page ID #:1158 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 MEMORANDUM OF POINTS AND AUTHORITIES Zurich American Insurance Company (“Zurich American”), American Zurich Insurance Company (“American Zurich”) and American Guarantee and Liability Insurance Company (“AGLIC”) (collectively, “Zurich”) submit this Memorandum in support of their motion for summary judgment. I. INTRODUCTION Zurich seeks a declaration that no coverage is afforded under general liability policies issued by Zurich American and following form excess policies issued by American Zurich and AGLIC, for underlying bodily injury and property damage claims asserted against its insureds - Exide1 and certain individual directors, officers and/or managers of Exide – by claimants residing near Exide’s lead battery recycling facility in Vernon, California (the “Vernon Plant”) in a consolidated action currently pending in Los Angeles Superior Court (the “Vernon Litigation”). Because of Exide’s Chapter 11 bankruptcy proceeding, the Vernon Litigation is asserted against Exide and its directors, officers and/or managers solely to the extent of applicable insurance. As part of Exide’s Fourth Amended Plan of Reorganization (the “Plan”), defendant Craig R. Jalbert was appointed as the Vernon Trust Tort Trustee (the “Trustee”) and was delegated with the responsibility of the resolution of the Vernon Tort Claims. The Trustee has demanded coverage under the Zurich American, American Zurich, and AGLIC policies for the claims of bodily injury and property damage made by the claimants in the Vernon Litigation. Neither Exide nor its directors, officers, and/or managers tendered their defense and indemnification to Zurich American, American Zurich, or AGLIC in the Vernon Litigation. Rather, Zurich’s first notice of the claims was a result of correspondence 1 Exide Technologies and predecessor Exide Corporation are hereinafter collectively referred to as “Exide.” Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 4 of 28 Page ID #:1159 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 received from attorneys for the claimants in the Vernon Litigation.2 As will be fully described below, each of the Zurich American, American Zurich, and AGLIC policies contains some variation of an absolute or total pollution exclusion that precludes coverage for all bodily injury and property damage alleged by the claimants in the Vernon Litigation. Courts in California and elsewhere have consistently held that an insured’s environmental liabilities arising from the discharge of pollutants from its industrial operations, such as at issue here, fall directly within the scope of the absolute or total pollution exclusions contained in Zurich’s policies. Further, none of the exceptions to the pollution exclusion that might restore coverage apply. Accordingly, Zurich American, American Zurich, and AGLIC request that the Court enter summary judgment in their favor and as against the Trustee, finding that the pollution exclusions contained in their respective policies bar coverage for the claims and damages alleged in the Vernon Litigation. II. FACTURAL SUMMARY A. Exide’s Operations At The Vernon Plant Exide, one of the world’s largest manufacturer, producer, distributor and recycler of lead-acid batteries, owns the lead battery recycling facility located at 2700 S. Indiana in Vernon, California (the “Vernon Plant”), which generated hazardous waste, including corrosive fluids and waste-containing metals such as lead and arsenic. [U.F. 1-4]. Exide acquired the Vernon Plant when it purchased GNB Technologies, Inc. in 2000, and operated the plant from that time until the plant was closed in or about March 2015. [U.F. 7]. Since the 1970’s, the Vernon Plant has been used for lead- 2 Since Exide and its directors, officers and/or managers did not tender their defense of the underlying Vernon Litigation to Zurich under any of the general liability policies issued by Zurich American or the following form excess policies issued by American Zurich and AGLIC, this coverage case and this motion only concerns actual coverage under Zurich’s policies, not the potential of coverage, for the claims and damages alleged in the Vernon Litigation. Palmer v. Truck Ins. Exchange, 21 Cal.4th 1109, 1120 (1999). Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 5 of 28 Page ID #:1160 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 acid battery recycling. [U.F. 6]. The Vernon Plant receives spent (used) lead-acid batteries and other lead-bearing materials and recycles them by recovering lead and polypropylene. [U.F. 11] Liquid waste generated as a result of the lead recycling of batteries is treated in the Vernon Plant wastewater treatment system, and the treated liquid is discharged into the sewer. [U.F. 16] Exide uses the recycled lead from the Vernon Plant to manufacture batteries at its other facilities. [U.F. 17]. To recycle spent batteries, Exide breaks up the batteries, captures the plastic casings for recycling materials into smelting furnaces to recover the lead… During this process, exhaust gases that contain lead and other metals present in batteries are generated from the smelting furnaces. The smelting process produced gases containing lead and other metals that were run through pollution-control equipment designed to remove as much pollution as possible and then were released into the atmosphere. [U.F. 13-14]. Exide did not manufacture lead-acid batteries or any other products at the Vernon Plant. Other Exide locations manufactured lead-acid batteries, using lead from the Vernon Plant or from other sources. [U.F. 17]. B. The California State Agencies’ Involvement In Regulating The Vernon Plant The Vernon Plant was designated a Hazardous Waste Treatment and Storage Facility by the State of California’s Department of Toxic Substances Control (“DTSC”), as a facility that Exide principally used to treat, store, or dispose of hazardous waste, subject to the Federal Resource Conservation and Recovery Act permit requirements. [U.F. 19]. The Vernon Plant is regulated by the DTSC “pursuant to a comprehensive statutory and regulatory framework for the generation, handling, treatment, transport and disposal of hazardous waste, set forth in the Hazardous Waste Control Law, Health & Safety Code §5100 et seq., and its implementing regulations, California Code of Regulations, Title 22, §66260.1 et seq.” [U.F. 22]. As a designated Hazardous Waste Treatment and Storage Facility, Exide was required to comply with certain permits, including interim status authorizations Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 6 of 28 Page ID #:1161 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 issued for the Vernon Plant by the DTSC on December 12, 1981. [U.F. 21]. Since Exide took over the operations of the Vernon Plant in 2000, it has entered into numerous Corrective Action Consent Orders and has been cited in connection with its operations at the Vernon Plant. [U.F. 28]. In January 2014, the South Coast Air Quality Management District (SCAQMD”) brought a civil enforcement action against Exide asserting that Exide had a lengthy history of violating SCAQMD rules, and alleging that Exide violated the Health & Safety Code and the SCAQMD rules, by, among other things, negligently and/or willfully failing to implement and follow appropriate operating practices, causing Exide to emit arsenic into the air. [U.F. 34]. Pursuant to a Non-Prosecution Agreement dated March 11, 2015 between Exide and the U.S .Attorney’s Office for the Central District of California (“Non- Prosecution Agreement”), which resolved a grand jury investigation, Exide agreed to immediately and permanently cease recycling operations at the Vernon Plant and proceed with facility closure pursuant to several agreements with the DTSC. [U.F. 36]. In the Non-Prosecution Agreement, Exide admitted that it knowingly and illegally stored and disposed of lead-contaminated hazardous waste at the Vernon Plant over the past two decades in violation of the Federal Resource Conservation & Recovery Act, 42 U.S.C. §6928(d)(2). [U.F. 37]. The DTSC terminated the Vernon Plant’s interim status authorization to manage hazardous wastes in May 2015. [U.F. 39]. C. Exide’s Bankruptcy And The Vernon Litigation On June 10, 2013, Exide filed a voluntary petition under Chapter 11 of Title 11 of the U.S. Code in the U.S. Bankruptcy Court for the District of Delaware, Case No. 13-11482 (“Chapter 11 proceedings”). Thereafter, several hundred proofs of claim were filed in Exide’s bankruptcy proceeding in connection with claims for bodily injury arising out of Exide’s operations at the Vernon Plant (the “Vernon Tort Proofs of Claim”) [U.F. 41]. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 7 of 28 Page ID #:1162 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 Between December 2014 and April 2015, several lawsuits were filed in Los Angeles County Superior Court against the managers, directors, and/or officers of Exide (the “Exide individuals”) in connection with Exide’s operations at the Vernon Plant, all of which were amended to name Exide as a defendant, but only to the extent of applicable insurance. These lawsuits were later consolidated in the First Consolidated Complaint filed on July 15, 2016, in Los Angeles County Superior Court, Case No. BC567401 (the “Vernon Litigation”). [U.F. 45]. The plaintiffs in the Vernon Litigation (hereinafter, the “Vernon plaintiffs”) alleged that, throughout its history (including for decades before Exide acquired the plant), the Vernon Plant emitted dangerously high levels of lead and arsenic, among other pollutants, into the atmosphere, which resulted in bodily injury and property damage in the vicinity of the Vernon Plant. [U.F. 53].3 The Vernon plaintiffs also alleged that as a result of Exide’s failure to install secondary containment and leak detection to its underground storm water system at the Vernon Plant – which was allegedly required as part of its permitting operations – hazardous chemicals, including lead and arsenic, have contaminated the environment surrounding the Vernon Plant. [U.F. 58]. The Vernon plaintiffs alleged that Exide knew that hazardous and/or toxic substances, specifically lead and arsenic, contaminated the air, soil, groundwater and environment from operations at the Vernon Plant, and that Exide willfully and deliberately failed to safeguard against exposing the Vernon plaintiffs to the types of injuries reasonably foreseeable, in conscience disregard of others’ safety, justifying an award of exemplary damages and/or punitive damages. [U.F. 66]. The Vernon plaintiffs seek general and special damages according to proof, including damages for loss of use or diminution in value of their property, remediation, future medical monitoring costs, and past and future emotional distress, 3 The Trustee was added as a plaintiff after Exide’s Bankruptcy Plan was confirmed. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 8 of 28 Page ID #:1163 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 injunctive relief, restitution, disgorgement, prejudgment interest, punitive damages, and attorneys’ fees. [U.F. 72 & 73]. D. Exide’s Chapter 11 Plan Of Reorganization On March 27, 2015, the Confirmation Order on Exide’s Fourth Amended Plan of Reorganization was entered in the Chapter 11 Proceeding (the “Plan”). The Plan established the Vernon Tort Trust for the resolution of “Vernon Tort Claims,” including the Vernon Tort Proofs of Claim and the Vernon Litigation, for the benefit of the “Vernon Tort Claimants.” [U.F. 42 & 43]. The Vernon Tort Trust was created effective May 20, 2015, pursuant to the Vernon Tort Trust Claims Agreement (“Vernon Tort Trust Agreement”). The Vernon Tort Trust Agreement appointed Defendant Craig R. Jalbert as the Vernon Tort Trustee. [U.F. 44]. Pursuant to the Vernon Tort Trust Agreement and Vernon Tort Trust Term Sheet included in the Plan, if no insurer defends Exide in the Vernon Litigation and the Trustee believes there is a good faith basis to pursue coverage, Exide is required to assign its rights to the Trustee to bring coverage litigation to determine whether coverage is available for the damages alleged in the Vernon Litigation under the insurance policies issued to Exide that are the subject of this action. [U.F. 50]. Exide provided an assignment of those rights to the Trustee. [U.F. 48]. The Trustee has demanded coverage under Zurich’s policies, as well as policies issued by the other insurers involved in this action, all of whom have filed separate motions for summary judgment, for the alleged damages suffered by the claimants in the Vernon Litigation. [U.F. 51]. E. The Zurich Policies And Relevant Policy Provisions 1. Zurich American’s General Liability Policies Zurich American issued successive annual general liability policies to Exide incepting on July 1, 2007 and ending on February 1, 2014. [U.F. 142]. All of the Zurich American general liability policies are subject to an identical Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 9 of 28 Page ID #:1164 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 pollution exclusion, which is contained in Endorsement Form “CG 21 64 12 04” entitled “TOTAL POLLUTION EXCLUSION WITH A BUILDING HEATING, COOLING AND DEHUMIDIFYING EQUIPMENT EXCEPTION AND A HOSTILE FIRE EXCEPTION. This total pollution exclusion states in part as follows: This insurance does not apply to: f. Pollution (1) “Bodily injury” or “property damage” which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants” at any time. This exclusion does not apply to: (a) “Bodily injury” if sustained within a building which is or was at any time owned or occupied by or rented or loaned to, any insured and caused by smoke, fumes, vapor or soot produced by or originating from equipment that is used to heat, cool or dehumidify the building or equipment that is used to heat water for personal use, by the building’s occupants or their guests; or (b) “Bodily injury” or “property damage” arising out of heat, smoke or fumes from a “hostile fire” unless that hostile fire occurred or originated: (i) At any premises, site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing or treatment of waste; [U.F. 143; JA 1142, 1221, 1329, 1388, 1493, 1599, and 1707].4 4 The Trustee has acknowledged in discovery responses in this action that no “hostile fire” ever occurred at the Vernon Plant. [U.F. 88-90]. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 10 of 28 Page ID #:1165 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 All of the Zurich American general liability policies are subject to an identical endorsement that adds the following exception to the total pollution exclusion set forth above: ISO Total Pollution Exclusion with a Building Heating Equipment Exception and a Hostile Fire Exception (CG 21 65) will be modified to include the following: f. Pollution (1)(c) “Bodily injury” or “property damage” included in the “products-completed operations hazard”… … [U.F. 144; JA 1125, 1208, 1274, 1405, 1506, 1613, 1719]. Finally, all of the Zurich American general liability policies contain an identical lead liability exclusion that states in part: This insurance does not apply to: 1. “Bodily injury”, “property damage”… arising directly or indirectly out of any actual or alleged or in any way connected with, in whole or in part, arising out of continuous or intermittent or repeated exposure, inhalation or absorption of: (A) Lead; … [U.F. 145; JA 1126, 1209, 1275, 1406, 1507, 1615, 1720]. 2. American Zurich’s Following Form Excess Policies American Zurich issued following form excess policies to Exide on an annual basis from July 1, 2004 – July 1, 2013, except for the policy period from July 1, 2007 – July 1, 2008, which was covered by another insurer. [U.F. 146]. All of American Zurich’s following form excess policies contain the following insuring agreement: SECTION I. COVERAGE A. We will pay on behalf of the insured the sums in excess of the total Underlying Limits of Insurance shown in Item 6.B. of the Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 11 of 28 Page ID #:1166 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 Declarations that the insured becomes legally obligated to pay as damages. B. This insurance applies only to damages covered by the Controlling Underlying Policy as shown in Item 6.A. of the Declarations. Except as otherwise provided by this policy, the coverage follows the definitions, terms, conditions, limitations, and exclusions of the Controlling Underlying Policy in effect at the inception of this policy. [UF No. 147; JA 0275, 0290, 299, 0315, 0329, 0346, 0364, 0387]. The controlling underlying policy for the 2004, 2005, 2006, and 2008 American Zurich following form excess policies was issued by XL Insurance Company (“XL”). [U.F. 147].5 The controlling underlying policies for the 2009 and 2010 American Zurich following form excess policies was issued by National Union Insurance Company (“National Union”). [U.F. 147].6 The controlling underlying policies for the 2011 and 2012 American Zurich following form excess policies was issued by ACE American Insurance Company (“ACE”). [U.F. 147].7 The 2004 and 2005 American Zurich following form excess policies contain the identical Absolute Pollution Follow Form Endorsement in Form U-EXS-264-A CW (4/99) that states in part: THIS ENDORSEMENT CHANGES THE POLICY PERIOD PLEASE READ IT CAREFULLY. SECTION IV. – EXCLUSIONS, EXCLUSION B. is deleted in its entirety and replaced by the following: 5 XL has brought its own motion for summary judgment land its pertinent policy provisions are included in the Joint Statement at U.F. 102 & 105. 6 National Union has brought its own motion for summary judgment and its pertinent policy provisions are included in the Joint Statement at U.F. 202-217. 7 ACE has brought its own motion for summary judgment and its pertinent provisions are included in the Joint Statement at U.F. 116-124. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 12 of 28 Page ID #:1167 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 [This policy does not apply to any liability, damage, loss, costs or expense: POLLUTION] B.1. Arising directly or indirectly out of the actual, alleged or threatened existence, discharge, seepage, migration, disposal, release or escape of “pollutants.” … As used in this endorsement, “pollutants” means any man-made or naturally occurring solid, liquid, gaseous or thermal irritant or contaminant, including but not limited to: smoke; vapor; soot; fumes; acids; alkalis; chemicals; and waste. Waste includes materials to be recycled, reconditioned, or reclaimed. However, it is agreed that this exclusion does not apply to any liability, damage, loss, cost or expense described above for which coverage is afforded under (XL Insurance America, Inc.) Policy No. (US00006428L104A) and then for no broader coverage than is afforded by such insurance (hereinafter referred to as the “Underlying Pollution Coverage”)….[U.F. 148; JA 0307]. The pollution exclusion in the 2005 American Zurich following form excess policy is the same and the underlying pollution coverage is contained in XL Policy US00006428L105A. [U.F. 148; JA 0307]. The 2009 and 2010 American Zurich following form excess policies contain the same absolute pollution following form endorsement described above, except the underlying pollution coverage was contained in policies issued by National Union. [U.F. 149; JA 0353, 0371]. The 2011 and 2012 American Zurich following form excess policies contain the same absolute pollution following form endorsement described above, except the controlling underlying policies were issued by ACE Insurance Company, policies G25832802 and G27046095. [U.F. 150; JA 0394, 0424]. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 13 of 28 Page ID #:1168 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 The 2006 American Zurich following form excess policy contains in part the following pollution exclusion that does not reference any Underlying Pollution Coverage: THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. SECTION IV. – EXCLUSIONS, EXCLUSION B. is replaced by the following: This policy does not apply to any liability, damage, loss, costs or expense: POLLUTION B. 1. Arising directly or indirectly out of the actual, alleged or threatened existence, discharge, seepage, migration, disposal, release or escape of “pollutants.” … 3. It is the intent and effect of this endorsement to exclude any or all coverage afforded by this policy for any claim, action, judgment, liability, settlement, defense, or expense, in any way arising out of an actual, alleged, or threatened existence, discharge, seepage, migration, disposal, release, or escape of “pollutants.” It applies whether such results from any insured’s activities or the activities of others, or is sudden, gradual, accidental, intended, foreseeable, expected, fortuitous, or inevitable. And it applies wherever or however such occurs. As used in this endorsement, “pollutants” means any man-made or naturally occurring solid, liquid, gaseous or thermal irritant or contaminant, including but not limited to: smoke; vapor; soot; fumes; acids; alkalis; chemicals; and waste. Waste includes materials to be Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 14 of 28 Page ID #:1169 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 recycled, reconditioned, or reclaimed. [U.F. 151; JA 0323]. The 2008 American Zurich following form excess policy contains in part the following pollution exclusion that again does not reference any Underlying Pollution Coverage: SECTION IV. – EXCLUSIONS, EXCLUSION B. is replaced by the following: This policy does not apply to any liability, damage, loss, costs or expense: POLLUTION B. 1. Arising directly or indirectly out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants” at any time. This exclusion does not apply to bodily injury or property damage arising out of heat, smoke or fumes from a “hostile fire” unless that “hostile fire” occurred or originated: a. At any premises, site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing, or treatment of waste; …[U.F. 152; JA 0330]. 3. AGLIC’s Following Form Excess Policies AGLIC issued the successive following form excess liability policies to Exide, effective July 1, 2013 – July 1, 2014 and July 1, 2014 – July 1, 2015 [UF No. 153]. AGLIC’s policies contain the same insuring agreements: SECTION I. – COVERAGE A. We will pay on behalf of the insured the sums in excess of the Total Limits Of All Underlying Insurance shown in Item 6.B. of the Declarations that the insured becomes legally obligated to pay as damages. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 15 of 28 Page ID #:1170 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 B. This insurance applies to damages covered by the Controlling Underlying Policy as shown in Item 6.A. of the Declarations. Except as otherwise provided by this policy, the coverage follows the definitions, terms, conditions, limitations, and exclusion of the Controlling Underlying Policy in effect at the inception of this policy. C. Notwithstanding anything to the contrary contained in Paragraph A. and B. above, if the Controlling Underlying Policy does not apply to damages for reasons other than exhaustion of applicable Limits of Insurance by payment of loss, then this policy does not apply to such damages. [UF No. 154; JA 0184, 0201]. The controlling underlying policy for the 2013 and 2014 AGLIC following form excess policy was ACE policy G2705343, effective July 1, 2013 – July 1, 2014, and policy G27422135, effective July 1, 2014 – July 1, 2015. [U.F. 154; JA 0184, 0201]. The 2013 and 2014 AGLIC following form excess policies contain the identical absolute pollution follow form endorsement in form U-EXS-264-B CW (April 2011), which states in part: THIS ENDORSEMENT CHANGES THE POLICY PLEASE READ IT CAREFULLY. EXCLUSION B. POLLUTION UNDER SECTION IV. – EXCLUSIONS, is deleted and replaced by the following: This policy does not apply to any liability, damage, loss, costs or expense: POLLUTION B. 1. Arising directly or indirectly out of the actual, alleged or threatened discharge, seepage, migration, disposal, release or escape of “pollutants” at any time. … Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 16 of 28 Page ID #:1171 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 However, this exclusion does not apply to any liability, damage, loss, cost or expense described above for which coverage is afforded under the Underlying Insurance shown in the Schedule below (hereinafter referred to as the Underlying Pollution Coverage) and for no broader coverage than is afforded by such insurance…[U.F. 155, JA 0173, 0213]. The schedule on the endorsement in the 2013 AGLIC policy identifies ACE policy G27053543 as the Underlying Pollution Coverage and the schedule on AGLIC’s 2014 policy identifies ACE Policy G27422135. [U.F. 155; JA 0173, 0213]. III. LEGAL ARGUMENT A. Zurich American’s Policies Do Not Afford Coverage For The Claims And Damages Alleged In The Vernon Litigation 1. Zurich American’s Total Pollution Exclusion In the Vernon Litigation, plaintiffs alleged that they suffered bodily injury and/or property damage caused by exposure to lead and arsenic discharged from operations at the Vernon Plant. [U.F. 53-73]. Zurich American’s general liability policies exclude: “Bodily injury” or “property damage” which would not have occurred in whole or part but for the actual, alleged or threatened discharged, dispersal, or seepage, migration, release or escape of “pollutants” at any time. [U.F. 143; JA 1142, 1221, 1329, 1388, 1493, 1599, 1707]. The policies define “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.”8 The total pollution exclusion contains an exception as to bodily injury within a building caused by smoke, fumes, vapor or soot produced by or originating from 8 The definition of “pollutants” in Zurich American’s General Liability Policies is contained in the definitions section of the Commercial General Liability Coverage Form, CG 00 01 12 04. [U.F. 143]. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 17 of 28 Page ID #:1172 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 equipment that is used to heat, cool or dehumidify the building. [U.F. 143]. There are no such claims in the Vernon Litigation. Also the total pollution exclusion excepts “bodily injury” or “property damage” arising out of heat or from a “hostile fire.” [U.F. 143]. The Trustee has acknowledged that there was no “hostile fire” at the Plant, and none has been alleged by the Vernon plaintiffs. [U.F. 88-90]. Zurich American’s total pollution exclusion does not contain any broad exception for sudden or accidental release of pollutants. See MacKinnon v. Truck Insurance Exchange, 31 Cal.4th 635, 644 (2003) explaining that the absolute pollution exclusion first appeared in 1985 and that one of the “most notable features is… the lack of any exception for the ‘sudden and accidental’ release of pollution.” See Lewis v. Hartford Casualty Ins. Co., No. 05-2969, 2006 U.S. Dist. Lexis 3754 at *15-16 (absolute pollution exclusion precluded coverage for release of perchloroethylene from dry cleaning facility regardless of whether release was “sudden and accidental”); American Casualty Company of Reading, PA. v. Miller, 159 Cal.App.4th 501, 515 (2008) (absolute pollution exclusion precluded coverage for release of methylene chloride from furniture stripping business even if it was proven to be from a “one- time negligent act”). In MacKinnon, supra, the California Supreme Court explained that the absolute pollution exclusion is intended to bar coverage for “injuries arising from events commonly thought of us as pollution” such as the type of “traditional environmental industrial pollution” at issue here. [MacKinnon, supra, at 641 fn. 1 and 653; It is undisputed that the Vernon Litigation is based on the allegation that operations at the Vernon Plant emitted dangerously high levels of arsenic and lead that contaminated the air, soil, groundwater in the surrounding communities of the plant, and that the Vernon plaintiffs have been harmed as a result. Courts in California and elsewhere consistently have held that the absolute or total pollution exclusion bars coverage for damage caused by airborne substances emitted during operations of an industrial business. See also, Cold Creek Compost, Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 18 of 28 Page ID #:1173 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 Inc. v. State Farm Fire & Casualty Co., 156 Cal.App.4th 1469, (2007); Hydro Systems, Inc. v. Continental Ins. Co., 929 F. 2d 472, 474 – 76 (9th Cir. 1991); Park- Ohio Industrial, Inc. v. Home Indemnity Company, 975 F. 2d 1215, 1222 (6th Cir. 1992); Allen v. Scottsdale Ins. Co., 307 F. Supp. 2d 1170, 1179 (D. Haw. 2004) . Accordingly, based upon the above overwhelming authority, there can be no genuine dispute of fact that the underlying bodily injury and property damage at issue in the Vernon Litigation, allegedly caused by the Vernon plaintiffs’ exposure to dangerously high levels of lead, arsenic and other pollutants discharged from Exide’s Vernon Plant, falls squarely within the scope of Zurich American’s total pollution exclusion and the heating and “hostile fire” exceptions do not apply. 2. The “Products-Completed Operations” Exception Zurich American’s general liability policies contain a separate endorsement that modifies the total pollution exclusion by adding an exception for “’bodily injury’ or ‘property damage’ included in the “Products-Completed Operations Hazard.” [U.F. 144]. The policies define the “Products-Completed Operations Hazard” as follows: a. Includes all “bodily injury” and “property damage” occurring away from premises you own or rent and arising out of “your product” or “your work” except: (1) Products that are still in your physical possession; or (2) Work that has not yet been completed or abandoned. However, “your work” will be deemed completed at the earliest of the following times: (a) When all of the work called for in your contract has been completed. (b) When all of the work to be done at the jobsite has been completed if your contract calls for work at more than one jobsite. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 19 of 28 Page ID #:1174 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 (c) When that part of the work done at a jobsite has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project. [U.F. 144]. Zurich American’s policies define “your product” as: Any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by: (a) You; [U.F. 144]. Zurich American’s policies define “your work” as: (1) Work or operations performed by you or on your behalf; and (2) Materials, parts or equipment furnished in connection with such work or operations. [U.F. 144]. Here, the discharges of lead and arsenic from the Vernon Plant did not arise from (1) Exide’s products that were no longer in its physical possession, or (2) Exide’s work that had already been completed. Because it is relying on an exception to an exclusion, the burden of proof lies with the insured, or in this case, the Trustee. Ayden Corp. v. First State Insurance Co., 18 Cal.4th 1183, 1188 (1998). If a claim falls within an exclusion, but the insured argues that an exception to the exclusion applies, then the burden shifts to the insured to show that the exception applies. Id. at 1192. Here, the underlying claims plainly fall within the total pollution exclusion. It is therefore the Trustee’s burden to show that the exception applies and the Trustee cannot meet that burden. The underlying claims do not allege injuries arising out of Exide’s products. Rather, the claimants allege that their injuries resulted from Exide’s “emission and leakage of hazardous waste material.” Materials that are emitted from a plant into the environment were plainly not Exide’s “products.” Accordingly, the “products” aspect of the “Products-Completed Operations Hazard” does not apply to trigger the exception to the pollution exclusion. See e.g. Hydro Systems, Inc. v. Continental Ins. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 20 of 28 Page ID #:1175 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 Co., 929 F. 2d 472, 475 (9th Cir. 1991), (holding the “Products-Completed Operations Hazard” exception to the pollution exclusion did not apply to claims arising from styrene gas emitted during the insured’s manufacturing process because “[t]he styrene was purposely vented into the atmosphere” and therefore could not be deemed the insured’s product.); CPS Chem, Co. Inc. v. Continental Insurance Co., 489 A.2d 1265 – 1270 (M.J. Law Div. 1984) (industrial waste not products under a products hazards exception because they were “not intended for consumption, sale or use by others”). The lead and arsenic were emitted into the atmosphere as part of Exide’s recycling activities. They were not Exide’s products. The “completed operations” aspect of the exception also does not apply. “Your Work” is defined as: 1. Work or operations performed by you or on your behalf; and 2. Materials, parts or equipment furnished in connection with such work or operations. Work is deemed to be completed: a. When all the work called for in your contract has been completed; b. When all the work to be done at the jobsite has been completed if your contract calls for work at more than one jobsite; or c. When that part of the work done at the jobsite has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project. [U.F. 144]. Under the Products-Completed Operations Hazard, work is completed under a contract or at a jobsite, not the insured’s ongoing operations at its own premises. The alleged injuries to the Vernon plaintiffs arose from Exide’s activities at its own plant, which entailed emitting and discharging toxic pollutants. Thus, the “completed Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 21 of 28 Page ID #:1176 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 operations” exception to the total pollution exclusion in Zurich American’s general liability policies does not apply. However, even if this distinction is ignored, Exide operated the Vernon Plant from 2000 until March 2015. [U.F. 7]. Zurich American’s last policy expired on February 1, 2014, [U.F. 146] long before the Vernon Plant ceased operations. Thus, purely from a “timing” standpoint, the operations were continuing throughout Zurich American’s policy periods negating the “Products-Completed Operations Hazard” exception to the pollution exclusion. Thus, the total pollution exclusion in Zurich American’s general liability policies applies to preclude coverage for all of the claims and damages alleged by the plaintiffs in the Vernon Litigation. Thus, summary judgment should be granted to Zurich American. B. American Zurich’s Following Form Excess Policies Do Not Afford Coverage For The Claims Or Damages Alleged In The Vernon Litigation American Zurich issued following form excess policies to Exide from July 1, 2004 – July 1, 2013.9 The American Zurich policies can be divided into two groups. The first group involves the 2006–2007 and 2008–2009 policies, both of which contain absolute or total pollution exclusions without any applicable exceptions and with no acknowledgment of coverage if coverage is afforded under the controlling underlying policy. The 2006 American Zurich following form excess policy contains the following pollution exclusion. This policy does not apply to any liability, damage, loss, cost or expense: B. 1. Arising directly or indirectly out of the actual, alleged or threatened existence, discharge seepage, migration, disposal, release or escape of “pollutants.” … 9 American Zurich did not issue a policy effective during the July 1, 2007 – July 1, 2008 policy period. [UF No. 146]. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 22 of 28 Page ID #:1177 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 3. It is the intent and effect of this endorsement to exclude any or all coverage afforded by this policy for any claim, action, judgment, liability, settlement, defense, or expense, in any way arising out of an actual alleged, or threatened existence, discharge, seepage, migration, disposal, release, or escape of “pollutants.” [U.F. 151; JA 0323]. Likewise, the 2008 American Zurich Following form excess policy contains the following pollution exclusion. This policy does not apply to any liability, damage, loss, cost or expense: B. 1. Arising directly or indirectly out of the actual, alleged or threatened, discharged, dispersal, seepage, migration, release or escape of “pollutants.” [U.F. 152; JA 0330]. The only exception to the exclusion is damage that arises out of a “hostile fire” [U.F. 152; JA 0330], which never occurred at the Vernon Plant. Thus, as to the 2006 and 2008 American Zurich following form excess policies, the pollution exclusions are absolute, with no applicable exceptions, so coverage is not afforded for any of the claims or damages of the Vernon plaintiffs. However, American Zurich’s 2004, 2005, 2009, 2010, 2011 and 2012 following form excess policies include an absolute pollution exclusion that contains an exception that restores coverage but only to the same extent as, and no broader than, coverage afforded under the “Underlying Pollution Coverage, ” [U.F. 147- 150]. The Underlying Pollution Coverage for American Zurich’s 2004 and 2005 Policies are in policies written by XL Insurance Company (“XL”) – US00006428LI04A, for the 2004 – 2005 policy and US0006428LI05, for the 2005 – 2006 policy. The “Underlying Pollution Coverage” for the 2009 and 2010 American Zurich policies are in policies issued by National Union Insurance Company (“National Union”) and for the 2011 and 2012 American Zurich policies under Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 23 of 28 Page ID #:1178 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 policies written by ACE American Insurance Company (“ACE”). 10 1. The XL Underlying Pollution Coverage XL issued umbrella policies effective 2004-2005 and 2005-2006, both of which contain the Underlying Pollution Coverage for American Zurich’s 2004 and 2005 following form excess policies. [U.F. 102]. The pollution exclusions for XL’s 2004 and 2005 umbrella policies each preclude coverage for “bodily injury” and “property damage”: Arising out of the actual, alleged or threatened, discharge, dispersal, or escape of “pollutants: … at or from premises the insured currently owns, rents, occupies or that the Insured formerly owned or occupied; [or] … [a]t or from any site or location used by or for the Insured or others for the handling, storage, disposal, processing or treatment of waste material; … [U.F. 105] XL’s absolute pollution exclusion contains two exceptions – a “named peril” exception and a “Products-Completed Operations Hazard exception. The “named peril” exception restores coverage for bodily injury or property damage arising out of the discharge, dispersal, release or escape of pollutants directly caused by fire, explosion, windstorm, flood, earthquake, collision or upset of a motor vehicle or railcar, or automatic sprinkler leakage. [U.F. 105]. There is no evidence that any of these “named perils” caused or contributed to any of the pollution that is the subject of the Vernon Litigation and, as an exception to the exclusion, would be Exide’s burden to prove. This it cannot do. XL makes the same arguments set forth above regarding the inapplicability of 10 Although American Zurich will review the Underlying Pollution Coverage in the policies issued by XL, National Union, and ACE, these insurers are bringing their own motions for summary judgment in which they are asserting that there is no coverage afforded under their policies based upon their own pollution exclusions. If the Court agrees, there would also be no coverage under American Zurich’s 2004, 2005, 2009, 2010, 2011 and 2012 following form excess policies and American Zurich would therefore be entitled to summary judgment. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 24 of 28 Page ID #:1179 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 the “Products-Completed Operations Hazard.” If the court agrees, there would be no coverage afforded under XL’s 2004 and 2005 Umbrella Policies, and therefore, no coverage under American’s Zurich 2004 and 2005 following form excess policies. Thus, if XL is entitled to summary judgment under its 2004 and 2005 policies, so too, American Zurich would be entitled to the same judgment. 2. National Union’s Underlying Pollution Coverage Similarly, the only exception in American Zurich’s Total Pollution Exclusion in its 2009 and 2010 following form excess policies is if coverage is afforded under the Underlying Pollution Coverage in the policies issued by National Union, and then, only to the same extent as, and no broader than, National Union’s Underlying Pollution Coverage. [U.F. 149; JA 0353; 0371]. If National Union is entitled to summary judgment under its 2009 – 2010 and 2010 – 2011 policies, so too is American Zurich under its 2009 and 2010 Following Form Excess Policies. National Union’s underlying policies contain an absolute pollution exclusion with several exceptions.11 Like XL’s policies reviewed above, one of the exceptions restores coverage for the same “named perils,” none of which are involved in this case. A second exception restores coverage for any discharge, dispersal, seepage, migration, release or escape of pollutants included within the “Products-Completed Operations Hazard.” The same arguments set forth above establish that this exception to the absolute or total pollution exclusion does not apply: (1) the lead, arsenic and other pollutants at issue in the Vernon Litigation are not the “products” of Exide; (2) “completed operations” do not include emissions from the insured’s ongoing, continual, and regular operations; and (3) Exide’s operations started in 2000 and continued until March 2015, long after National Union’s policies expired. Thus, Exide’s operations were never completed during National Union’s policy periods. Further, notwithstanding any exception, including the “Products-Completed 11 See the Joint Statement at [U.F. 202-217]. Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 25 of 28 Page ID #:1180 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 Operations Hazard,” National Union’s policies do not provide coverage for any site used by Exide for the handling, storage, disposal, dumping, processing or treatment of waste materials, i.e., the Vernon Plant. Thus, National Union contends there is no coverage under its umbrella policies for any of the claims or damages alleged in the Vernon Litigation. If the Court agrees, then there is also no coverage afforded under American Zurich’s ’s 2009 and 2010 following form excess policies. 3. ACE’s 2011 and 2012 Underlying Pollution Coverage ACE issued umbrella policies to Exide, effective July 1, 2011–July 1, 2012 and July 1, 2012–July 1, 2013, which are the Underlying Pollution Coverage referenced in American Zurich’s following form excess policies during the same periods. [U.F. 150; JA 0394, 0424]. Again, American Zurich’s policies contain an absolute pollution exclusion with only one exception, i.e., notwithstanding the absolute pollution exclusion, coverage would be restored under American Zurich’s policies to the same extent as, and no broader than, coverage afforded under ACE’s policies. [U.F. 147, 150]. ACE’s 2011 and 2012 Commercial Umbrella Policies contain an absolute pollution exclusion endorsement that excepts pollution that arises out of “your product” including in the “Products-Completed Operations Hazard” but only if the pollution “commenced abruptly and can be clearly identified as having commenced entirely at a specific time on a specific date during the policy period.” [U.F. 116- 124]. There is no evidence that the pollution that is the subject of the Vernon Litigation commenced abruptly at a specific time and on a specific date during ACE’s 2011 – 2012 or 2012 – 2013 policy periods. As an exception to the exclusion, Exide has the burden of proof, which it cannot sustain. There is also an exception if the pollution is at or from any premises owned by the insured, but only if reported to ACE within 80 days of the commencement of the discharge of the “pollutants.” [U.F. 117] There is no evidence this ever occurred. Finally, ACE’s pollution exclusion precludes coverage for any pollution or Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 26 of 28 Page ID #:1181 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 24 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 contamination at or from a waste site, such as the Vernon Plant. Based upon these provisions, there is no coverage for the claims and damages alleged by the plaintiffs in the Vernon Litigation under ACE’s 2011 and 2012 umbrella policies. If the Court agrees, there also is no coverage under American Zurich’s 2011 and 2012 following form excess policies and American Zurich is entitled to summary judgment under these policies. C. AGLIC’s Following Form Excess Policies Do Not Afford Coverage for the Claims or Damages Alleged in the Vernon Litigation AGLIC issued two following form excess policies effective July 1, 2013–July 1, 2014 and July 1, 2014–July 1, 2015. [U.F. 153]. They are identical to American Zurich’s 2011 and 2012 policies in that they contain an absolute pollution exclusion but then except from the exclusion and restore coverage to the same extent as, and no broader than, coverage afforded under ACE’s Underlying Pollution Coverage in its umbrella policies, which were effective for the same periods. [U.F. 154 & 155]. ACE’s umbrella policies for the 2013–2014 and 2014–2015 periods contain the identical pollution exclusion as in its 2011 and 2012 policies. [U.F. 116-124]. For the same reasons, there is no coverage under ACE’s 2013 and 2014 umbrella policies and its Underlying Pollution Coverage for any of the damages alleged by the plaintiffs in the Vernon Litigation, and so, no coverage under AGLIC’s following form excess policies. If the Court agrees, and grants ACE summary judgment, the Court must also grant AGLIC summary judgment. IV. CONCLUSION There is no coverage under Zurich American’s general liability policies because all of the policies contain a total pollution exclusion with an exception for “bodily injury” and “property damage” within the “Products-Completed Operations Hazard.” However, the pollution alleged by the plaintiffs in the Vernon Litigation did not emanate from Exide’s product, but rather, from emissions from its recycling operations, none of which constitute Exide’s products. Further, the “Products- Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 27 of 28 Page ID #:1182 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MEMORANDUM OF POINTS & AUTHORTIES IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 Completed Operations Hazard” definition makes clear that the insured’s continuous pollution from its operations was never intended to be covered under the completed operations hazard. Thus, there is no coverage under Zurich American’s general liability policies for any of the claims or damages alleged in the Vernon Litigation. American Zurich’s following form excess policies either contain a total pollution exclusion with no exceptions (the 2006 and 2008 policies) or an exception that restores coverage to the same extent as, and no broader than, coverage afforded in the Underlying Pollution Coverage under policies issued by XL, National Union, and ACE. As set forth above and in each of those insurers separate motions for summary judgment, no coverage is afforded under these underlying umbrella policies for any of the damages alleged by the plaintiffs in the Vernon Litigation. Thus, there is no coverage afforded under American Zurich’s following form excess policies. Finally, AGLIC’s following form excess policies also contain a total pollution exclusion that restores coverage to the same extent as, and no broader than, coverage afforded under the ACE controlling umbrella policies. ACE’s policies preclude coverage so there is no coverage under AGLIC’s policies. Based upon this analysis Zurich American, American Zurich and AGLIC are entitled to summary judgment against the Trustee as to all the claims and damages alleged by the plaintiffs in the Vernon Litigation. DATED: July 3, 2017 SINNOTT, PUEBLA, CAMPAGNE & CURET, APLC By: /s/ Randolph P. Sinnott Randolph P. Sinnott Randy M. Marmor Attorneys for Zurich American Insurance Company, American Zurich Insurance Company, and American Guarantee and Liability Insurance Company Case 2:16-cv-08318-GW-JEM Document 84-1 Filed 07/03/17 Page 28 of 28 Page ID #:1183 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 DECLARATION OF ERIN L. BREWER IN SUPPORT OF ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 SINNOTT, PUEBLA, CAMPAGNE & CURET, APLC Randolph P. Sinnott, #107301 rsinnott@spcclaw.com Randy M. Marmor, #074747 rmarmor@spcclaw.com 550 S. Hope St., Suite 2350 Los Angeles, California 90071-2618 Tel: (213) 996-4200; Fax: (213) 892-8322 Attorneys for Zurich American Insurance Company, American Zurich Insurance Company, and American Guarantee and Liability Insurance Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION XL INSURANCE AMERICA, INC., a Delaware corporation; and ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Connecticut corporation, Plaintiff, vs. CRAIG R. JALBERT, a Massachusetts citizen, as Trustee of the Vernon Tort Claims Trust; ACE PROPERTY AND CASUALTY INSURANCE COMPANY, a Pennsylvania corporation; ACE AMERICAN INSURANCE COMPANY, a Pennsylvania corporation; ZURICH AMERICAN INSURANCE COMPANY, a New York corporation; AMERICAN ZURICH INSURANCE COMPANY, an Illinois corporation; AMERICAN GUARANTEE & LIABILITY INSURANCE COMPANY, a New York corporation; GREAT AMERICAN INSURANCE COMPANY OF NEW YORK, a New York corporation, AMERICAN HOME ASSURANCE COMPANY, a New York corporation; and NATIONAL Case No. 2:16-CV-08318-GW-JEM DECLARATION OF ERIN L. BREWER IN SUPPORT OF ZURICH AMERICAN INSURANCE COMPANY’S, AMERICAN INSURANCE COMPANY’S, AND AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Filed concurrently with: 1. Notice of Motion; 2. Memorandum of Points & Authorities; 3. Joint Statement of Uncontroverted Facts and Conclusions of Law; 4. Joint Request for Judicial Notice; 5. Insurers’ Appendix of Exhibits; 6. [Proposed] Judgment Date: July 31, 2017 Time: 8:30 a.m. Crtrm.: 9D The Hon. George H. Wu Case 2:16-cv-08318-GW-JEM Document 84-2 Filed 07/03/17 Page 1 of 4 Page ID #:1184 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 DECLARATION OF ERIN L. BREWER IN SUPPORT OF ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, a Pennsylvania corporation, Defendant. Complaint Filed: November 8, 2016 DISCOVERY CUTOFF: None Set MOTION CUTOFF: None Set TRIAL DATE: None Set AND RELATED CROSS-ACTIONS DECLARATION OF ERIN L. BREWER I, Erin L. Brewer, declare as follows: 1. I am an Environmental Claims Specialist for the Zurich North America Group of insurance companies which group includes Zurich American Insurance Company (“Zurich American”), American Zurich Insurance Company (“American Zurich”), and American Guarantee and Liability Insurance Company (“AGLIC”) (collectively, “Zurich”). I am authorized to make this declaration on behalf of Zurich in support its Motion for Summary Judgment. In this capacity, I have personal knowledge of the facts set forth herein, which are known to me to be true and correct. If called as a witness, I would and could competently testify thereto. 2. I am responsible for handling the claims brought by the Vernon plaintiffs in the Vernon Litigation relating to alleged pollution and contamination emanating from the Vernon Plant located at 2700 S. Indiana in Vernon, California. At no time did Zurich ever receive a tender of defense or indemnity from Exide Technologies or Exide Corporation (“Exide”) or Exide’s directors, officers, and/or managers in the Vernon Litigation. On or about July 30, 2015. Zurich received a demand for coverage under its policies for the claims of bodily injury and property damage made by the claimants in the Vernon Litigation from claimants’ counsel. 3. Zurich American Insurance Company issued the following policies to Exide: Policy No. GLO 9260592-00, effective July 1, 2007 – July 1, 2008 Policy No. GLO 9260592-01, effective July 1, 2008 – July 1, 2009 Case 2:16-cv-08318-GW-JEM Document 84-2 Filed 07/03/17 Page 2 of 4 Page ID #:1185 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 DECLARATION OF ERIN L. BREWER IN SUPPORT OF ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 Policy No. GLO 9260592-02, effective July 1, 2009 – July 1, 2010 Policy No. GLO 9260592-03, effective July 1, 2010 – July 1, 2011 Policy No. GLO 9260592-04, effective July 1, 2011 – July 1, 2012 Policy No. GLO 9260592-05, effective July 1, 2012 – August 1, 2013 Policy No. GLO 9260592-06, effective August 1, 2013 – February 1, 2014. The policies of insurance attached to the Appendix of Exhibits are true and correct copies of the policies of insurance issued by Zurich American to Exide. The policies have been redacted solely to prevent disclosure of premium information. 4. American Zurich Insurance Company issued the Following Form Excess Liability policies to Exide as follows: Policy No. AEC 5085879 00, effective July 1, 2004 – July 1, 2005 Policy No. AEC 5085879 01, effective July 1, 2005 – July 1, 2006 Policy No. AEC 5085879 02, effective July 1, 2006 – July 1, 2007 Policy No. AEC 9671164 00, effective July 1, 2008 – July 1, 2009 Policy No. AEC 9671164 01, effective July 1, 2009 – July 1, 2010 Policy No. AEC 9671164 02, effective July 1, 2010 – July 1, 2011 Policy No. AEC 9671164 03, effective July 1, 2011 – July 1, 2012; and Policy No. AEC 9671164 04, effective July 1, 2012 – July 1, 2013. The policies in the Index of Exhibits are true and correct copies of the Following Form Excess Policies issued by American Zurich to Exide. American Zurich did not issue to Exide any Following Form Excess Policy for the policy year July 1, 2007 – July 1, 2008. The policies have been redacted solely to prevent disclosure of premium information. 5. AGLIC issued Following Form Excess Liability Policies to Exide as follows: Policy No. AEC 9671164 05, effective July 1, 2013 – July 1, 2014 and Case 2:16-cv-08318-GW-JEM Document 84-2 Filed 07/03/17 Page 3 of 4 Page ID #:1186 Case 2:16-cv-08318-GW-JEM Document 84-2 Filed 07/03/17 Page 4 of 4 Page ID #:1187 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 [PROPOSED] ORDER GRANTING ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 SINNOTT, PUEBLA, CAMPAGNE & CURET, APLC Randolph P. Sinnott, #107301 rsinnott@spcclaw.com Randy M. Marmor, #074747 rmarmor@spcclaw.com 550 S. Hope St., Suite 2350 Los Angeles, California 90071-2618 Tel: (213) 996-4200; Fax: (213) 892-8322 Attorneys for Zurich American Insurance Company, American Zurich Insurance Company, and American Guarantee and Liability Insurance Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION XL INSURANCE AMERICA, INC., a Delaware corporation; and ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Connecticut corporation, Plaintiff, vs. CRAIG R. JALBERT, a Massachusetts citizen, as Trustee of the Vernon Tort Claims Trust; ACE PROPERTY AND CASUALTY INSURANCE COMPANY, a Pennsylvania corporation; ACE AMERICAN INSURANCE COMPANY, a Pennsylvania corporation; ZURICH AMERICAN INSURANCE COMPANY, a New York corporation; AMERICAN ZURICH INSURANCE COMPANY, an Illinois corporation; AMERICAN GUARANTEE & LIABILITY INSURANCE COMPANY, a New York corporation; GREAT AMERICAN INSURANCE COMPANY OF NEW YORK, a New York corporation, AMERICAN HOME ASSURANCE COMPANY, a New York corporation; and NATIONAL Case No. 2:16-CV-08318-GW-JEM [PROPOSED] ORDER GRANTING ZURICH AMERICAN INSURANCE COMPANY’S AMERICAN ZURICH INSURANCE COMPANY’S, AND AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Filed concurrently with: 1. Notice of Motion; 2. Memorandum of Points & Authorities; 3. Joint Statement of Uncontroverted Facts and Conclusions of Law; 4. Declaration of Erin L. Brewer; 5. Joint Request for Judicial Notice; 6. Insurers’ Appendix of Exhibits Date: July 31, 2017 Time: 8:30 a.m. Crtrm.: 9D The Hon. George H. Wu Complaint Filed: November 8, 2016 Case 2:16-cv-08318-GW-JEM Document 84-3 Filed 07/03/17 Page 1 of 3 Page ID #:1188 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 [PROPOSED] ORDER GRANTING ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, a Pennsylvania corporation, Defendant. DISCOVERY CUTOFF: None Set MOTION CUTOFF: None Set TRIAL DATE: None Set AND RELATED CROSS-ACTIONS The motion of defendants Zurich American Insurance Company, American Zurich Insurance Company, and American Guarantee and Liability Insurance Company (collectively, “Zurich”) against Craig R. Jalbert, as Trustee of the Vernon Tort Claims Trust, came on regularly for hearing on July 31, 2017, in Department 9D of the above-entitled court. The Court having reviewed all the pleadings, records and files in this matter, having reviewed the various motion for summary judgment that have been submitted by the parties, and having heard the arguments of the parties, and good cause appearing therefore, hereby orders that Zurich’s motion for summary judgment is granted. The Court finds that there is no triable issue of material fact in this action and that Zurich is entitled to summary judgment as a matter of law against Craig R. Jalbert, as Trustee of the Vernon Tort Claims Trust in that Zurich has no duty to indemnify its insureds, the Trustee or any of the claimants for any of the claims, losses or damages alleged in the underlying Vernon Litigation. / / / / / / / / / / / / / / / / / / / / / Case 2:16-cv-08318-GW-JEM Document 84-3 Filed 07/03/17 Page 2 of 3 Page ID #:1189 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 [PROPOSED] ORDER GRANTING ZURICH AMERICAN’S, AMERICAN ZURICH’S AND AGLIC’S MOTION FOR SUMMARY JUDGMENT SI N N O T T , P U EB LA , C A M P A G N E & C U R ET , A P LC 55 0 S. H O P E ST ., SU IT E 23 50 LO S A N G EL ES , C A LI FO R N IA 9 00 71 -2 61 8 T EL (2 13 ) 9 96 -4 20 0 • FA X (2 13 ) 89 2- 83 22 It is therefore ordered that judgment shall be entered in favor of Zurich and against Craig R. Jalbert as Trustee of the Vernon Tort Claims Trust, consistent with this order. DATED: ____________ 2017 Hon. Judge George H. Wu Case 2:16-cv-08318-GW-JEM Document 84-3 Filed 07/03/17 Page 3 of 3 Page ID #:1190