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Meridian Chemicals, LLC v. Torque Logistics, LLC

United States District Court, M.D. Louisiana

September 27, 2018




         Before the Court is a Motion for Summary Judgment[1] filed by Defendant, Kinsale Insurance Company (“Kinsale”). Kinsale is the Commercial General Liability Insurer of Torque Logistics, LLC, (“Torque”). Plaintiffs, Meridian Chemicals LLC (“Meridian”), and Aspen Specialty Insurance Co. (“Aspen”), [2] have filed an Opposition.[3] Kinsale filed a Reply.[4] For the following reasons, the Court finds that the Motion should be GRANTED.


         Meridian instituted the foregoing action against Torque and its insurer Kinsale Insurance Co. for Torque's failure to manage and oversee tanks of Black Liquor Soap stored on property owned by Beaulieu Plantation, Inc. (“Beaulieu”). The claims against Torque and Kinsale arise out of a breach of the lease agreement between Torque and Beaulieu. Specifically, the Lease provided that, if the Property became contaminated with “hazardous material” - as defined by the Lease - as a result of the acts of Torque or its “invitees, agents, or otherwise, ” Torque had to indemnify and hold Beaulieu harmless for all damages or losses, including attorney's fees, arising as a result of the contamination.[5]The Lease also required Torque, at its expense, to promptly take any and all necessary actions to return the Property to the condition existing before the presence of any “hazardous material.”[6] Meridian instituted suit after it executed an Assignment of Claims (“the Assignment”) with Beaulieu, assigning Meridian “any and all claims and causes of action of any kind whatsoever … which [Beaulieu] may have against all persons and entities that are related to the Product Release” that gave rise to the instant lawsuit.[7]

         The Product Release in the Assignment is a reference to the incident giving rise to this suit foregoing lawsuit. Meridian alleges that, on or about March 6, 2017, a spill, release, or discharge of Black Liquor Soap was discovered at the Beaulieu property and was caused by the actions of Torque.[8] Meridian further alleges that it incurred approximately $2, 625, 000.00 in expenses to clean up, remediate, and/or restore the property and surrounding ditches which were contaminated by the Black Liquor Soap.[9]

         Kinsale brings the current Motion arguing that it is entitled to summary judgment as a matter of law because the insurance policy issued to Torque has an Absolute Pollution and Pollution Related Liability exclusion which excludes coverage for all the claims alleged by Meridian, as that exclusion has been interpreted, by the Louisiana Supreme Court in Doerr v. Mobil Oil Corp.[10]

         In opposition, Meridian argues that Kinsale's Motion should be denied because there is a material issue of fact as to whether the Absolute Pollution Exclusion applies.


         A. Summary Judgment Standard

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”[11] “When assessing whether a dispute to any material fact exists, we consider all of the evidence in the record but refrain from making credibility determinations or weighing the evidence.”[12] A party moving for summary judgment “must ‘demonstrate the absence of a genuine issue of material fact,' but need not negate the elements of the nonmovant's case.”[13] If the moving party satisfies its burden, “the non-moving party must show that summary judgment is inappropriate by setting ‘forth specific facts showing the existence of a genuine issue concerning every essential component of its case.'”[14] However, the non-moving party's burden “is not satisfied with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.”[15]

         Notably, “[a] genuine issue of material fact exists, ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'”[16] All reasonable factual inferences are drawn in favor of the nonmoving party.[17] However, “[t]he Court has no duty to search the record for material fact issues. Rather, the party opposing the summary judgment is required to identify specific evidence in the record and to articulate precisely how this evidence supports his claim.”[18] “Conclusory allegations unsupported by specific facts … will not prevent the award of summary judgment; ‘the plaintiff [can]not rest on his allegations … to get to a jury without any “significant probative evidence tending to support the complaint.”'”[19]

         B. The Policy Language

         Kinsale's policy, Policy No. 0100033968-1 issued to Torque, is a commercial general liability policy which contains an “Absolute Pollution Exclusion” that provides in pertinent part, as follows:

The following exclusions are added to this policy. If this policy already includes a pollution exclusion or a pollution related exclusion, such exclusion(s) is (are) deleted and replaced with the following:
1. This insurance does not apply to any claim or “suit” for “bodily injury”, “property damage”, “personal and advertising injury” or other injury or damage arising directly or indirectly out of, related to, or, in any way involving:
Pollution/environmental impairment/contamination or any expenses or any obligation to share damages with or repay anyone else who must pay damages from same in conjunction with occurrences arising out of or alleged to have arisen out of same. All liability and expense arising out of or related to any form of pollution, whether intentional or otherwise and whether or not any resulting injury, damage, devaluation, cost or expense is expected by any insured or any person or entity, is excluded throughout this policy.
2. This insurance does not apply to any damages, claim, or “suit” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants" including but not limited to any:
a. “Bodily injury”, “personal and advertising injury”, “property damage” or other injury or damages for the devaluation of property, or for taking, use or acquisition or interference with the rights of others in or on property or air space, or any other type injury or expense; or
b. Any loss, cost, expense, fines and/or penalties arising out of any (i) request, demand, order, governmental authority or directive that of any private party or citizen action that any insured, or others, test for, monitor, clean up, remove, contain, treat, detoxify or neutralize or in any way respond to, or assess same, the effects of “pollutants”, environmental impairments, contaminants or (ii) any litigation or administrative procedure in which any insured or others may be involved as a party as a result of actual, alleged or threatened discharge, dispersal, seepage, migration, release, escape or placement of “pollutants”, environmental impairments, or contaminants into or upon land, premises, buildings, the atmosphere, any water course, body of water, aquifer or ground water, whether sudden, accidental or gradual in nature or not, and regardless of when.

         These exclusions apply regardless of whether:

1. Injury or damage claimed is included within the “products-completed operations hazard” of the policy; or
2. An alleged cause for the injury or damage is the insured's negligent hiring, placement, training, supervision, retention, act, error or omission.
The following definition is added to the policy. If the policy already includes a definition of “pollutants” such definition is deleted and replaced with the following:
“Pollutants” means any solid, liquid, gaseous, fuel, lubricant, thermal, acoustic, electrical, or magnetic irritant or contaminant, including but not limited to smoke, vapor, soot, fumes, fibers, radiation, acid, alkalis, petroleums, chemicals or “waste”. “Waste” includes medical waste, biological infectants, and all other materials to be disposed of, recycled, stored, reconditioned or reclaimed.[20]

         C. Interpretation of Insurance Contracts

         Because subject matter jurisdiction in this case is based on diversity of citizenship, the Court applies the law of the forum state. In Louisiana, in an action under an insurance contract, the insured bears the burden of proving the existence of policy and coverage. The insurer, however, bears the burden of showing any policy limits or exclusions.[21]Summary judgment declaring a lack of coverage under an insurance policy is not proper unless there is no reasonable interpretation of the policy, when applied to the undisputed material facts shown by the evidence supporting the motion, under which coverage could be afforded.[22]

         An insurance policy is a contract between the parties and should be construed using ordinary contract principles. The parties' intent, as reflected by the words of the policy, determines the extent of coverage. An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. However, if after applying the other rules of construction an ambiguity remains, the ambiguous provision is to be construed against the drafter and in favor of the insured.[23]

         Louisiana courts have held that insurance companies have the right to limit coverage in any manner they desire, as long as the limitations do not conflict with statutory provisions or public policy.[24] The Louisiana Supreme Court has specifically addressed the pollution exclusion at issue here:

[A] total pollution exclusion was neither designed nor intended to be read strictly to exclude coverage for all interactions with irritants or contaminants of any kind. Instead, we find that “[i]t is appropriate to construe [a] pollution exclusion clause in light of its general purpose, which is to exclude coverage for environmental pollution, and under such interpretation, [the] clause will not be applied to all contact with substances that may be classified as pollutants.” Russ, supra, at § 127:6 n. 62. The applicability of a total pollution exclusion in any given case must necessarily turn on several considerations:
(1) Whether the insured is a “polluter” within the meaning of the exclusion;
(2) Whether the injury-causing substance is a “pollutant” within the meaning of the exclusion; and
(3) Whether there was a “discharge, dispersal, seepage, migration, release or escape” of a pollutant by the insured within the meaning of the policy.[25]

         Kinsale argues that the second part of the Absolute Pollution Exclusion meets the Doerr factors presented above. The Court will discuss each of these enumerated factors below.

         D. The Absolute ...

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