United States District Court, W.D. Missouri, Western Division
ORDER ON MOTIONS FOR PARTIAL SUMMARY
KAYS, CHIEF JUDGE
case arises out of an insurance dispute. After insurer
Defendant Illinois Union Insurance Co. (“ILU”)
refused to indemnify Plaintiff Sunflower Redevelopment, LLC
(“Sunflower”), Sunflower sued for declaratory
judgment and breach of contract.
parties' request, the Court agreed to separate the
litigation of this case into two phases (Doc. 29). Phase I,
which is the basis for the pending motions, pertains to the
issue of whether pollution conditions within certain Solid
Waste Management Units (“SWMU”) and Areas of
Concern (“AOC”) are excluded from coverage under
a Premise Pollution Liability (“PPL”) insurance
policy. The parties agree the insurance policies at issue are
unambiguous (Doc. 51).
before the Court are the parties' cross-motions for
partial summary judgment on the Phase I issue (Docs.
& 57). For the reasons set forth below, the Court GRANTS
IN PART and DENIES IN PART Plaintiff's motion (Doc. 57),
and GRANTS IN PART and DENIES IN PART Defendant's motion
Material Facts 
heart of this dispute is the former Sunflower Army Ammunition
Plant (“Plant”), consisting of approximately 9,
035 acres in Johnson County, Kansas. The Army manufactured
power and propellant munitions, and nitric and sulfuric acids
at the Plant. During its operation, spills and releases of
propellant, heavy metals, nitrate compounds, and other
pollutants contaminated various parts of the Plant property.
Due to these activities, numerous areas of the property were
determined to be heavily polluted.
1998, the Army determined it no longer needed the Plant.
Sunflower sought to purchase the property with a vision to
clean up the pollutants and develop the land.
to the sale, on July 29, 2005, the Kansas Department of
Health and Environment (“KDHE”) issued a Consent
Order obligating Sunflower to remediate all pollution
conditions at the Plant before Sunflower could develop the
property. The Consent Order also required Sunflower to
purchase PPL and Remediation Cost Containment
August 3, 2005, Sunflower entered into an agreement with the
Army to purchase the Plant. The conveyance was made subject
to the pollution conditions. On the same day, Sunflower
entered into a Remediation Services Agreement
(“RSA”) with the United States, which obligated
Sunflower to purchase environmental insurance, secure the
worksite, and perform certain remediation work. In exchange,
the Army would pay Sunflower for the outlined remediation
work. The Army and Sunflower codified the specific
remediation work covered by the RSA into the
“Remediation Plan.” The work described in the
Remediation Plan is organized by SWMUs and AOCs, which
represent defined geographical areas of the Plant property.
issued Sunflower PPL insurance providing coverage for
unknown, and certain known, pre-existing pollution conditions
at the Plant. Relevant to this dispute, Endorsement 001 of
the PPL policy excludes coverage for
“‘remediation costs' . . . with respect to
those ‘pollution conditions' . . . related to the
implementation and management of the ‘remediation
plan' identified within [the] Remediation Plan Schedule
endorsement of the [RCC policy].” PPL policy at 15
also issued Sunflower an RCC policy, which “affords
coverage for costs in excess of a remediation plan incurred
during the policy period.” RCC policy at 2 (Doc. 58-6).
Under the RCC policy, Sunflower is entitled to
“‘excess remediation costs' [that] arise out
of ‘Pollution Conditions' identified in the
‘remediation plan' or are first discovered during
the implementation of the ‘remediation
plan.'” RCC policy at 5.
December 19, 2008, during the period of coverage, KDHE
ordered Sunflower to investigate and remediate contaminated
soils at the Plant (Doc. 58-7). These pollution conditions
exist both inside and outside of existing SWMUs and AOCs.
Also, these pollution conditions are not specifically listed
in the RSA or the Remediation Plan. KDHE told Sunflower it
was liable for remediation costs associated with these
pollution conditions at the Plant.
February 13, 2009, Sunflower submitted a claim to ILU under
the RCC policy, but ILU did not immediately cover the claim.
Instead, on April 9, 2009, ILU pointed Sunflower to the RCC
policy terms that require Sunflower to submit a revised
remediation plan to ILU for approval before Sunflower could
file a claim under the RCC policy. See RCC policy at
10. Sunflower interpreted this response as a coverage denial
and then submitted a claim under the PPL policy. On May 21,
2010, ILU denied coverage under the PPL policy because
“the work involved [is] related to the SWMUs or AOCs
included within the scope of the RCC Policy.” (Doc. 58
specific pollution conditions at issue here are those
referenced in the December letter from KDHE that are within
the existing SWMUs and AOCs and that are not excluded from
coverage by the enumerated list of SWMUs and AOCs in
Endorsement 018 of the PPL policy (“New Pollution
Conditions”). The parties do not dispute the New
Pollution Conditions fall within the scope of the insuring
agreement of the PPL policy, in that they are pollution
conditions at the Plant as defined in the policy. The only
issue in Phase I of this litigation is to determine whether a
policy endorsement excludes the New Pollution Conditions from
coverage. For the reasons outlined below, the Court finds an
exclusion to coverage does not apply.