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The Doe Run Resources Corp. v. American Guarantee & Liability Insurance

Supreme Court of Missouri

October 31, 2017

THE DOE RUN RESOURCES CORPORATION, Respondent,
v.
AMERICAN GUARANTEE & LIABILITY INSURANCE and LEXINGTON INSURANCE COMPANY, Defendants, and ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Appellant.

         APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY The Honorable Thomas J. Prebil, Judge

          Mary R. Russell, Judge

         The Doe Run Resources Corporation was sued by several minor plaintiffs allegedly injured by toxic pollution released from Doe Run's smelting facility in La Oroya, Peru. Doe Run sued its insurer, St. Paul Fire and Marine Insurance Company, for reimbursement of defense costs incurred during the litigation of these claims. St. Paul denied any duty to defend Doe Run, alleging coverage was barred under the insurance policy's pollution exclusion. The circuit court entered summary judgment in favor of Doe Run, finding the pollution exclusion ambiguous and unenforceable. St. Paul appeals. Because the pollution exclusion is not ambiguous, coverage is barred and St. Paul has no duty to defend Doe Run. The judgment is reversed, and this Court enters judgment in favor of St. Paul pursuant to Rule 84.14.[1]

         Background

         Doe Run is a Missouri corporation that produces lead and lead concentrate through its mining, milling, and smelting operations. While its primary business is in Missouri, Doe Run also houses a metallurgical industrial complex in La Oroya, Peru. In 2007, a class action lawsuit was filed against Doe Run on behalf of individuals living in the vicinity of the La Oroya facility, alleging bodily harm caused by exposure to toxic emissions emanating from Doe Run's facility. After the class action lawsuit was voluntarily dismissed, more than 25 minor plaintiffs filed individual lawsuits against Doe Run ("the Reid lawsuits"). Each lawsuit raises identical allegations that Doe Run released harmful substances, such as lead, arsenic, cadmium, and sulfur dioxide, into the environment. Plaintiffs claim these emissions created a dust that permeated the surrounding air and water, "enter[ing] and settle[ing] inside the minor plaintiffs' houses and … on … [their] furniture, clothing, water, and crops." Litigation in the Reid lawsuits is ongoing.

         In 2010, Doe Run filed suit in St. Louis County Circuit Court against four insurance companies, not including St. Paul, seeking reimbursement of costs incurred defending against the Reid lawsuits.[2] Doe Run added St. Paul to the suit in 2012 under St. Paul's Commercial General Liability Policy. The policy provided two terms of general liability insurance to Doe Run, spanning from December 2005 to November 2007. Subject to its terms, conditions, and exclusions, the policy covers bodily injury and property damage arising during the policy period for any event occurring outside the United States.

         St. Paul denied it was legally obligated to defend Doe Run, and both parties moved for summary judgment. St. Paul argued the policy's pollution exclusion barred coverage of the underlying allegations in the Reid lawsuits. St. Paul also denied coverage under the policy's "other insurance" provision, which eliminates any duty to defend when the policy provides excess, rather than primary, coverage. In the alternative, St. Paul argued if the court did find a duty to defend, St. Paul need not reimburse Doe Run for any costs incurred before March 2012, when Doe Run first tendered to St. Paul the defense of the Reid lawsuits, and it did not owe Doe Run any prejudgment interest. Doe Run argued the pollution exclusion was ambiguous and, because ambiguous policies must be construed against the insurer, St. Paul could not avoid its duty to defend under the policy. Doe Run also argued St. Paul was a primary insurer of Doe Run and the policy's other insurance provision could have no preclusive effect on coverage. The trial court entered summary judgment in favor of Doe Run, finding the pollution exclusion ambiguous and that St. Paul is a primary insurer of Doe Run and, therefore, has a duty to defend.

         Before a trial on damages, St. Paul filed a motion in limine to prevent Doe Run from recovering any defense costs incurred before it officially demanded defense from St. Paul. During the trial, St. Paul filed a motion for judgment under Rule 73.01, again arguing it could not legally be required to reimburse Doe Run for any costs incurred prior to Doe Run's tender of defense. The trial court denied both motions. It entered judgment against St. Paul and awarded Doe Run approximately $1.75 million for unpaid defense costs plus prejudgment interest. Two months later, the trial court entered its final judgment, reiterating its core findings as to St. Paul's duty to defend, St. Paul's breach of that duty, and the damages owed. The court awarded Doe Run $2.1 million in damages and prejudgment interest and $12, 000 in costs. St. Paul appeals.[3]

         St. Paul asserts four points on appeal, arguing the trial court erred by: (1) finding St. Paul owes a duty to defend Doe Run because the unambiguous pollution exclusion bars defense coverage; (2) finding St. Paul has a duty to defend Doe Run because the other insurance provision precludes defense coverage; (3) awarding defense costs to Doe Run incurred before the March 2012 tender of the Reid lawsuits to St. Paul; and (4) awarding prejudgment interest to Doe Run. Because this Court finds the pollution exclusion unambiguous and enforceable, the trial court's judgment is reversed and judgment is entered in favor of St. Paul pursuant to Rule 84.14.

         Standard of Review

         Appellate review of summary judgment is de novo. ITT Comm'l Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Summary judgment is appropriate when there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Id.

         Analysis

         This case presents an issue of first impression for this Court: whether an insurance policy's general pollution exclusion bars defense coverage of a toxic tort claim arising from alleged industrial pollution. Because the pollution exclusion is unambiguous and bars coverage, St. Paul does not have a duty to defend Doe Run.

         I. Interpreting Insurance Contracts

         The interpretation of an insurance contract is a question of law and is given de novo review. Mendenhall v. Prop. and Cas. Ins. Co. of Hartford, 375 S.W.3d 90, 92 (Mo. banc 2012). When interpreting an insurance policy, this Court gives the policy language its plain meaning, or the meaning that would be attached by an ordinary purchaser of insurance. Gavan v. Bituminous Cas. Corp., 242 S.W.3d 718, 720 (Mo. banc 2008). If the policy language is clear and unambiguous, it must be construed as written. Id. An ambiguity exists only if a phrase is "reasonably open to different constructions." Mendenhall, 375 S.W.3d at 92. Courts may not create an ambiguity when none exists. Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 160 (Mo. banc 2007).

         II. The ...


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