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Hinkle v. Crum & Forster Holding

June 11, 2010

GARY HINKLE AND JUDITH HINKLE, PLAINTIFFS,
v.
CRUM & FORSTER HOLDING, INC.; THE NORTH RIVER INSURANCE COMPANY; AND UNITED STATES FIRE INSURANCE COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Ralph R. Beistline United States District Judge

ORDER REGARDING MOTIONS AT DOCKETS 101, 136, and 140

Before the Court are a number of motions to be resolved prior to trial. The Court resolves several herein and expects to resolve the remainder of the motions soon.

Defendant North River Insurance Company has moved for Partial Summary Judgment on three issues at Docket 101. Plaintiffs have filed a Motion for Partial Summary Judgment on the issue of coverage by estoppel at Docket 136. Defendant has filed a Second Motion for Summary Judgment on four additional issues at Docket 140. All issues have been fully briefed, and the Court concludes that oral argument is not necessary and the hearing scheduled for July 27, 2010, is VACATED. If the Court finds oral argument necessary with regard to the remaining motions, a hearing will be scheduled.

I. FACTS

Plaintiffs Gary and Judith Hinkle purchased a parcel of real property (River Terrace R.V. Park) from Raymond and Jessica Bilodeau in 1974. The Bilodeaus had operated a dry cleaning and laundry business on the premises, which the Hinkles continued until 1984. The pleadings suggest that for a period of time, the Bilodeaus owned the property, but were absent.

The Hinkles suggest in their Complaint that there is credible evidence that a dry-cleaning agent ("perc") was dumped onto the ground at River Terrace in 1965 and thereafter, without the knowledge of the Bilodeaus. In 1997, the State of Alaska brought a civil action against the Hinkles, seeking unspecified sums associated with cleaning up the perc contamination. The Hinkles filed suit against the Bilodeaus, arguing that at least some of the perc contamination occurred during the Bilodeaus' ownership and that they should be responsible for paying the State's clean-up charges.*fn1 To date, roughly $2 million in clean-up fees have been paid on behalf of the Hinkles to the United States and the State of Alaska.*fn2

The Hinkles sued the Bilodeaus under Alaska's Model Toxics Control Act, which provides for strict liability for those who own property on which hazardous substances are released without permission. AS 46.03.822(a). When a contribution claim is made by one former owner against another, "the court may allocate damages and costs among liable parties using equitable factors determined to be appropriate by the court."*fn3

In this case, the Hinkles have filed suit against North River Insurance Company and Unites States Fire Insurance Company ("the Insurers"), alleging that at various times between 1968 and 1974, both of these Defendants insured the Bilodeaus for claims made against them arising out of occurrences at River Terrace.*fn4

Attempts to settle the Hinkles' contribution claims against the Bilodeaus have failed with both insurance companies. Mr. Bilodeau, on behalf of himself and his deceased wife, has settled with the Hinkles in the form of a consent judgment in favor of the Hinkles for over $2 million. In exchange, Bilodeau assigned all of the claims he had against the three Defendants to the Hinkles. The Hinkles have agreed to refrain from enforcing the consent judgment and bring this lawsuit against the Bilodeaus' insurance carriers under an assignment of rights, alleging breach of contract, and seeking compensatory and punitive damages, in addition to attorney fees and costs.

At the center of this case is a dispute regarding whether or not insurance policies ever existed that would cover the damages caused by the spilled chemicals. As early as 1997, the Insurers indicated that they could not locate any policies that covered the Bilodeaus. Since then, Plaintiffs state that the Bilodeaus have discovered at least five policies that provide them with coverage for the contamination. Plaintiffs allege that although microfilm records indicate that several policies existed, Defendants have failed to acknowledge the existence of those policies. Ultimately the Insurers agreed to pay for the Bilodeaus' defense, subject to a reservation of rights. As of May 2005, the Insurers still could not locate any of the policies, but continued the defense under the two primary policies.*fn5 Defendants, however, indicate that "no party has ever been able to locate a copy of the declarations page of either policy, the terms or conditions of either policy, or the exclusions and endorsements that were part of the policies."*fn6

A. Defendants' Motion for Partial Summary Judgment at 101

Defendants seek summary judgment, at Docket 101, on three discrete issues:

1. U.S. Fire and North River did not breach any duty to defend that may have been owed to their insureds;

2. U.S. Fire and North River did not unreasonably fail to settle the claims against their insureds; and

3. Plaintiffs cannot recover against U.S. Fire and North River under a theory of failure to maintain a proper claim file.

In response, Plaintiffs complain that Defendants seek summary judgment on two issues that Plaintiffs have not claimed in this lawsuit.*fn7 Specifically, they note that they have not (1) claimed a breach of duty to defend their insured; or (2) alleged a failure to maintain a proper claim file.*fn8 Plaintiffs note that although the insurance companies have failed to maintain proper claims files, the Hinkles have not asserted an independent cause of action based on this failure. They argue it is "procedurally improper to seek dismissal of a claim that has not been made."*fn9 The Court agrees. ...


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