Scottsdale Indemnity v. Village of Crestwood

Mar 12: In the U.S. Court of Appeals, Seventh Circuit, Case Nos. 11-2385, 11-2556, & 11-2583. Appealed from the United States District Court for the Northern District of Illinois, Eastern Division. The appeal in a diversity suit governed by Illinois law requires the Appeals Court to interpret the pollution exclusion from coverage found in most general liability insurance policies. The most common policy is the "commercial general liability policy" drafted by the Insurance Services Office and purchased by businesses to insure against losses arising out of general business operations. The policies at issue in this case are "public entity general liability policies," which are issued to municipalities to cover analogous risks and contain the same pollution exclusion as the commercial general liability policy.

 

    Two insurers sue for a declaration that they have no duty either to defend a series of tort suits brought against their insureds (the Village of Crestwood, Illinois, and past and present Village officials) or to indemnify the insureds should the plaintiffs in those suits prevail. The district court, holding that the allegations in the tort complaints triggered the pollution exclusion, granted summary judgment for the insurers, precipitating the appeals, which are multiple because there are a number of different declaratory-judgment suits.

 

    In 1985 or 1986 Crestwood's mayor and other Village officials learned from state environmental authorities that one of the wells was contaminated by perc (PCE—perchloroethylene, also known as tetrachloroethylene). Village officials promised the state authorities that the well would be used only in emergencies. But instead, for reasons of economy, the well continued to be used as a source of the daily Village water supply -- without disclosure to the Village's residents. The well remained in use until 2007, and not until 2009 was it sealed.

 

    Hundreds of Crestwood residents, having learned of the contamination of their water supply from a series of articles in the Chicago Tribune, sued the Village and past and present Village officials in an Illinois state court seeking damages for injury to health. In a parallel suit the State of Illinois seeks an injunction requiring the Village to finance "a site inspection to determine the

nature and extent of contamination" and take "all necessary steps to remediate the contamination." All these suits are pending.

 

    In its reasoning the Appeals Court said, "The insureds might as well be arguing that because the Village has never manufactured perc it is responsible for none of the harms that dispersing perc might cause. That would be like a murderer arguing that his victim was killed not by him but by his gun. The Village "caused" the contamination of its water supply (it could have sealed the well a quarter of a century ago, when it discovered the well was contaminated) in a perfectly good sense of the word. . .

 

    Finally, in affirming the district court the Appeals Court indicates, "The insurers conceded at oral argument that the duty to defend would be activated if so enigmatic a complaint were allowed. The complaints actually filed, however, describe in copious detail the conduct giving rise to the tort suits, and in doing so inadvertently but unmistakably acknowledge the applicability of the pollution exclusion."

 

    Access the complete opinion (click here). [#Drink, #CA7]

 

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Shell Oil Company, Et Al v. U.S.

Mar 7: In the U.S. Court of Appeals, Federal Circuit, Case No. 2010-5161. Appealed from the United States Court of Federal Claims. As explained by the Appeals Court, the case is an appeal from a decision of the Court of Federal Claims requiring the United States to indemnify certain oil companies for environmental cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act of 1978, 42 U.S.C. § 9601, et seq. (CERCLA). The Court of Federal Claims initially entered judgment in favor of all four plaintiffs in this litigation: Shell Oil Company, Atlantic Richfield Company, Texaco Inc., and Union Oil Company of California (collectively, the Oil Companies). Upon discovering that his wife had a financial interest in the parent company of Texaco and Union Oil, however, Judge Loren A. Smith: (1) vacated his 2008 and 2009 summary judgment rulings in favor of the Oil Companies; (2) sua sponte severed Texaco and Union Oil from the lawsuit and directed the clerk of court to reassign their claims to a different judge; (3) reinstated his prior summary judgment decisions with respect to Shell and Arco only; and (4) entered final judgment against the government in the total amount of $68,849,505.88.

 

    The government appeals from the Court of Federal Claims' decision entering final judgment in favor of Shell Oil and Arco, and seeks reversal on a number of grounds, including the trial judge's treatment of the discovered financial conflict. The Appeals Court rules, "Because we find that the presiding judge was required to recuse himself under 28 U.S.C. § 455(b)(4), and that vacatur is appropriate in the circumstances of this case, we vacate the final judgment and the summary judgment orders on which it was premised, and remand with instructions that this case be reassigned to a different judge."

 

    The Appeals Court explains further, "Because we find that the trial judge's failure to recuse in this case was not harmless error, particularly given the risk of injustice and risk of under-mining the public's confidence in the judicial process, we conclude that the appropriate remedy is to vacate the district court's orders and remand the case."

 

    Access the complete opinion (click here). [#Remed, #CAFed]

 

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Solutia Inc. v. McWane, Inc.

Mar 6: In the U.S. Court of Appeals, Eleventh Circuit, Case No. 10-15639. Appealed from the United States District Court for the Northern District of Alabama. Plaintiffs-Appellants Solutia, Inc. and Pharmacia Corporation (Solutia & Pharmacia) appeal the District Court's grant of summary judgment against their claims under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Solutia & Pharmacia also appeal the District Court's denial of their Federal Rule of Civil Procedure 59(e) motion to clarify or amend the summary judgment order.

 

    The appeal requires the Appeals Court to decide, as a matter of first impression, whether parties subject to a consent decree

may file claims for cost recovery under § 107(a) of CERCLA, or whether their remedies are limited to filing claims for contribution under § 113(f) of CERCLA. The Appeals Court notes that, as the Magistrate Judge noted in his thorough ruling granting summary judgment, "[t]his case is complex, in terms of its underlying facts, its litigation history, and the legal issues it presents."

 

    The Appeals Court ruled, ". . .Solutia & Pharmacia limited their arguments to the content of the Partial Consent Decree, and the definition of the Anniston Lead Site contained therein. They never actually argued prior to the grant of summary judgment, as they do now, that they 'voluntarily incurred costs unrelated to the Consent Decree.' Nor did Solutia & Pharmacia cite the properties by name that they now urge should be exempt from summary judgment.

 

    As the Magistrate Judge correctly noted, '[t]here is no burden upon the district court to distill every potential argument that could be made based on the materials before it on summary judgment. Rather, the onus is upon the parties to formulate arguments; grounds alleged in the complaint but not relied upon in summary judgment are deemed abandoned.' Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 598 (11th Cir. 1995). With this principle in mind, the Magistrate Judge did not abuse his discretion by denying Solutia & Pharmacia's Rule 59(e) motion to alter or amend the summary judgment order. . . we affirm the grant of summary judgment."

 

    Access the complete opinion (click here). [#Remed, #CA11]

 

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Bd of MS Levee Commissioners v. U.S. EPA

In the U.S. Court of Appeals, Fifth Circuit, Case No. 11-60302. Appealed from the United States District Court for the Northern District of Mississippi. The Board of Mississippi Levee Commissioners (the Board) appealed the district court's decision granting summary judgment to U.S. EPA and a number of environmental organizations on the Board's claim that the EPA improperly exercised its power to veto a plan to reduce flooding in Mississippi, called the Yazoo Backwater Area Pumps Project. Specifically, the Board claimed that the EPA was barred from vetoing the Project under section 404(r) of the Clean Water Act. The Board contends that because all of the requirements of section 404(r) were met, the EPA could not have lawfully vetoed the Project.

 

    In response -- and for the first time on appeal -- the EPA claims that the Board does not have prudential standing to contest the EPA's decision. Additionally, the Board moved to supplement the record on appeal or, in the alternative, for the Appeals Court to take judicial notice of a Fish and Wildlife Mitigation Report that was not before the district court.

 

    The Appeals Court ruled, "As an initial matter, we deny the Board's motion to supplement the record on appeal or, in the alternative, for judicial notice. In addition, we conclude that the EPA waived its argument that the Board does not have prudential standing under the Administrative Procedure Act (APA). We affirm the district court's decision upholding the EPA's veto, as the record does not contain sufficient evidence to overturn the EPA's findings."

 

    Among other things, the Appeals Court notes that, "The record contains a document from the Corps' Vicksburg District detailing its Standard Operating Procedures. See U.S. Army Corps of Engineers, Water Resource Policies and Authorities: Application of Federal Regulations Implementing Section 404 to Civil Works Projects (Sept. 18, 1979). This document sets out three options for the Corps to meet its obligations under section 404: (1) seek an exemption pursuant to section 404(r) as part of the authorization process; (2) obtain a state water quality certification pursuant to section 401; or (3) seek an exemption under section 404(r) after authorization by submitting an EIS to Congress. The record demonstrates that the Corps pursued the second option, as it sought a state water quality certification under section 401. Additionally, after the Corps revised the Project in 2007, it again sought a state water quality certification. The Corps' interpretation of section 404 shows that it would either have to seek an exemption under 404(r) or comply with section 401. The fact that it instead sought a state water quality certification indicates that the Corps did not believe that section 404(r) applied. Additionally, this document demonstrates that the Corps was aware of the process for seeking a section 404(r) exemption and that, had it intended to do so, it would have followed the Standard

Operating Procedures."

 

    Access the complete opinion (click here). [#Water, #CA5]

 

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In Re: Katrina Canal Breaches Litigation

Mar 2: In the U.S. Court of Appeals, Fifth Circuit, Case Nos. 10-30249, 10-31054 & 11-30808. Appeals from the United States District Court for the Eastern District of Louisiana. As explained by the Appeals Court, decades ago, the Army Corps of Engineers (the Corps) dredged the Mississippi River Gulf Outlet (MRGO), a shipping channel between New Orleans and the Gulf of Mexico, as well as levees alongside the channel and around the city. The Corps's negligence in maintaining the channel, grounded on a failure to appreciate certain hydrological risks, caused levees to fail and aggravated the effects of 2005's Hurricane Katrina on the city and its environs.

 

    Claimants filed hundreds of lawsuits, many of which were consolidated before the district judge a quo. That court worked with plaintiffs' litigation committees to identify several categories of plaintiffs and individual "bellwether" plaintiffs. The opinion concerns three groups of bellwether plaintiffs, all suing the United States for flood damages. One group went to trial; three of its plaintiffs prevailed on all claims, and four did not. Another group was dismissed before trial when the government was found immune. The third has survived motions to dismiss and is proceeding to trial. All losing parties have appealed; the government has also petitioned for a writ of mandamus to stay the third group's trial pending issuance of this opinion. The Appeals Court ruled, "We affirm each of the judgments and deny the petition."

 

    The Appeals Court concluded, "The district court's careful attention to the law and even more cautious scrutiny of complex facts allow us to uphold its expansive ruling in full, excepting our minor restatement of FCA [Flood Control Act of 1928] immunity. Accordingly, we affirm the judgments in Robinson and Anderson, leaving each party as he was before this appeal. Similarly, we deny the government's petition for a writ of mandamus to stay the Armstrong trial."

 

    A report on the case in the New York Times (NYT) indicates that the Appeals Court, "upheld a ruling that the Army Corps of Engineers is liable for property owners' claims, saying shoddy work on a shipping channel caused billions of dollars in damage during Hurricane Katrina. The court ruled that the federal government is not immune from lawsuits blaming flood damage on the corps' operation and maintenance of the New Orleans navigation channel." Another report on the Jurist website indicates, "In upholding the district court's ruling, the Fifth Circuit allowed five plaintiffs to recover approximately $720,000."

 

    Access the complete opinion (click here). Access the NYT article (click here). Access the Jurist article (click here). [#Water, #CA5]

 

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San Luis & Delta-Mendota Water v. Department of Interior

Mar 2: In the U.S. Court of Appeals, Ninth Circuit, Case No. 09-17594. Appealed from the United States District Court for the Eastern District of California. As explained by the Appeals Court, the appeal arises from a long-running conflict which has devolved to the present remaining dispute as to the classification of approximately 9,000 acre feet (AF) of water released between June 17 through 24 of 2004 from the Nimbus and New Melones reservoirs within California's Central Valley Project (the CVP or Project) by Defendant-Appellee United States Department of the Interior (Interior), acting through the United States Bureau of Reclamation (the Bureau).

 

    Plaintiff-Appellants San Luis & Delta-Mendota Water Authority and Westlands Water District contend that Interior abused its discretion in failing to apply the latter June 2004 releases against the 800,000 AF of CVP yield especially designated for fish, wildlife, and habitat restoration under section 3406(b)(2) of the Central Valley Project Improvement Act (CVPIA).

 

    The Appeals Court ruled that, "Because we find that the Water Agencies have standing and the accounting which Interior conducted for the latter June 2004 releases did not constitute an abuse of discretion, we affirm the district court's orders granting summary judgment in favor of the Federal Appellees and against Appellants.

 

    Access the complete opinion (click here). [#Water, #CA9]

State of Wyoming v. NPCA

Feb 29: In the U.S. Court of Appeals, Tenth Circuit, Case No. 10-8088, 10-8089, & 10-8090. Appealed from the U.S. District Court for the District of Wyoming. As explained by the Appeals Court, in 1974, the National Park Service (NPS) adopted a default rule prohibiting the use of snowmobiles in all national parks except on designated routes. 36 C.F.R. § 2.18(c). Pursuant to the default rule, NPS must promulgate a special regulation designating specific routes open to snowmobile use in a particular national park. Absent such a rule, no snowmobiles are allowed. See id. (Snowmobiles are prohibited except where designated).

 

    NPS originally regulated designated routes, choosing not to set a limit on the number of snowmobiles permitted in the parks. 36 C.F.R. § 7.13(l)(2) (2000). In 1997, environmental and recreational groups began seeking to limit the daily number of snowmobiles permitted in Yellowstone National Park, Grand Teton National Park, and the John D. Rockefeller Jr. Memorial Parkway (collectively, the parks). And over the past fifteen years, groups have continued to litigate the fate of snowmobiles in the parks.

 

    In the present cases, Petitioners the State of Wyoming and Park County, Wyoming filed petitions for review of agency action, challenging the 2009 rules governing snowmobile use in the parks. The district court dismissed the petitions for review, holding Petitioners lacked standing to pursue their claims. On appeal, Petitioners ask us again to weigh in on this ongoing saga. The Appeals Court affirmed in part, vacated in part, and remanded the case to the district court for further review.

 

    Explaining further, the Appeals Court said, "Because we hold Petitioners' procedural challenge to the 2009 temporary rule as to Yellowstone is moot, that portion of the district court's order must be vacated and remanded to the district court to dismiss that portion of the case for lack of jurisdiction. Wyoming, 587 F.3d at 1254. As to Petitioners' remaining claims, we conclude that Petitioners lack Article III standing to bring their substantive challenge to the 2009 temporary rule as to Yellowstone and their entire challenge as to the 2009 permanent rule as to Grand Teton because Petitioners' alleged injuries are merely speculative. Accordingly, we need not address prudential standing."

 

    Access the complete opinion (click here). [#Land, #CA10]

 

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