FILED
Mar 23 2012, 9:34 am
FOR PUBLICATION
CLERK
of the supreme court,
court of appeals and
tax court
ATTORNEYS FOR APPELLANTS: ATTORNEYS FOR APPELLEES,
CITY OF EVANSVILLE and UNITED STATES GUARANTY
EVANSVILLE WATER AND SEWER COMPANY, ST. PAUL FIRE and
UTILITY: MARINE INSURANCE COMPANY,
FIDELITY AND GUARANTY
GEORGE M. PLEWS INSURANCE COMPANY, and
DONNA C. MARRON FIDELITY GUARANTY INSURANCE
TONYA J. BOND UNDERWRITERS, INC:
TODD G. RELUE
Plews Shadley Racher & Braun, LLP BRYCE H. BENNETT, JR.
Indianapolis, Indiana JEFFREY B. FECHT
Riley Bennett & Egloff, LLP
Indianapolis, Indiana
STEVEN SCHULWOLF
KATHRYN A ‘HEARN
Michaels & May, P.C.
Chicago, Illinois
ATTORNEYS FOR APPELLEES,
ARROWOOD SURPLUS LINES
INSURANCE COMPANY and
LANDMARK AMERICAN INSURANCE
COMPANY:
GINNY L. PETERSON
Kightlinger & Gray, LLP
Indianapolis, Indiana
BRUCE D. CELEBREZZE
BRYAN S. CHAPMAN
Sedgwick, LLP
Chicago, Illinois
IN THE
COURT OF APPEALS OF INDIANA
CITY OF EVANSVILLE and EVANSVILLE )
WATER and SEWER UTILITY, )
)
Appellants-Plaintiffs, )
)
vs. ) No. 49A02-1104-PL-375
)
UNITED STATES FIDELITY and GUARANTY )
COMPANY, ET AL., )
)
Appellees-Defendants. )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Michael D. Keele, Judge
Cause No. 49D07-0707-PL-27789
March 23, 2012
OPINION - FOR PUBLICATION
BARNES, Judge
Case Summary
The City of Evansville (“the City”) appeals the trial court‟s grant of summary
judgment in favor of United States Fidelity and Guaranty Company (“USF&G”), Fidelity
and Guaranty Insurance Company, Fidelity and Guaranty Insurance Underwriters, Inc.,
St. Paul Fire and Marine Insurance Company (“St. Paul”), Princeton Excess & Surplus
Lines Insurance Company, Hartford Casualty Insurance Company (“Hartford”), Twin
City Fire Insurance Company, Zurich American Insurance Company, American
Guarantee and Liability Insurance Company, Arrowood Surplus Lines Insurance
2
Company (“Arrowood”), and Landmark American Insurance Company (“Landmark”)
(collectively, “Insurers”). We affirm.1
Issues
The City raises several issues, which we consolidate and restate as whether the
trial court properly determined that the Insurers were entitled to summary judgment
because the City was seeking coverage for projects to prevent future discharges of
combined-sewer overflows rather than to remediate past discharges.
Facts
Insurers sold primary and excess-layer general liability insurance policies to the
City at various times. The policies, except for the Arrowood and Landmark policies,
allegedly contain provisions regarding coverage for “„damages‟ that arise from „bodily
injury‟ or „property damage‟ caused by an „occurrence‟ during the policy period” and
“„damages‟ that result from „personal injury‟ during the policy period” subject to all the
other definitions, terms, conditions, and exclusions in the policies. App. pp. 152-53,
698.2 The Insurers, with the exception of Arrowood and Landmark, did not designate the
relevant insurance policies. In their motion for summary judgment, the Insurers stated
that, for purposes of the summary judgment motion, the policies at issue contained this
language. Id. at 152-53. The City does not argue that the policies do not contain this
1
Oral argument was held on February 15, 2012. We commend the attorneys for their advocacy.
2
On appeal, the City also cites a copy of a Hartford insurance policy “that was originally filed by the City
in the original proceeding in support of its motion for partial summary judgment [on a different issue].”
Appellant‟s Br. p. 13 n.1 (citing App. p. 1253). However, that policy was not designated in the instant
summary judgment proceedings, and as a result, we cannot consider that policy on appeal. A portion of
that policy and a portion of the St. Paul policy appear to have been designated by the City as part of Emily
Crisler‟s affidavit, and we may consider those portions of the policies on appeal. See App. p. 480.
3
language. However, because the Insurers did not actually designate the policies, we have
not been provided with the contractual definitions of the relevant terms.3
The Arrowood and Landmark policies were designated and contained coverage for
“ultimate net loss” because of “bodily injury,” “property damage,” “personal injury” or
“advertising injury” caused by an “occurrence” during the policy period. Id. at 235, 279.
The Arrowood and Landmark policies define “occurrence” with respect to “bodily
injury” and “property damage” as “an accidental happening, including continuous and
repeated exposure to substantially the same general harmful conditions which results in
„bodily injury‟ or „property damage.‟” Id. at 217, 261. The term “ultimate net loss” is
defined as:
the total sum which an insured becomes obligated to pay
through either adjudication or compromise by reason of
“bodily injury,” “property damage,” “personal injury,” or
“advertising injury,” arising out of the insured‟s activities . . .
. “Ultimate net loss” also includes:
*****
b. Legal expenses, premiums to release attachments or appeal
bonds, expenses for lawyers and investigators and other
persons for defense, settlement or investigation of “claims”
and “suits” which are paid under Coverage Parts II or III.
Id. at 219, 263.
The City‟s original sewer system was constructed approximately a century ago.
The sewer system is a combined system, whereby “certain lines that transport sewage
away from homes and businesses mix with stormwater collected by the City‟s storm
3
In any insurance coverage dispute, copies of the entire policy ideally should be provided to the court.
4
drains.” Id. at 437. Such combined sewer systems are designed such that, during periods
of heavy rain, a combined sewer overflow (“CSO”) will occur, and the overfill “exits the
combined system through designated „outfalls‟ and enters local streams, lakes, and
rivers.” Id. at 437-38. Thus, the City‟s system is designed to discharge diluted, but
untreated sewage at certain times.
One of the City‟s outfalls is Bee Slough, which discharges into the Ohio River.
Bee Slough consists of three sections. The first section of Bee Slough is enclosed and
transitions into a concrete-lined section, which is approximately one mile long. Bee
Slough then transitions back into an enclosed section. When the Ohio River is at a high
water level, a levee gate is closed, and CSO discharges fill Bee Slough. The combined
sewage “that is allowed to stand in the slough for days essentially undergoes the primary
treatment process of gravity separation.” Id. at 720. When the river recedes, the levee
gate is opened, and “the liquid portion of the contained area drains to the river.” Id.
However, solid materials that have settled to the bottom of the concrete channel remain.
The City uses a front-end loader and dump truck to remove the solids and clean the
concrete channel annually.
The City has been issued National Pollution Discharge Elimination System
(“NPDES”) permits, which “set specific requirements and limitations on CSO discharges
during wet weather conditions and prohibit CSO discharges during dry weather.” Id. at
438. However, stricter requirements regarding CSO‟s have been enacted since the
1990‟s. The City, like other CSO communities, is required to develop a Long-Term
Control Plan (“LTCP”) to coordinate long-term sewer improvement projects, and the City
5
submitted a LTCP in 2002, but it was not approved. In 2005, the City sought reissuance
of its NPDES permits, and the Environmental Protection Agency (“EPA”) became
involved in the negotiations. The EPA, Indiana Department of Environmental
Management (“IDEM”), and the City entered into negotiations over a consent decree and
the City‟s LTCP, but they could not agree on terms.
In June 2007, the City filed a complaint for declaratory judgment against some of
the Insurers. In June 2009 and April 2010, the City filed motions for leave to amend its
complaint to add additional insurer defendants, which the trial court granted. The City
alleged that it had liability insurance policies with the Insurers for the relevant time
periods that provided coverage for “the City‟s cost of remedial measures required by
government to correct past harm caused by combined sewer overflows and to prevent
further harm.”4 Id. at 698. The City sought “an award of its past and future Defense
Costs and its past and future Indemnity Costs, up to policy limits, resulting from liability
claims by government that overflows from the City‟s combined sewer overflow systems
have harmed the environment.” Id. at 699.
In June 2009, the United States and the State of Indiana, on behalf of the EPA and
IDEM, filed a complaint against the City in federal district court, and they amended the
complaint in December 2009. The Government alleged that the City had “unauthorized
and illegal discharges of pollutants and other violations” of the Clean Water Act and its
4
One of the City‟s experts, Dr. William Gonwa, stated, “remedial is past-looking, trying to clean up past
contamination issues; whereas, the forward-looking projects are looking to prevent future contamination.”
App. p. 1155.
6
NPDES permits. Id. at 665. The Government claimed that the City had “discharged
sewage and other harmful pollutants from the sewage collection systems that are part of
its Publicly Owned Treatment Works (“POTW”) onto public and private property and
into navigable waters flowing through and around the City of Evansville, including but
not limited to the Ohio River, Pigeon Creek, Bee Slough, and Carpentier Creek.” Id.
The Government sought: (1) a permanent injunction directing the City “to take all steps
necessary to come into permanent and continuous compliance with all terms and
conditions of its NPDES permits . . . ;” (2) an order permanently enjoining the City “from
causing or contributing to pollution that is presenting an imminent and substantial
endangerment to the health of persons in the service area of [the City‟s] POTW and
ordering [the City] to take such other action as may be necessary to abate and mitigate
such endangerment;” (3) “[a] permanent or temporary injunction ordering [the City] to
mitigate the past environmental harm caused by its violations . . . ;” (4) a judgment of
civil penalties for violations; and (5) an award of costs and disbursements to the United
States and the State of Indiana. Id. at 683-84.
In October 2010, USF&G filed a motion for summary judgment alleging that the
City‟s claim against the Insurers was not covered by the insurance policies because the
claim was based on proposed improvements and upgrades to its sewer system, fines, and
attorney fees, rather than remediation of past pollution.5 USF&G‟s argument was based
primarily on Cinergy Corp. v. Associated Elec. & Gas Ins. Services, Inc., 865 N.E.2d 571
5
USF&G later filed a motion to substitute a corrected designation of evidence in support of its motion for
summary judgment, which the trial court granted.
7
(Ind. 2007), (“Cinergy I”), and related opinions, Cinergy Corp. v. St. Paul Surplus Lines
Ins., 873 N.E.2d 105 (Ind. Ct. App. 2007), (“Cinergy II”), trans. denied, and Cinergy
Corp. v. St. Paul Surplus Lines Ins., 915 N.E.2d 524 (Ind. Ct. App. 2009), (“Cinergy
III”), trans. denied. The other defendant insurers, except for Arrowood and Landmark,
filed motions to join in USF&G‟s motion for summary judgment. Arrowood and
Landmark filed a separate motion for summary judgment, in which they incorporated
USF&G‟s arguments and designation of evidence and also designated their own
insurance policies.
The City filed a response to the Insurers‟ motions for summary judgment and
argued that a $15 million project to construct a dam and convert Bee Slough into a
wetland was, at least in part, a remedial measure to allow present and future contaminants
at Bee Slough to biodegrade naturally. The Bee Slough project would result in some
untreated sewage being diverted into the constructed wetland during substantial
rainstorms, and the sewage would be allowed to naturally biodegrade in the wetland. The
City‟s designation of evidence included affidavits from: (1) Harry Lawson,
Superintendent of Wastewater for the City of Evansville Water and Sewer Utility; (2) Dr.
William Gonwa; and (3) Dr. Francis Magilligan.
The Insurers then filed reply briefs in support of their motions for summary
judgment and designated additional evidence in support of their motions, including
excerpts from Dr. Gonwa‟s deposition. USF&G‟s also designated a news release issued
by the City in November 2010 regarding a consent decree reached between the City and
the Government and its expected approval by the Water and Sewer Utility Board. See
8
App. p. 534. According to the news release, the consent decree required the City to
develop a LTCP within two years, gave the City an additional nineteen and one-half to
twenty-five years to complete the improvements to the sewer system, and required the
City to pay a civil penalty of $490,000 “to resolve all claims and liability for alleged past
violations.” Id. at 535. However, the actual consent decree was not designated by the
parties in their summary judgment submissions. At oral argument on appeal, the City
asserted that the consent decree process was not finalized and that the EPA could still
order the City to perform other activities, including removal of contaminated soil.
After a hearing on the motions for summary judgment, the City filed a motion for
leave to file a surreply brief to address “USF&G‟s attacks on the City‟s expert
affidavits.” Id. at 1123. The City designated additional portions of Dr. Gonwa‟s
deposition. Although the Insurers objected to the City‟s motion to file a surreply and
designation of additional evidence, the trial court granted it.
On April 5, 2011, the trial court granted the Insurers‟ motions for summary
judgment. The trial court concluded the insurance policies at issue did “not provide any
coverage for Plaintiffs‟ alleged liability, including fines and penalties” as a result of the
Government‟s action against the City “or any other related administrative or enforcement
actions.” Id. at 27. The trial court determined that our supreme court‟s decision in
Cinergy I controlled and “[t]he amounts Evansville seeks in this action are for
infrastructure improvement projects with the purpose of bringing Evansville‟s sewer
system into legal compliance by reducing the amount of combined sewer overflow events
(“CSOs”) in the future.” Id. The City‟s claims did not “involve „damages‟ and/or
9
„ultimate net loss‟ on account of „property damage,‟ „bodily injury‟, or „personal injury‟
caused by an „occurrence,‟” and the Insurers also did not owe the City a duty to defend.
Id. at 28. The City now appeals.6
Analysis
The City argues that the trial court improperly determined the Insurers were
entitled to summary judgment because the City was seeking coverage for projects related
to the prevention of future discharges rather than remediation of past discharges. Our
standard of review for a trial court‟s grant of a motion for summary judgment is well
settled. Summary judgment is appropriate only where there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial
Rule 56(C); Mangold ex rel. Mangold v. Ind. Dep‟t of Natural Res., 756 N.E.2d 970, 973
(Ind. 2001). All facts and reasonable inferences drawn from those facts are construed in
favor of the nonmovant. Mangold, 756 N.E.2d at 973. Our review of a summary
judgment motion is limited to those materials designated to the trial court. Id. We must
carefully review a decision on summary judgment to ensure that a party was not
improperly denied its day in court. Id. at 974.
Where a trial court enters findings of fact and conclusions thereon in granting a
motion for summary judgment, as the trial court did in this case, they do not alter the
nature of our review. Rice v. Strunk, 670 N.E.2d 1280, 1283 (Ind. 1996). In the
6
During the trial court proceedings, at the City‟s request, the trial court issued an order declaring certain
documents to be confidential. In this appeal, however, the City filed its appendix, which contains
documents labeled confidential, but it failed to comply with the requirements of Indiana Administrative
Rule 9(G)(4) and Indiana Trial Rule 5(G). Consequently, the City waived the confidentiality of the
documents. See Recker v. Review Bd. of Ind. Dep‟t of Workforce Development, 958 N.E.2d 1136, 1138
n.4 (Ind. 2011).
10
summary judgment context, we are not bound by the trial court‟s specific findings of fact
and conclusions thereon. Id. They merely aid our review by providing us with a
statement of reasons for the trial court‟s actions. Id.
Generally, the interpretation of an insurance policy presents a question of law and
is appropriate for summary judgment. Cinergy I, 865 N.E.2d at 574. Clear and
unambiguous language in insurance policy contracts, like other contracts, should be given
its plain and ordinary meaning. Id. Where the policy language is ambiguous, insurance
contracts are to be construed strictly against the insurer and the language must be viewed
from the standpoint of the insured. Id. “Ambiguous terms will be construed in favor of
the insured, but for purposes of summary judgment, only if the ambiguity exists by
reason of the language used and not because of extrinsic facts.” Id.
The City‟s arguments on appeal concern our supreme court‟s opinion in Cinergy I
and the related opinions. In Cinergy I, Associated Electric & Gas Insurance Services
Limited (“AEGIS”) and other insurance companies filed a complaint for declaratory
judgment against Cinergy and other power companies insured by policies issued by the
insurance companies. The declaratory judgment complaint sought to determine the
insurance companies‟ obligations regarding a federal lawsuit filed against the power
companies by the United States, three states, and several environmental organizations
pursuant to the Clean Air Act. The federal lawsuit alleged that the power companies had
failed to obtain permits and discharged excess emissions into the air. The power
companies filed a motion for partial summary judgment in the declaratory judgment
action seeking defense costs, but the trial court denied the motion.
11
On appeal, our supreme court analyzed the insurance policies and concluded that,
“[a]fter the self-insured retention amounts specified in the policies are satisfied, AEGIS is
responsible for expenses incurred by the power companies in the investigation,
negotiation, settlement, and defense of any claim or suit seeking damages because of or
resulting in bodily injury or property damage with respect to any accident, event, or
continuous or repeated exposure to conditions.” Id. at 576-77. “The essential
controversy is thus whether the federal lawsuit against the power companies is such a
suit–one that seeks damages because of or resulting in bodily injury or property damage
with respect to any accident, event, or continuous or repeated exposure to conditions.”
Id. at 577. The court focused on a “distinction between remedial and prophylactic
remedies as a basis for determining coverage. . . .” Id. at 581.
The court reviewed the federal complaint against the power companies and noted
that the complaint‟s prayer for relief requested that the federal district court take the
following action:
(a) permanently enjoin the power companies from operating
or constructing various power plants “except in accordance
with the Clean Air Act and any applicable regulatory
requirements” or the administrative consent order;
(b) order the power companies “to remedy their past
violations by, inter alia, requiring the Defendants to install, as
appropriate, the best available control technology, the best
available technology, or technology to achieve the lowest
achievable emissions rate on each boiler unit” at various
power plants, and “to take such other measures as are
necessary to bring the Defendants‟ plants into compliance”
with provisions of the Act and the State Implementation
Plans, “including emission offsets, if necessary,” and to
otherwise comply with the Act;
12
(c) order the power companies “to take other appropriate
actions to remedy, mitigate, and offset the harm to public
health and the environment caused by the violations of the
Clean Air Act”;
(d) order the power companies “to apply for permits that are
in conformity” with requirements of the Act and the State
Implementation Plans;
(e) order the power companies “to conduct audits of their
operations to determine if any additional modifications have
occurred which would require them to meet” various statutory
and regulatory requirements;
(f) assess “a civil penalty . . . of up to $25,000 per day for
each violation of the Clean Air Act and the applicable
regulations, and $27,500 per day for each such violation on or
after January 30, 1997”;
(g) award costs of the action; and
(h) grant “such other relief as the Court deems just and
proper.”
Id. at 578.
Despite language in the federal court lawsuit regarding the remediation of past
pollution, our supreme court determined that “the primary thrust of the federal lawsuit is
to require the power companies to incur the costs of installing government-mandated
equipment intended to reduce future emissions of pollutants and prevent future
environmental harm.” Id. at 579. “Notwithstanding the federal lawsuit‟s various
references to seeking relief that would „remedy‟ past violations and harm to public health,
the power companies acknowledge that the injunctive remedy sought by the federal
lawsuit is „to force Cinergy to install equipment to contain any further excess emissions
13
and allow the environment to recover.‟” Id. at 582. The court concluded that the federal
lawsuit was “directed at preventing future public harm, not at obtaining control,
mitigation, or compensation for past or existing environmentally hazardous emissions.”
Id.
The Cinergy I court noted that the policies covered damages caused by an
“occurrence” and that the power companies‟ claims did not qualify as an “occurrence”
under the policies. Id. “[W]hat the power companies here claim to be covered, the
installation costs for equipment to prevent future emissions, is not caused by the
happening of an accident, event, or exposure to conditions but rather result from the
prevention of such an occurrence.” Id. The court discerned “no ambiguity here that
would permit the occurrence requirement reasonably to be understood to allow coverage
for damages in the form of installation costs for government-mandated equipment
intended to reduce future emissions of pollutants and to prevent future environmental
harm.” Id. The court ultimately determined that the costs of installing government-
mandated equipment intended to reduce future emissions and to prevent future
environmental harm did not qualify as “ultimate net loss” under the policies. Id. at 583.
As a result, the court held that the trial court properly granted partial summary judgment
regarding costs incurred by the power companies in defending the federal lawsuit.
We reached similar conclusions in Cinergy II and Cinergy III. In Cinergy II, 873
N.E.2d 105, a federal lawsuit was filed against Cinergy alleging that, after certain
maintenance and repair projects, Cinergy failed to install additional air emissions
equipment, causing increased emissions of harmful substances. The claims regarding
14
emissions at a Cayuga plant were later dismissed from the federal lawsuit. The insurers
filed a motion for partial summary judgment, arguing that they were not responsible for
claims related to the Cayuga plant because there was no “occurrence.” The trial court
granted partial summary judgment to the insurers regarding Cinergy‟s claim for defense
costs when it concluded that Cinergy‟s claim did not involve an “occurrence.” Relying
on Cinergy I, we concluded that, because the relevant claim was dismissed from the
federal lawsuit, there was no occurrence to trigger the policies‟ coverage provisions.
“[I]n order for the Insurers to bear any responsibility for payment of costs, there must
first be a claim or claims arising out of an occurrence.” Cinergy II, 873 N.E.2d at 115.
In Cinergy III, the insurers moved for summary judgment, claiming that they had
“no obligation to defend or indemnify Cinergy for any of the claims being adjudicated in
the underlying federal litigation” based on Cinergy I and Cinergy II. Cinergy III, 915
N.E.2d at 528. The trial court granted summary judgment, and we affirmed on appeal.
We held that costs associated with Cinergy‟s federal-court ordered surrender of emissions
allowances were “not caused by the happening of an accident, event, or exposure to
conditions but rather result[ed] from the prevention of such an occurrence.” Id. at 534.
We further concluded that the insurance policies did not cover any civil penalties or
attorney fees because there was “no occurrence” under the policies.7 Id.
7
We also noted that Cinergy conceded some of the policies involved “expressly exclude[d] fines or
penalties,” Cinergy III, 915 N.E.2d at 534 n.8, and that “penalties are not included within the ordinary
meaning of damages.” Cinergy III, 915 N.E.2d at 534 n.9 (citing Hartford Accident & Indem. Co. v.
Dana Corp, 690 N.E.2d 285, 298 (Ind. Ct. App. 1997), trans. denied).
15
The parties also rely on Newnam Manufacturing, Inc. v. Transcontinental Ins. Co.,
871 N.E.2d 396 (Ind. Ct. App. 2007), trans. denied. In the mid-1980‟s, a manufacturer
modified equipment without the appropriate permits, and in 2003, IDEM brought an
administrative action against the manufacturer based on the modification. The
manufacturer eventually was granted summary judgment and sought reimbursement from
its insurance carrier for its attorney fees. The trial court granted summary judgment to
the insurance carrier on the attorney fees issue. On appeal, we relied upon Cinergy I to
conclude that IDEM‟s action concerned reduction of future emissions, not a response to
an “occurrence.” Newnam, 871 N.E.2d at 403. The manufacturer argued that IDEM‟s
action concerned remediation because “the only way to remediate air pollution is by
limiting further emissions.” Id. We rejected this argument based on Cinergy I. We
further concluded that, because there had been no specific allegation that the
manufacturer‟s excess emissions had contaminated another person‟s land or interfered
with the enjoyment of such land, there was no coverage under the “personal injury”
provision of the policy. Id. at 405. Ultimately, we determined that, “[b]ecause there was
no potential for coverage under the policy, [the company‟s] lawsuit did not trigger [the
insurer‟s] duty to defend.” Id.
As in Cinergy I, the essential controversy here is whether the federal lawsuit
against the City is a suit that seeks damages covered by the policies issued by the
Insurers. The policies, except for the Arrowood and Landmark policies, apparently
contain provisions regarding coverage for “„damages‟ that arise from „bodily injury‟ or
„property damage‟ caused by an „occurrence‟ during the policy period” and “„damages‟
16
that result from „personal injury‟ during the policy period” subject to all the other
definitions, terms, conditions, and exclusions in the policies. App. pp. 152-53, 698. The
Arrowood and Landmark policies contained coverage for “ultimate net loss” because of
“bodily injury,” “property damage,” “personal injury” or “advertising injury” caused by
an “occurrence” during the policy period. Id. at 235, 279. The Arrowood and Landmark
policies define “occurrence” with respect to “bodily injury” and “property damage” as
“an accidental happening, including continuous and repeated exposure to substantially
the same general harmful conditions which results in „bodily injury‟ or „property
damage.‟” Id. at 217, 261.
As in Cinergy I, the policies here require an “occurrence,” and under Cinergy I,
projects to prevent pollution, rather than remediate past pollution, do not qualify as an
occurrence.8 The City argues that Cinergy I does not control here because it designated
evidence that the Bee Slough project was at least partially remedial. The Insurers
disagree, noting that the City failed to submit any documentation that it was ordered to
correct past contamination and that the designated evidence fails to demonstrate a
genuine issue as to whether the wetlands project is remedial.
In response to the Insurers‟ motion for summary judgment, the City relied on
affidavits from Harry Lawson, the Superintendent of Wastewater for the City of
8
The City also argues that the policies here are different because some of the policies “define „property
damage‟ to include a „loss of use‟ of property that is not physically harmed” and some of the policies
“provide separate „personal injury‟ that is triggered by the „offenses‟ of „wrongful entry and/or „the
invasion of private occupancy of a premise.” Appellant‟s Br. p. 34. The City bases its argument on
definitions of “personal injury” and “property damage” in the Hartford and St. Paul policies. However,
only a few pages of the policies were designated, and some of the pages designated are illegible.
Moreover, regardless of this policy language, the City designated no evidence of a loss of use of property,
personal injury, wrongful entry, or invasion of a premise.
17
Evansville Water and Sewer Utility, Dr. Gonwa, and Dr. Magilligan. Lawson submitted
an affidavit claiming that the City was informed in 2005 that EPA and IDEM would be
“seeking remedial measures for previous CSO and alleged SSO [Sanitary Sewer
Overflow] discharges as part of an enforcement action brought under the CWA and
related Indiana statutes.” Id. at 439. Lawson‟s affidavit provided:
The City has cleaned and disinfected Bee Slough, and has
developed a plan in response to the USEPA‟s enforcement
action to construct a dam and convert Bee Slough into a
wetland at an estimated cost of $15,000,000.00. By
constructing the dam and creating a wetland, the City will
contain the CSO related contaminants at the Bee Slough site.
Id.
Dr. Gonwa‟s affidavit stated:
The only remedy available to Evansville will involve a
substantial investment in measures that will significantly
reduce or eliminate CSO discharges. . . . Source control will
eliminate the current CSO impacts to these two water bodies
[Bee Slough and Pigeon Creek]. It will allow biodegradation
and other natural process to improve sediment and water
quality in Bee Slough over time. Source control may replace
or eliminate the need for periodical removal and disposal by
the City of CSO-impacted solids that accumulate in and along
Bee Slough. There may, however, be further requirements to
remove accumulated solids discharged with CSOs to Bee
Slough.
Id. at 444. According to Dr. Gonwa, “[t]his wetland would contain the CSO pollutants,
limit discharges to the Ohio River and other bodies of water, and allow for
biodegradation and other natural processes to diffuse and remediate the pollutants.” Id.
Dr. Gonwa opined that “CSO control measures and sediment removal affecting Pigeon
Creek and Bee Slough, that may be required of the City as a result of the U.S. EPA‟s and
18
the State of Indiana‟s enforcement activities, are remedial in nature or at a minimum have
a substantial remedial component.” Id. at 445. “The mandated removal of CSO-
impacted sediment is directed solely at remediating and containing past contamination
that resulted from the long-term impact of decades of CSO discharges.” Id. Although
Dr. Gonwa‟s affidavit discusses “mandated removal” of sediments, he admitted in his
deposition, which was designated by the Insurers, that he was aware of no requirement
that solids be removed from Bee Slough. In his deposition, Dr. Gonwa also testified that
all of the projects identified in the LTCP contained “some remedial components.” Id. at
1154-55.
Dr. Magilligan‟s affidavit provided that “sediment storage can . . . be considered a
remediation strategy as well as mitigation strategy” and “most contaminants absorbed on
sediment readily biodegrade and can be transformed to lower toxicities, and natural
recovery processes, such as storing sediment on floodplains, serve to contain, destroy, or
reduce the bioavailability of contaminated sediments.” Id. at 452-53. However, Dr.
Magilligan‟s affidavit was not specific to Bee Slough or Evansville; rather, it was based
solely on general scientific propositions.
The question is whether there is a genuine issue of material fact regarding whether
the Bee Slough conversion to a wetland is remedial, i.e., cures past pollution. Our review
of the designated evidence shows that there is no genuine issue of material fact on this
issue. In response to the Insurers‟ motions for summary judgment, the City designated no
evidence that it was actually required to remediate any pollution or remove any polluted
sediments. Although it claims that the Bee Slough wetland conversion is partially
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remedial, the City presented no specific evidence that Bee Slough was contaminated or
that it had been ordered to remediate Bee Slough. Dr. Gonwa‟s opinion that remedial
sediment removal “may be required of the City” is pure speculation. App. p. 445. Dr.
Magilligan‟s affidavit did not specifically address the situation at Bee Slough or
Evansville. Further, Lawson‟s affidavit did not contain evidence that the City actually
had been ordered to perform a cleanup of contaminants.
“[M]ere speculation cannot create questions of fact.” Beatty v. LaFountaine, 896
N.E.2d 16, 20 (Ind. Ct. App. 2008), trans. denied. “Opinions expressing a mere
possibility with regard to a hypothetical situation are insufficient to establish a genuine
issue of material fact.” Id. “ʻ[G]uesses, supposition and conjecture are not sufficient to
create a genuine issue of material fact to defeat summary judgment.‟” Id. (quoting
Midwestern Indem. Co. v. Sys. Builders, Inc., 801 N.E.2d 661, 666 (Ind. Ct. App. 2004),
trans. denied). The designated evidence here amounts to mere speculation that the City
may be required to perform remediation in the future, and such evidence is insufficient to
demonstrate a genuine issue of material fact.
We concede that the federal court complaint does include a request that the City
remediate pollution. The City designated evidence that the federal court lawsuit against it
included demands for: (1) an order permanently enjoining the City “from causing or
contributing to pollution that is presenting an imminent and substantial endangerment to
the health of persons in the service area of [the City‟s] POTW and ordering [the City] to
take such other action as may be necessary to abate and mitigate such endangerment;”
and (2) “[a] permanent or temporary injunction ordering [the City] to mitigate the past
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environmental harm caused by its violations . . . .” App. p. 684. However, the federal
court complaint in Cinergy I also requested an order that the power companies “take
other appropriate actions to remedy, mitigate, and offset the harm to public health and the
environment caused by the violations of the Clean Air Act.” Id. at 1058. Our supreme
court held that, even though the federal court complaint included language requesting
mitigation and a remedy of the Clean Air Act violations, the “primary thrust” of the
lawsuit was a reduction of future emissions and pollution. Cinergy I, 865 N.E.2d at 579.
Similarly, it is clear that the “primary thrust” of the federal court lawsuit against the City
was the reduction of future CSO emissions.
Given the lack of genuine issues of material fact showing that the Bee Slough
project is remedial, we conclude that Cinergy I governs this action and precludes the
City‟s claim as a matter of law.9 The City claims that Cinergy I is distinguishable
because it concerned a Clean Air Act violation rather than a Clean Water Act violation,
the federal complaint in Cinergy I contained general allegations of environmental harm
rather than impacts in specific streams, and the relief sought is different. However, we
9
In its Appellant‟s Brief, the City also makes a brief argument differentiating between an insurance
company‟s duty to defend and a duty to indemnify. See Appellant‟s Br. p. 27. Again, it is difficult to
address this argument given the lack of designated insurance policies. In general, an insurance
company‟s duty to defend is broader than its duty to indemnify. Newnam, 871 N.E.2d at 401. However,
where an insurer‟s independent investigation of the facts underlying a complaint against its insured
reveals a claim patently outside of the risks covered by the policy, the insurer may properly refuse to
defend. Id. “We determine the insurer‟s duty to defend from the allegations contained within the
complaint and from those facts known or ascertainable by the insurer after reasonable investigation.” Id.
If the pleadings reveal that a claim is clearly excluded under the policy, then no defense is required. Id.
We addressed a similar argument in Newnam. Although the manufacturer argued that there was a
possibility of coverage and, thus, there was a duty to defend, we disagreed. We concluded there was no
duty to defend because the coverage sought related to future emissions rather than remediation of past
pollution. Id. at 405. Similarly, here, there is no evidence that remediation of past pollution is required.
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find those differences immaterial. The holding of Cinergy I is that prevention of future
environmental harm, rather than remediation of past contamination, is not an
“occurrence” under insurance policies, and the policies at issue here contain similar
provisions. The differences between the instant action and Cinergy I do not impact that
ultimate holding.10 The trial court properly granted summary judgment to the Insurers
based on Cinergy I.
Conclusion
The trial court properly granted summary judgment to the Insurers. We affirm.
Affirmed.
KIRSCH, J., and BRADFORD, J., concur.
10
Based on arguments at oral argument, we clarify that this opinion should not be interpreted to preclude
the City from making a claim on the policies if it is later required to perform remedial actions under the
Consent Decree or if third parties make claims of property damage or personal injuries as a result of
sewage contamination by the City.
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