Citations
- 714 F. Supp. 2d 1119
Full opinion text
Memorandum and Order
WESLEY E. BROWN, Senior District Judge.
This dispute arises out of a flood of the Verdigris River on June 30, 2007. During the flood, a large amount of crude oil from plaintiffs oil refinery was released into flood waters and was carried into Coffey-ville, Kansas, resulting in widespread damage to homes and businesses. Plaintiff has now allegedly spent over $50 million as a result of the release. In this action, plaintiff claims the defendants have breached obligations to indemnify it under various liability insurance policies. The matter is before the court on several pending summary judgment motions. Subject matter jurisdiction is appropriate in this court based upon diversity of citizenship. See 28 U.S.C. § 1332(a).
Counsel in this case have done a substantial amount of work. Unfortunately, the briefs make it somewhat difficult to address the issues in concise fashion. Plaintiffs initial motion for summary judgment was based in part on an affidavit from plaintiffs general counsel which contained a number of assertions not shown to be based on the witness’s personal knowledge, although many of the assertions otherwise appeared in the record. This in turn led to motions to strike, responses, replies, and sur-replies, and a generally contentious state of affairs. The issues are now dispersed among a multitude of briefs, with many arguments and factual assertions incorporated from one brief to another. It has taken the court a good deal of time to sort through the briefs. Although there was a request for oral argument, the court is now prepared to rule and concludes that oral argument would not materially assist in deciding the issues presented.
The following motions are now before the court: National Union’s Motion for Summary Judgment (Doc. 77), Coffeyville Resources’ Motion for Partial Summary Judgment (Doc. 81),. Illinois Union’s Motion for Summary Judgment (Doc. 83), and National Union’s Motion for Partial Summary Judgment (Doc. 141). The standards for summary judgment are well-established. Summary judgment is appropriate “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). A disputed fact is “material” if it might affect the outcome of the suit under the governing law. An issue is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Because it is the role of a jury to resolve conflicts in the evidence, on summary judgment the court must examine the factual record and draw all reasonable inferences in the light most favorable to the nonmoving party. Seamons v. Snow, 206 F.3d 1021, 1026 (10th Cir.2000). “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Anderson, 477 U.S. at 255, 106 S.Ct. 2505. Thus, “[wjhere different ultimate inferences may properly be drawn, the case is not one for a summary judgment.” Seamons, 206 F.3d at 1026.
Under Rule 56, the moving party initially bears the burden of making a prima facie showing of the absence of a genuine issue of material fact and an entitlement to judgment as a matter of law. See Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998). This burden may be satisfied by pointing to an absence of evidence on an essential element of the non-movant’s claim. Id. at 671 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Once the moving party carries this burden, the opposing party cannot simply rest upon the pleadings; it must come forward with “specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
All of the current motions ask the court to declare the parties’ rights under the respective insurance policies. “In a case of actual controversy within its jurisdiction ..., any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The court finds that an actual controversy exists between the parties concerning their respective adverse obligations under the Illinois Union and National Union policies, and the controversy is of sufficient immediacy to warrant the issuance of a declaratory judgment. Such a judgment will resolve at least portions of the dispute, it will clarify the parties’ legal relations, and it is an appropriate remedy under the circumstances.
Under Kansas law, as in most states, the following rules of construction are applied to insurance contracts:
“ ‘The language of an insurance policy, like any other contract, must, if possible, be construed in such way as to give effect to the intention of the parties. In construing a policy of insurance, a court should consider the instrument as a whole and endeavor to ascertain the intention of the parties from the language used, taking into account the situation of the parties, the nature of the subject matter, and the purpose to be accomplished.
“ ‘Because the insurer prepares its contracts, it has a duty to make the meaning clear. If the insurer intends to restrict or limit coverage under the policy, it must use clear and unambiguous language; otherwise, the policy will be liberally construed in favor of the insured. If an insurance policy’s language is clear and unambiguous, it must be taken in its plain, ordinary, and popular sense. In such case, there is no need for judicial interpretation or the application of rules of liberal construction. The court shall not make another contract for the parties and must enforce the contract as made.
“ ‘However, where the terms of an insurance policy are ambiguous or uncertain, conflicting, or susceptible of more than one construction, the construction most favorable to the insured must prevail.
“ ‘ “To be ambiguous, a contract must contain provisions or language of doubtful or conflicting meaning, as gleaned from a natural and reasonable interpretation of its language. Ambiguity in a written contract does not appear until the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning.”
“ ‘Whether a written instrument is ambiguous is a question of law to be decided by the courts. Courts should not strain to create an ambiguity where, in common sense, there is not one. The test in determining whether an insurance contract is ambiguous is not what the insurer intends the language to mean, but what a reasonably prudent insured would understand the language to mean.’ ”
See Snider v. American Family Mut. Ins. Co., - Kan.App.2d -, 214 P.3d 1226 (Table) (Kan.App.,2009) [citations omitted] (quoting American Family Mut. Ins. Co. v. Wilkins, 285 Kan. 1054, 1058-59, 179 P.3d 1104 (2008)). See also James McHugh Const. Co. v. Zurich American Ins. Co., 401 Ill.App.3d 127, 339 Ill.Dec. 706, 927 N.E.2d 247 (2010) (similar standards apply under Illinois law).
I.Nation Union Motion for Summary Judgment (Doc. 77).
A. Uncontroverted Facts. The court finds the following facts to be uncontroverted for purposes of the instant motion for summary judgment. See also additional statements of fact infra at Pp. 17-39.
The Underlying Pollution Liabilities
1. On the evening of June 30, 2007, flooding from the Verdigris River reached Plaintiffs oil refinery located in Coffey-ville, Kansas. Subsequently, on July 1, 2007, a refinery tank released crude oil into the floodwaters (the “oil pollution release”), causing widespread environmental contamination.
2. Plaintiff alleges that as a result of this oil pollution release and resulting environmental contamination, it has incurred more than $50,000,000 to investigate and remediate the contamination, and to defend, adjust, and resolve claims arising from the same.
The Insurance Coverage Action
3. On or about July 10, 2008, Plaintiff filed the instant coverage action, seeking coverage from four of its insurers for the above-referenced costs. See Ex. A. Two of the defendants, Liberty Surplus Insurance Company (“Liberty”) and Illinois Union, issued pollution legal liability policies to Plaintiff. The other two insurers, National Union and Westchester Fire Insurance Company (“Westchester), issued general liability policies to Plaintiff. See infra, Statement of Undisputed Material Facts (“SUMF”) Nos. 6, 11, and 12. See also Ex. A at ¶¶ 16, 17, 19, 21, and 23.
4. On or about September 23 2008, Plaintiff fully and completely settled with Liberty and, as a result, coverage under the Liberty pollution legal liability policy is exhausted. See Plaintiff and Liberty’s Joint Stipulation and Motion and Order of Dismissal with Prejudice attached as Exhibit C.
5. Plaintiff alleges that the Illinois Union policy attaches immediately excess of the Liberty policy. See Ex. A at ¶ 19. Illinois Union denies this allegation, and asserts that the National Union policy attaches first. See Illinois Union’s Answer and Affirmative Defenses to the Plaintiffs Complaint, attached as Exhibit D at ¶¶ 19 and 51.
The Illinois Union Policy
6. Illinois Union issued Policy No. EXC G23796156 001 to Plaintiff for the September 6, 2006 to September 6, 2011 period (the “Illinois Union policy”). See Illinois Union policy attached to Exhibit B at Tab No. 2. Subject to all of its terms, exclusions, conditions and other provisions, this Illinois Union policy provides coverage for “fixed site pollution legal liability, claims made” with an aggregate limit of liability of $25,000,000. Id. at Items 2 and 5 of the Declarations.
7. Section II.A of the Illinois Union policy states that the coverage under the policy attaches after the “Underlying Policies” have paid their entire limits:
It is expressly agreed that liability for any covered Loss shall attach to the insurer only after the insurers of the Underlying Policies shall have paid, in the applicable legal currency, the full amount of the Underlying Limit and the Insureds shall have paid the full amount of the uninsured retention, if any, applicable to the primary Underlying Policy.
Id. at Section II.A. Item 8 to the Illinois Union policy Declarations, titled “Schedule of Underlying Policies,” lists a single policy- — Liberty policy No. TVE-NY10-1041 (the “Liberty policy”). Id. at Item 3 of the Declarations.
8. Section II.B of the Illinois Union policy states that it will continue in force as primary coverage once the “Underlying Policies” have been exhausted.
B. ... [I]n the event of the ... exhaustion of the Underlying Limit by reason of the insurers of the Underlying Policies paying ... loss otherwise covered hereunder, then this policy shall ... continue in force as primary insurance;....
Id. at Section II.B (emphasis added).
9. Section I of the Illinois Union policy states that it provides insurance coverage “in accordance with the terms, definitions, conditions, exclusions and limitations of the Followed Policy, except as otherwise provided herein.” Id. at Section I. As with the Schedule of Underlying Policies, the Declarations page of the Illinois Union policy designates only the Liberty policy as the “Followed Policy.” Id. at Item 3 of the Declarations.
10. Section IV of the Illinois Union policy, titled “UNDERLYING INSURANCE,” reiterates that it follows form to the Liberty policy.
A. This policy is subject to ... the same terms, definitions, conditions, exclusions and limitations (except as regards the premium, the limits of liability, the policy period and except as otherwise provided herein) as are contained in or as may be added to the Followed Policy....
Id. at Section IV.A (emphasis added).
11. The Illinois Union policy does not contain its own “other insurance” clause. The “Other Insurance” clause in the Liberty policy to which the Illinois Union policy follows form provides, in relevant part, as follows:
If other valid and collectible insurance is available to the “insured” for “loss” or “business interruption expense” we cover under this policy, our obligations are limited as follows:
Primary Insurance
This insurance is primary and our obligations are not affected unless any of the other insurance is also primary. In that case, we will share with all such other insurance by the method described in Method of Sharing described below.
Method of Sharing
If all of the other insurance permits contribution of equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the “loss” or “business interruption expense” remains, whichever comes first.
If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer’s share is based on the ratio of its applicable limits or insurance to the total applicable limits of insurance of all insurers.
Id. at Section I. See also Liberty policy attached to Exhibit B at Tab No. 3, Section V.13 (page 10 of the Insuring Agreement).
The National Union Policy
12. National Union issued Commercial Umbrella Liability policy No. 9835018 to Plaintiff for the July 1, 2007 to July 1, 2008 policy period. See National Union policy attached to Exhibit B at Tab No. 4. Subject to all of its terms, exclusions, conditions, and other provisions, the National Union policy provides general liability coverage with per occurrence and aggregate limits of liability of $25,000,000. Id. at Items 3 of the Declarations.
13. The Insuring Agreement to the National Union policy states that the policy attaches above the “Retained Limit:”
We will pay on behalf the Insured those sums in excess of the Retained Limit that the Insured becomes legally obligated to pay as damages ...
Id. at Section I.A (emphasis added). “Retained Limit” is defined in the National Union policy to include “the total applicable limits of Scheduled Underlying Insurance and any applicable Other Insurance to the Insured.” Id. at Section VII.Z.
14. The Insuring Agreement to the National Union policy further states that “[t]he amount we will pay for damages is limited as described in Section IV. Limits of Insurance.” Id. at Section I.A. Section IV.F limits National Union’s payment obligations, in relevant part, as follows:
This policy applies only in excess of the total applicable limits of Scheduled Underlying Insurance and any applicable Other Insurance whether or not such limits are collectible....
Id. at Section IV.F (emphasis in original).
15. Similarly limiting National Union’s payment obligation is Section IV.M, which provides in relevant part as follows:
M. We will not make any payment under this policy unless and until:
1. the total applicable limits of Scheduled Underlying Insurance have been exhausted by the payment of Loss to which this policy applies and any applicable Other Insurance have been exhausted by the payment of Loss;..
Id. at Section IV.M, as modified by Endorsement No. 1 (emphasis in original). The National Union policy defines “Loss” to mean “those sums actually paid as judgments or settlements.” Id. at Section VII.P.
16. The National Union policy defines “Scheduled Underlying Insurance” to mean, in relevant part, “the policy or policies of insurance and limits of insurance shown in the Schedule of Underlying Insurance forming a part of this policy....” Id. at Section VIL AA. The Schedule of Underlying Insurance in the National Union policy states that: (a) American Home Assurance Company (“American Home”) provides general liability coverage with limits of liability of $1 million per occurrence and $2 million in the aggregate; and (b) Lexington Insurance Company (“Lexington”) provides excess liability coverage with limits of liability of $4 million per occurrence and $4 million in the aggregate. Id. at Schedule of Underlying Insurance. American Home and Lexington are not named as defendants in Plaintiffs complaint, and no party has asserted that these policies provide coverage for the pollution liabilities at issue.
17. The National Union policy defines “Other Insurance” as follows:
T. Other Insurance means a valid and collectible policy of insurance providing coverage for damages covered in whole or in part by this policy. However, Other Insurance does not include Scheduled Underlying Insurance, the Self-Insured Retention or any policy of insurance specifically purchased to be excess of this policy affording coverage that this policy also affords [as amended by Endorsement No. 1].
Id. at Section VII.T and Endorsement No. 1.
18. The Conditions section to the National Union policy further states as follows with respect to the impact of “Other Insurance” upon National Union’s payment obligations:
L. Other Insurance
If other valid and collectible insurance applies to damages that are also covered by this policy, this policy will apply excess to the Other Insurance. However, this provision will not apply if the Other Insurance is specifically written to be excess of this policy.
Id. at Section VI.L.
19. National Union’s payment obligations are further limited by the “Time Element Pollution Self-Insured Retention Endorsement” (“Pollution Endorsement”) to the policy. To the extent a loss is covered under this Pollution Endorsement, the self-insured retention is increased to $5,000,000 per occurrence:
For the purpose of this endorsement only, the SELF-INSURED RETENTION in ITEM 5. of the DECLARATIONS, is amended to include the following additional provision:
$5,000,000 Each Occurrence (As respects all damages arising out of any discharge, dispersal, seepage, migration, release or escape of Pollutants covered under this endorsement). This Self-Insured Retention will not be reduced by Defense Expenses.....
Id. at Endorsement No. 28. The Pollution Endorsement further states that “[t]he above Self-Insured Retention applies whether or not there is any available Scheduled Underlying Insurance or Other Insurance.” Id. (emphasis added).
20. The Pollution Endorsement further provides that payments received for a loss from applicable Scheduled Underlying Insurance or Other Insurance can be applied against the Self-Insured Retention as long as: (1) they are not Defense Expenses; and (2) the policies were specifically purchased to be underlying to the National Union policy:
If there is Scheduled Underlying Insurance or Other Insurance applicable to a Loss, amounts received through such Scheduled Underlying Insurance or Other Insurance for payment of the Loss may be applied to reduce or exhaust the above Self-Insured Retention if such policies were purchased by the Named Insured to specifically apply as underlying insurance to this policy. However, in no event will amounts received through such Scheduled Underlying Insurance or Other Insurance for the payment of Defense Expenses reduce the above Self-Insured Retention.
Id. (emphasis added).
B. National Union arguments. National Union moves for partial summary judgment. It argues that to the extent the National Union and Illinois Union policies both provide coverage, plaintiff must first exhaust the Illinois Union policy before coverage will attach under the National Union policy. It maintains the Illinois Union policy is primary and the National Union policy is secondary, and it seeks a declaration to that effect.
Its argument is based on the language of both policies. It notes the Illinois Union policy provides that liability attaches “after the insurers of the Underlying Policies shall have paid” their underlying limit, and a single policy was listed under the “Schedule of Underlying Policies” — the Liberty policy. The Liberty policy limit has now been paid. Section II.B provides that the Illinois Union policy would “continue in force as primary insurance” in the event of exhaustion of the limit of “the Underlying Policies.” Section IV reiterated that the Illinois Union policy follows the Liberty policy. The Illinois Union policy does not contain its own “Other Insurance” clause, and the “Other Insurance” clause of the followed Liberty policy provides in part that if other valid and collectible insurance is available for loss, then “this insurance is primary and our obligations are not affected unless any of the other insurance is also primary,” in which case all such insurance is shared under a prescribed method.
The National Union policy, meanwhile, provides that National Union will not make any payment before the limits of “Scheduled Underlying Insurance ... and any applicable Other Insurance” have been exhausted. “Other Insurance” means “a valid and collectible policy of insurance providing coverage for damages covered in whole or in part by this policy.” A condition in the National Union policy dealing with “Other Insurance” provides that if other insurance applies to damages also covered by this policy, then “this policy will apply excess to the Other Insurance,” unless the other insurance was specifically written to be excess of this policy. National argues the Illinois Union policy qualifies as “Other Insurance,” because it is valid and collectible, and says it was not written to be excess of the National Union policy. Citing inter alia American Cas. Co. for Reading, Pa. v. Health Care Indemnity, Inc., 520 F.3d 1131 (10th Cir.2008).
National Union argues that “other insurance” clauses of this type are enforceable under Kansas law. Where such clauses can be reconciled, courts apply them as reconciled. National Union points out that its own clause is an “excess other insurance” clause — -which says the policy is excess if there is other insurance — while the Illinois Union policy follows the Liberty “pro rata other insurance” clause — which provides that where other collectible insurance exists, the policy remains primary. National Union argues the clauses “compliment each other and point to but one result — the parties intended the Illinois Union policy to be primary and the National Union policy to be excess.” Doc. 78 at 13. National Union thus asks the court to declare that to the extent plaintiffs pollution liabilities are covered under both policies, plaintiff must first exhaust coverage under the Illinois Union policy before coverage will attach under the National Union policy.
C. Illinois Union’s Response. Illinois Union takes issue with these arguments. It first rejects any suggestion that the National policy is excess merely by virtue of the fact it is called an umbrella policy. It says the nature of the policy, not its name, determines whether it is excess. Doc. 121 at 28. See also Doc. 84 at 33. Illinois Union argues its own policy is excess because it is only collectible after a predetermined amount of primary coverage has been exhausted. Doc. 121 at 29. By contrast, it says, the National Union policy is only sometimes excess. It says the National Union policy is primary in these circumstances because it provides first-dollar coverage for unexpected and unintended pollution “over only a long-since exhausted self-insured retention.” Id. And because of “horizontal exhaustion” — a principle allegedly requiring all applicable primary policies to be exhausted before the next layer of coverage may be reached, and which Illinois Union contends is the law of Illinois and Kansas- — -it argues National Union’s policy must be exhausted before plaintiff can reach Illinois Union’s policy.
Illinois Union further contends National Union’s “Other Insurance” clause does not apply here. The provision says in part that “if other valid and collectible insurance applies to damages that are also covered by this [National Union] policy, this policy will apply excess of the Other Insurance,” unless the other insurance is “specifically written to be excess of this policy.” Illinois Union says its policy is not “collectible” because it is excess over the Liberty policy and plaintiff has failed to prove that it has more than $15 million of “non-cleanup costs” covered by the Liberty policy. Doc. 121 at 30. It further contends the Illinois Union policy was specifically written to be excess of the National Union policy, because even though it does not mention that policy by name, it states that it is not triggered until all lower levels of coverage apply, and the National Union policy is a lower level primary policy. Illinois Union thus contends the court should deny the summary judgment motion of defendant National Union.
D. Discussion. Although the court finds Illinois Union’s arguments to be creative, they are ultimately unavailing. The Illinois Union policy is plainly triggered by exhaustion of the Liberty policy and plaintiffs exhaustion of the $1 million Self Insured Retention applicable to the Liberty policy. The Illinois Union excess policy generally follows form to the Liberty policy, and it stands to reason it would attach after exhaustion of the underlying policy. The language of the Illinois policy bears that out. It provides in part that “in the event of ... exhaustion of the Underlying Limit by reason of the Insurers of the Underlying Policies paying ... Loss otherwise covered hereunder, then this policy shall ... in the event of exhaustion, continue in force as primary insurance; ...” Doc. 84-6 at 3. Additionally, the Illinois Union policy contains no “other insurance” clause; it incorporates the Liberty provision pursuant to which, once triggered, it remains primary even if other insurance is available.
By contrast, the'National Union policy states it is excess of the “Retained Limit” and that no payment will be made until any applicable other insurance has been exhausted by the payment of loss. The “Retained Limit,” according to one of two alternative definitions, includes the total limits of any applicable “Other Insurance,” which is defined as a valid and collectible policy of insurance providing coverage for damages covered in whole or part by the National Union policy. The Liberty policy (until its exhaustion) and the Illinois Union policy both qualify as “Other Insurance” under this definition. The court rejects Illinois Union’s contention that it is not “collectible.” Contrary to its assertion, plaintiff has shown that the Liberty policy has been exhausted. Reading all of the various provisions together, they all point to a finding that the National Union policy is excess to the Illinois Union policy as to any damages covered by both policies. This is verified by the National Union “other insurance” clause, which provides that if other valid and collectible insurance applies to damages also covered by this [National] policy, “this policy will apply excess of the Other Insurance.” Cf. Western Cas. & Surety Co. v. Trinity Universal Ins. Co. of Kansas, Inc., 13 Kan.App.2d 133, 764 P.2d 1256, 1263 (1988) (policy containing pro rata clause is other collectible primary insurance which triggers the excess clause in the second policy).
The court also rejects Illinois Union’s claim that its policy was “specifically written to be excess of’ the National Union policy therefore does not qualify as “other insurance.” Nothing in the Illinois Union policy remotely suggests it was specifically written to be excess of the National Union policy or of any other policy providing coverage for damages also covered by Illinois Union. The Illinois Union policy provides that upon exhaustion of the Liberty policy, the Illinois Union policy will continue in force as primary insurance. The “other insurance” clause of the followed Liberty policy likewise indicates the Illinois Union policy remains primary even if other insurance is available. The declarations page of the Illinois Union policy identified only the Liberty policy in the Schedule of Underlying Policies. The various policy provisions cannot reasonably be read as making the Illinois Union policy excess of the National Union policy. With respect to damages covered by both policies, both policies clearly indicate an intent for the National Union policy to be excess and the Illinois Union policy to be primary after exhaustion of the Liberty Surplus coverage. Cf. American Cas. Co. of Reading, Pa. v. Health Care Indem., Inc., 520 F.3d 1131, 1136 (10th Cir.2008).
Illinois Union’s “horizontal exhaustion” argument is also untenable. It is based on a premise that the National Union overlapping coverage is primary, but that premise is not borne out by the policy language. As to damages covered by both policies, the National Union policy is clearly excess of the Illinois Union policy. Nor is this relative arrangement altered in any way by Illinois Union’s argument that it does not qualify as “collectible” insurance because the Liberty policy has not truly been exhausted. It contends the Liberty Surplus policy has not been exhausted “because Coffeyville has failed to fulfill its burden of proving it has more than $15,000,000.00 of non-clean-up costs covered by the Liberty Surplus policy.” Doc. 121 at 30. To begin with, Illinois Union points to no evidence of bad faith in connection with the Liberty settlement for policy limits, and it must be presumed in these circumstances that the Liberty policy has in fact been exhausted. And plaintiffs affidavits are sufficient, absent contrary evidence, to show that the Liberty policy coverage has in fact been exhausted. Even if the court were to find an issue of fact concerning exhaustion, that would not change the relative order of coverage between the National and Illinois Union policies. It would only mean the exhaustion issue must be resolved before it could be determined whether Illinois Union’s coverage was triggered. Cf. Zeig v. Massachusetts Bonding & Ins. Co., 23 F.2d 665, 666 (2nd Cir.1928) (the plaintiff should have been allowed to prove the amount of his loss, and, if that loss was greater than the amount of the expressed limits of the primary insurance, he was entitled to recover the excess to the extent of the policy in suit). In any event, to the extent plaintiffs pollution liabilities are covered under both policies, National is correct that plaintiff must first exhaust coverage under the Illinois Union policy before coverage will attach under the National Union policy. See Doc. 159 at 6. National Union’s motion for partial summary judgment requesting such a declaration is therefore granted to the extent set forth above.
II. Plaintiff’s Motion for Partial Summary Judgment (Doc.
81).
Plaintiff Coffeyville Resources “requests partial summary judgment identifying and declaring the insurers’ coverage responsibilities for oil contamination losses. Adjudication of the insurers’ coverage responsibilities,” it contends, “will greatly simplify the factual determination of the remaining damage issues.” Doc. 82 at 3.
In sum, plaintiff contends that both the Illinois Union and National Union policies cover all losses or expenses of Coffeyville Resources associated with claims resolution, damages, or expenses created by the oil-contaminated real or personal property; that National Union’s policy coverage will “drop down” to reimburse any oil remediation losses or liability otherwise excluded by Illinois Union’s policy; that both of these policies provide coverage for plaintiffs remediation obligations, real and personal property damage, additional living expense and business interruption payments, claim resolution and defense costs; and that in each of these areas of dual coverage, Illinois Union’s policy is primary, such that National Union would continue coverage upon the exhaustion of Illinois Union’s $25 million policy limits. Doc. 82 at 45.
A. Uncontroverted Facts. After reviewing the parties’ recitations, the court finds the following facts to be uncontroverted for purposes of plaintiffs motion for partial summary judgment. In keeping with the standards governing summary judgment, assertions of fact not supported by appropriate citations to the record or not otherwise appearing in the record are not included.
1. Coffeyville Resources operates an oil refinery (the “Refinery”) in Coffeyville, Kansas, adjacent to the Verdigris River.
2. On the night of June 30, 2007, the Verdigris River experienced record flooding. It crested at a height of more than 10 feet above flood stage, which was four feet above the Refinery’s levies.
3. During an emergency shut down of the Refinery, approximately 80,000 gallons (over 1900 barrels) of crude oil, 5,000 gallons of diesel oil, and 4,000 gallons of crude oil fractions were released into the flood waters of the Verdigris River. Doc. 153-9 at Depo. p. 47; 107-09.
4. The crude oil release was due primarily to an overflow of Tank 8010, an 80,000 barrel storage tank. During the shutdown, refinery employees failed to close an inlet valve to the tank, which allowed crude oil to continue to flow into the tank until it overflowed. As part of the emergency shutdown, refinery employees had been moving hydrocarbons into various tanks, including Tank 8010, in an effort to keep the tanks from floating off their foundations should the flood waters enter the area. Doc. 153-3, at p. 46. Later, after a determination was made to close the inlet valve, the person responsible for it could not do so because the flood water was too high. Id. at 22.
Tank 8010 was supplied by a 16-inch pipeline from the East Tank Farm, which was located approximately three miles from the refinery. The pipeline operated by gravity-flow but could also be pumped, depending on the level of crude in the tank. At the time of the release, crude oil was being gravity-fed to Tank 8010, at the approximate rate of 1500-2500 barrels per hour. Doc. 153-9 at 109.
In addition to the inlet valve located at ground level at Tank 8010 itself, there was also a valve at the East Tank Farm that could shut off the flow of crude to Tank 8010. The valve at the East Tank Farm was normally left open. Doc. 153-3 at p. 21.
The following is a summary of the evidence of events leading up to the release. Keith Osborn, general manager of the refinery, conducted a meeting with about 20 employees on the evening of June 30, 2007, at 6:30 pm. Doc. 133-2 at p. 26. Osborn called the meeting because it was predicted that flood waters would come close to entering the plant, and because he wanted to have an update on the refinery’s activities. Id. At 7:50 p.m. on June 30, Osborn made the decision to shut down the plant. The shutdown procedure would normally require at least a day. Id. at 29. Part of that process would be that if a tank such as 8010 was filling, the OTS (Oil Transfer System) operator at the refinery would close the inlet valve at the tank once the tank reached its normal full operating height. Id. at 29-30. The intent of the OTS operators was to raise the level in the tank and then close the valve. Id. at 60.
Flood waters started to enter the refinery at around 11:15 p.m. on the night of June 30, 2007. Doc. 133-2 at p. 26.
Osborn conducted a meeting at 6:00 a.m. on July 1, 2007, with a group of 40 or so employees. During that meeting, the individual who was supposed to close the inlet valve to Tank 8010 called in to report that he could not close the valve because of flood waters in the refinery. Id. at 25, 64-65. Osborn asked that the information be passed on to the Bartlesville pipeline group, which was in charge of the East Tank Farm. Id. Bartlesville is located about 45 miles from the refinery.
When asked at his deposition, Osborn conceded that if the inlet valve at the tank were left open and the valve at the East Tank Farm was open, Tank 8010 would continue to fill by gravity and would eventually overflow. Id. at 41. Osborn knew that the flow of crude to Tank 8010 could be shut off by closing the valve at the East Tank Farm, and that the East Tank Farm itself was not flooded. Id. at 36, 40, 68.
The bridge and highway from Coffey-ville and the refinery to the East Tank Farm was flooded and was inaccessible by road by the time of the 6:00 a.m. July 1 meeting. Doe. 133-2 at Pp. 36, 68.
The Bartlesville pipeline manager, Bill Edens, inquired sometime in the morning on July 1 about a helicopter flyover. Osborn was asked if he wanted to come along. Doc. 133-2 at p. 39. The Bartlesville pipeline group requested that their people go over and close the valve at the East Tank Farm. Doc. 133-2 at p. 38. It took several hours, however, to make arrangements for a helicopter. Osborn rode on a flight with two people from the Bartlesville group. During that flight, pipeline employees were flown to the East Tank Farm to manually close the supply valve to Tank 8010. Id. at 18. Coffeyville Resources first learned that Tank 8010 was releasing oil when Keith Osborn flew over the tank on the helicopter flight at around 11:15 a.m. on July 1, 2007. He could see oil coming down the side of the tank and an obvious trail of oil leaving the tank. Doc. 122-2 at Pp. 73-74. The time at which the overflow began is unknown. Plaintiff estimates that the release from Tank 8010 began at perhaps 10:15 or 10:30 a.m. on July 1, 2007, and continued until about 11:15 or 11:30 a.m., although the release could have begun earlier. Doc. 153-9 at p. 108.
Plaintiff had the ability to measure tank levels both electronically and manually, and had access to information regarding crude oil flow rates. The tank levels at the East Tank Farm could ordinarily be monitored by computer from the offices of Coffeyville Resources Crude Transportation located in Bartlesville, Oklahoma. Doc. 188-1 at p. 17. That office could also see whether the transfer pump was running or not running, and the pump could be turned off remotely from the office. Id. at 17-18. The computer was programmed to give a visual “high level” alarm. Id. at 18. Bill Eden, the manager of that office, could also monitor the tank levels and turn off the pumps remotely by logging into his personal computer at home. Id. at 21. The only thing the computer system could remotely monitor at the Refinery was the fluid level in Tank 8010. The system could not remotely turn off the inlet valve at Tank 8010, although it could remotely close the supply valve at the East Tank Farm provided electrical power was available. Id. at 27-28, 63. If the pumps were shut off, there would still be gravity flow into Tank 8010 from the East Tank Farm unless either the supply valve at the East Tank Farm or the inlet valve at Tank 8010 were closed. Id. at 28.
Bill Eden testified that he received a phone call at about 8:00 p.m. on June 30th, informing him the refinery was starting shutdown procedures. Doc. 188-1 at 42. At about 10:00 p.m., he received a call saying things at the refinery were deteriorating and the shutdown was being expedited. Id. at 43. Eden communicated with Jim Berry by email, asking if there were anything Eden could do to help. Eden inquired if Berry wanted to raise the level of Tank 8010, which was then at about 28 feet, to reduce the danger of the tank floating off its foundation. Id. at 44. Berry responded that he would be more comfortable with the level being closer to 32 feet. Eden testified that at about 12:25 a.m. on July 1, the pumps to Tank 8010 were shut down because the oil was approaching the 32 foot level requested by Berry. Id. at 46. Eden did not shut down the supply valve to Tank 8010 because the normal practice at that time was to leave that valve open and to control the inflow into Tank 8010 by opening or closing the valve at the refinery. Id. at 61-62. Eden tried to phone Berry but was unsuccessful. Id. at 47. At about 1:00 a.m., Eden talked to Pat Quinn about the flow of crude coming from Cushing, Oklahoma, and whether to shut down the supply line coming into the East Tank Farm. Id. at 44-46. Eden testified that the computer system was monitored pretty constantly up until the pumps were shut off at 12:30 a.m., but it was monitored at unknown times thereafter. Id. at 49-51. He said the personnel at the Bartlesville control center should have been able to tell whether crude was flowing into Tank 8010 up to the point where the refinery lost power or communication was cut with the Tank 8010 gauge. Eden said he was not aware of any high level alarm going off for Tank 8010.
At about 7:00 a.m. on July 1, Eden received a call from Steve Lafferty of the refinery informing him that the shutting of the valve at Tank 8010 “may have been missed” and asking if Eden could remotely close something at the East Tank Farm. Doc. 188-1 at 49. Eden said he could not because the tank farm had lost electrical power sometime after 4:30 a.m. Id. at 49. The two discussed whether or not boats could get across the river to the East Tank Farm, but Lafferty concluded it was too dangerous. Id. at 53. Eden looked at some maps to see if he might be able to get to the East Tank Farm, but he could not determine a way because of widespread flooding. Id. Eden suggested they try to get a helicopter. After three or four attempts with other aviation companies, Eden spoke with KNB Aviation in Tulsa and made arrangements for a helicopter flyover. Id. at 53-56. Eden called Keith Osborn’s office and provided the details, including the plan for the helicopter to land at the football stadium in Coffeyville at around 10:30 a.m. Id. at 58. It was closer to 11:00 a.m. when the helicopter arrived. Id. Eden dispatched two employees, Gary Alspach and David Willman, to go on the helicopter flight and to shut down the valve to Tank 8010 at the East Tank Farm. Id. at 57.
For purposes of the instant motion, and construing the facts in the light most favorable to the non-movants, a jury could find that plaintiff negligently failed to monitor and limit the level of crude oil in Tank 8010. While it may have been a reasonable and prudent decision initially to increase the level of crude in the tank to keep it from floating off its foundation, the company clearly failed to exercise reasonable diligence thereafter to see that the tank was not over-filled. The evidence suggests this could have been accomplished rather easily, either by having someone close the inlet valve at Tank 8010 in the late night hours of June 30 or early morning hours of July 1. Even if that valve was inaccessible due to flood waters by the time the tank reached the desired level (around 12:30 a.m.), the company apparently had the ability to monitor the tank remotely via the Coffeyville Resources Crude Transportation office in Bartlesville, and to remotely close the East Tank Farm inlet valve from that office. Through an obvious lack of communication and monitoring, however, the company unnecessarily waited until 6:00 or 7:00 a.m. the morning of July 1 to follow up on the issue, by which time the absence of power meant the valve at the East Tank Farm could no longer be remotely closed and flood waters prevented access to the East Tank Farm to manually close it. Under the evidence cited, the spill from Tank 8010 would have been prevented had plaintiffs employees exercised reasonable care to communicate with each other and to monitor and limit the flow of crude into Tank 8010.
5. The diesel oil that was released came from Tank 8005 after that tank moved off its foundation in the flood waters. Doc. 153-3 at 57. Additionally, the flooding of the refinery’s sewer system caused the release of an estimated 100 barrels of crude oil fractions. Doc. 153-9 at Pp. 47-48.
6. The flood waters transported Coffeyville Resources’ crude oil into the City of Coffeyville and onto business properties, homes, parks, public structures and real estate located in and around Coffeyville. A small portion of the crude oil was transported downstream into Oklahoma, resulting in claims of livestock and agricultural damage.
7. On July 5, 2007, Danny Dunham filed a putative class action in Case No. 07-1186-JTM in the United States District Court for the District of Kansas, alleging damages through oil contamination on behalf of himself and the “class of plaintiffs similarly situated.” Doc. 82-3, ¶ 2.
8. On July 6, 2007, a class action lawsuit was filed by Western Plains Alliance, LLC, in Case No. 07 CV 991, in the District Court of Montgomery County, Kansas. Doc. 82-4. The complaint asserted a class action on behalf of all persons who owned property and all businesses within the area contaminated by the oil release. Id. ¶ 9.
9. On July 10, 2007, Coffeyville Resources executed an Administrative Order on Consent (“AOC”) with the Environmental Protection Agency to govern plaintiffs contamination removal and recovery responsibilities. Doc. 82-5.
10. On July 16, 2007, Coffeyville Resources posted formal notices of claim to each of the defendant insurers by certified mail. Doc. 82-2.
11. Thereafter, Coffeyville Resources commenced a claim resolution program to address and resolve potential claims from the release. The program resulted in:
a. Purchase and demolition of over 320 residences;
b. Payment of over 2,181 claims related to personalty and realty;
c. Payment of over 429 claims related to additional living expenses;
d. Resolution of more than 70 claims of commercial establishments.
Plaintiff contends all of these claims were related to oil contamination. Doc. 153-5 at Pp. 59, 88-89,121.
12.As of October 19, 2008, Coffeyville Resources had spent a total of $50,580,341.96 in response to the July 1, 2008 oil spill. Doc. 122-12, ¶ 2. These expenditures included:
a. General removal and recovery of oil as required by the EPA Administrative Order on Consent;
b. Claims settlement of realty damage, personalty damage, bodily injury, business interruption, and additional living expenses associated with the oil release; and
c. Administrative costs and defense costs associated with the litigation and claim resolution procedures.
Plaintiff has submitted an “Environmental Costs Database Summary” (Doc. 122-12) containing a summary of what plaintiff allegedly spent in connection with the spill. According to the accompanying affidavit of Sam A. McCormick, Environmental Projects Manager for the plaintiffs parent company, plaintiff compiled the summary to reflect and categorize its various expenses in connection with the spill. McCormick determined which expenses were placed in which category. Among the categories and expenses he identified were the following:
• $3,940,287.86 — Clean-up costs within the meaning of the Liberty and Illinois Union policies ($3,889,559.11 of which was paid by Liberty)
• $5,468,837 — paid to Pilot Catastrophe, for claim center administration and associated claim adjustment activities to resolve third party claims
• $471,568.28 — to reimburse area residents for alternate living expenses
• $120,309.03 — for automobile damage
• $1,630,519.95 — for damage to personal property (reflects adjustment of 0% to 50% percent of the total damage based on individual assessment of the height of the water and intensity of oil damage)
• $975.00 — bodily injury claims
• $8,033,700.70 — purchase of oil-impacted residential properties
• $1,158,247.52 — purchase of oil-impacted commercial properties
• $856,458.77 — for business interruption and damage to businesses’ personal property
• $126,543.93 — for settlement of oil-related agricultural claims
• $7,760.66' — for veterinary fees associated with alleged damage to pets
• $6,920,695.74 — for demolition and removal of purchased structures
• $15,917,115.67 — for oil removal or disposal of impacted third-party property
• $1,416,637.10 — for laboratory sampling and analysis in connection with the purchase program and oil removal related to settlement obligations
• $1,382,100.09 — for litigation support related to negotiation of the AOC, reporting obligations, class action lawsuits, and other lawsuits against plaintiff.
According to McCormick, as of October 19, 2008, Coffeyville Resources had spent $50,580,341.96 to respond to the oil spill and to resolve third-party claims. Plaintiff has incurred $24,580,341.96 in expenses in excess of the applicable $1 million retention and the $25 million limit of the Liberty policy.
13. At the time of the flood and oil release, Coffeyville Resources possessed Liberty’s Pollution Legal Liability Policy No. TVE-101041-016, which provided aggregate policy limits of $25,000,000 for:
... those sums the “insured” becomes legally obligated to pay for “loss” arising from “claims” for “bodily injury” or “property damage” caused by “pollution conditions” at or emanating from a “covered location.”
(There is no genuine dispute as to the contents of the various insurance policies at issue in this case, and they are hereby incorporated by reference. Various portions of the policies are discussed infra in addressing the parties’ summary judgment arguments.)
14. Coffeyville Resources also possessed an Illinois Union Excess Liability Insurance Policy No. EXC G23796156001 which provided an additional $25,000,000 layer of coverage following the Liberty policy terms and conditions (with some variations), through the following insurance clause:
... [Illinois Union] agrees to provide insurance coverage to the Insureds in accordance with the terms, definitions, conditions, exclusions and limitations of the Followed Policy [i.e., the Liberty policy] except as otherwise provided herein.
The Illinois Union Excess Policy referred to the Liberty Policy as either the “Followed Policy” or the “Underlying Policy.”
In a limiting endorsement, the Illinois Union policy specifically excluded “any ‘cleanup costs’ and any associated ‘defense expense(s)’” and “any ‘business interruption expense’ and any associated ‘defense expense(s)’ ”. The quoted terms were based on definitions in the Liberty policy.
15. At the time of the oil release, Coffeyville Resources was also insured under National Union’s Policy No. 9835018. This Commercial Umbrella Liability Policy (“CGL Umbrella”) provided an additional $25,000,000 of general liability coverage, with certain exclusions including one for property damage “arising out of any discharge, dispersal, seepage, migration, release or escape of Pollutants.... ” An exception, however, allowed coverage for pollution releases if certain conditions were met, one of which was if the discharge or release was “was abrupt and neither expected nor intended by the Insured.”
16. National Union’s CGL Umbrella policy referred to above (No. 9835018) was in effect for July 1, 2007, to July 1, 2008. Although the flood began on June 30, 2007, the oil release from the refinery commenced on July 1, 2007, and Policy No. 9835018 was thus in effect.
17. National Union’s prior CGL Umbrella policy, No. 4485527, was in effect from July 1, 2006, to July 1, 2007. The prior coverage and the succeeding coverage are identical for all purposes related to Coffeyville Resource’s claims. The pollution endorsements provided continuous and identical pollution coverage under either policy.
18. Westchester Fire Insurance Company issued Excess Insurance Policy No. G2203523A002 effective from July 1, 2007, to July 1, 2008. (This was also a renewal policy).
19. In October 2007, Liberty tendered a $10,000,000 insurance payment while denying any remaining insurance policy coverage obligation, contending the Liberty policy’s sub-limit of $10,000,000 for “clean up costs” contractually precluded further indemnification.
20. Because Liberty had not tendered or paid its policy limits, Illinois Union continued to deny coverage under Section 11(A) of Illinois Union’s policy, which provided:
It is expressly agreed that liability for any covered Loss shall attach to the Insurer only after the insurers of the Underlying Policies shall have paid ... the full amount of the Underlying Limit and the Insureds shall have paid the full amount of the uninsured retention, if any, applicable to the primary Underlying Policy.
21. Similarly, National Union denied coverage pursuant to its “Other Insurance” provision, which stated:
If other valid and collectable insurance applies to the damages that are also covered by this policy, this policy will apply excess of the Other Insurance. However, this provision will not apply if the Other Insurance is specifically written to be excess of this policy-
22. On May 20, 2008, Coffeyville Resources received a series of Oil Pollution Act Notices of Claim related to alleged oil contamination damages of seven commercial establishments within Coffeyville, and approximately fifteen agricultural claims related to farms in Oklahoma.
23. On July 10, 2008, Coffeyville Resources filed its complaint against these insurers.
24. On August 19, 2008, the Oil Pollution Act claimants filed their complaint in Case No. 08-1255-MLB-KMH in the United States District Court for the District of Kansas.
25. On September 18, 2008, Liberty tendered and paid plaintiff an additional $15,000,000 under its Pollution Liability Policy, thereby reaching the $25,000,000 limit on that policy. Coffeyville Resources filed a Motion to Dismiss and executed a settlement agreement under which Liberty was dismissed with prejudice on September 25, 2008.
26. Illinois Union and National Union have continued to deny coverage.
Illinois Union’s Supplemental Statement of Facts.
1. On July 1, 2007, approximately 80,-000 gallons of crude oil spilled from a refinery owned by Coffeyville in Coffey-ville, Kansas.
2. According to Coffeyville, the spill occurred when Coffeyville mistakenly allowed crude oil to be pumped into a storage tank after it had reached capacity.
3. Due to contemporaneous widespread flooding, the oil reached a large area, particularly through the Verdigris River, and ultimately entered homes and businesses in the surrounding community.
4. The United States Environmental Protection Agency ordered Coffeyville to investigate and clean up the environmental contamination.
5. Coffeyville alleges it has spent in excess of $50,000,000 to comply with this cleanup order and to investigate and resolve various private third-party claims arising from this environmental contamination, and seeks recovery of those expenditures from the insurers in the lawsuit.
6. Illinois Union contends the following chart illustrates the insurance policies at issue:
7.Beginning at the lower left-hand corner of the chart, the first three boxes or table cells represent Pollution Legal Liability Policy No. TVE-NY-101041-016, which Liberty Surplus issued to Coffeyville for the period of September 6, 2006 to September 6, 2007 (the “Liberty Surplus policy”).
8. The Liberty Surplus policy has policy limits of $25 million per “pollution condition” and in the aggregate for most coverages, with a smaller per “pollution condition” sublimit of $10 million for “Clean-up Costs Resulting from New Pollution Conditions,” all in excess of a $1 million self-insured retention (“SIR”).
9. Exhibit 1 to Coffeyville’s complaint is a true and correct copy of the Liberty Surplus policy.
10. The cell directly above the thud of the three cells just discussed, marked “ACE,” corresponds to Excess Liability Insurance Policy No. EXC G23796156 001, providing “Fixed Site Pollution Legal Liability” coverage on a claims made basis, which Illinois Union issued to Coffeyville for the policy period of September 6, 2006 to September 6, 2011 (the “Illinois Union policy”).
11. The Illinois Union policy has a $25 million limit for bodily injury and property damage claims arising out of pollution conditions, in excess over the Liberty Surplus policy.
12. Exhibit 6 to this motion is a true and correct copy of the Illinois Union policy.
13. In the lower right-hand corner of the chart, there are cells signifying Commercial Umbrella Liability Policy No. 9835018, issued by National Union to Coffeyville for the period of July 1, 2007 to July 1, 200819 (the “National Union policy”), and its underlying $5 million SIR.
14. The National Union policy has a $25 million limit for bodily injury and property damage claims in excess over the SIR just mentioned.
National Union denies that the foregoing chart and statements accurately illustrate the insurance policies at issue. It argues that the Illinois Union policy, not the National Union policy, now acts as a primary policy. Because the underlying Liberty policy is exhausted, it maintains, the Illinois Union policy now “continues in force as primary insurance” under the terms of that policy. The National Union policy is not primary, it argues, but an umbrella policy with limited pollution coverage, and this limited pollution coverage sits above the $5,000,000 Self-Insured Retention.
15. Exhibit 3 to Coffeyville’s complaint is a true and correct copy of the National Union policy.
16. Coffeyville hired numerous contractors to assist in the cleanup of the area affected by the subject spill and set up a claim center to handle third-party claims.
17. The contractors cleaned up oily debris and washed structures on both public and private property, and Coffeyville’s claim center identified residences and businesses with oil damage.
18. Coffeyville ultimately identified approximately 330 residences with oil related damage.
19. Most of those homes were appraised by third-party firms and purchased by Coffeyville for at least 110% of their pre-flood value.
20. Coffeyville then either cleaned or demolished the homes it purchased and those that were still owned by third parties.
21. In addition to purchasing homes, Coffeyville paid residents for additional living expenses, automobile damage, bodily injuries, property damage and damage to contents.
22. Coffeyville also purchased and remediated commercial properties and settled with many of the remediated property owners for any additional property damage.
23. The claim center processed claims for approximately 70 business properties with oil related damage.
24. In many cases, Coffeyville also paid for business interruption, out-of-pocket clean up expenses, and other forms of property damage.
25. Various claimants also filed lawsuits against Coffeyville for damages related to the July 2007 releases of crude oil.
26. One group of plaintiffs filed a class action entitled Danny Dunham, et al. v. Coffeyville Resources, LLC on July 4, 2007 in the United States District Court for the District of Kansas. This suit has since been dismissed.
27. Another group of plaintiffs filed a class action entitled Western Plains Alliance, LLC v. Coffeyville Resources Refining and Marketing, LLC on July 6, 2007 in the District Court of Montgomery County, Kansas. The class was never certified and Coffeyville has since reached a settlement with the plaintiffs.
28. A pro se plaintiff, Melissa Phillips, has also filed suit against Coffeyville in state court.
29. Fifteen or sixteen commercial property claimants filed a suit captioned Duane Angleton, et al. v. Coffeyville Resources Refining & Marketing, LLC on August 18, 2008 in the United States District Court for the District of Kansas. Coffeyville’s Coverage Claims
30. On July 16, 2007, Coffeyville provided Liberty Surplus and National Union with formal notice of the flood and oil spill.
31. The same day, Coffeyville also gave formal notice to Illinois Union.
32. On July 24, 2007, Illinois Union reserved its rights, and a true and correct copy of the reservation of rights letter is Exhibit 8 to this motion.
33. Coffeyville, thereafter, demanded Liberty Surplus’s policy limits.
34. Liberty Surplus tendered its policy sub-limit of $10,000,000 for “clean-up,” on November 7, 2007, and denied any further liability.
35. On November 19, 2007, Coffeyville demanded National Union’s policy limits, and on December 4, 2007, National Union denied liability.
36. National Union contended