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R.T. Rogers Oil Co., Inc. v. Zurich American Insurance Co.

United States District Court, S.D. West Virginia, Beckley Division

July 7, 2017




         The Court has reviewed the Defendant's Motion for Summary Judgment (Document 41) and Memorandum of Law in Support (Document 42), the Defendant's Suggestion of Unopposed Motion for Summary Judgment (Document 44), and the Response of Plaintiff to Defendant's Motion for Ruling and Motion for Leave to File Response to Defendant's Motion for Summary Judgment Out of Time (Document 45). The Court has also reviewed the Defendant's Motion to Strike and Opposition to Plaintiff's Request for Leave to File an Untimely Motion (Document 47), the Response of Plaintiff, R.T. Rogers Oil Company, Inc., to Defendant's Motion to Strike and Reply to Zurich American Insurance Company's Opposition to Plaintiff's Request for Leave to File Untimely Motion (Document 49), and the Defendant's Reply in Support of Motion to Strike and Opposition to Plaintiff's Request for Leave to File an Untimely Motion (Document 50). For the reasons stated herein, the Court finds that the motion for summary judgment should be granted.


         Plaintiff R.T. Rogers Oil Company (“Rogers Oil”) initiated this action with a Complaint (Document 1-1) filed in the Circuit Court of Summers County, West Virginia, on December 14, 2015. The Defendant removed the matter to this Court on February 9, 2016, citing diversity jurisdiction. The Plaintiff named Zurich American Insurance Company (“Zurich”) as the sole Defendant in its complaint. The Plaintiff's claims include a declaration of rights based on an insurance policy, breach of contract, and statutory bad faith pursuant to West Virginia Code § 33-11-4(9).

         The Plaintiff is a West Virginia corporation with its principal place of business in Summers County, West Virginia. Rogers Oil owns and operates various gas stations in southern West Virginia. Rogers Oil alleges that it and the Defendant were parties to a contract for an insurance policy wherein Rogers Oil was insured regarding its ownership and operation of underground storage tanks (“USTs”). Rogers Oil removed one of those USTs located on an insured property, and, upon removal, the West Virginia Department of Environmental Protection determined that a release of fuel from that UST into the ground had occurred. Rogers Oil alleges that it reported a claim to Zurich, but that Zurich refused to fully cover the environmental remediation necessary after the contaminant release. Zurich moved for summary judgment on February 28, 2017, the deadline for filing such motions. (See Document 34, granting the parties' joint motion for modification of scheduling order and extending the dispositive motions deadline to February 28, 2017.)

         The Plaintiff filed no response to the motion for summary judgment within the fourteen-day response period. On April 4, 2017, the Defendant filed its suggestion of unopposed motion for summary judgment and moved this Court to enter summary judgment in its favor based on the Plaintiff's failure to respond. On that same day, the Plaintiff responded to the suggestion of unopposed motion and sought leave to file a response to the Defendant's motion out of time, filing a response in opposition shortly thereafter on April 7, 2017. On April 13, 2017, Zurich filed a motion to strike the Plaintiff's out-of-time response to its motion for summary judgment, asserting that the Court should not consider the response due its untimeliness and the Plaintiff's lack of excusable neglect. Because the Plaintiff's response to the motion for summary judgment was filed well beyond the deadline to respond, [1] the facts that follow are based exclusively on the Defendant's motion and attached exhibits. The facts are, however, described in the light most favorable to the Plaintiff as the non-moving party.

         The Plaintiff obtained an insurance policy issued by the Defendant entitled “Storage Tank System Third Party Liability and Cleanup Policy.” (Def.'s Mot. for Sum. Judg., Exhibit A.) (hereinafter, “Policy”) The Policy was a “claims made and reported policy” wherein “claim(s) must first be made by or against the ‘insured' during the ‘policy period' and ‘claim(s)' must be reported to [Zurich] during the ‘policy period, ' the automatic extended reporting period or the extended reporting period, if applicable.” (Id. at 1.) According to the Policy, Zurich agreed to pay, “on behalf of the ‘insured' any ‘cleanup costs' required by ‘governmental authority' as a result of a ‘release(s)' that ‘emanates from' a ‘scheduled storage tank system(s)' at a ‘scheduled location' that commences on or after the ‘retroactive date' and is first discovered by the ‘insured' during the ‘policy period . . . .'” (Id.) The Policy defines scheduled locations as “the property(ies) designated in the Declarations or by endorsement onto this policy, ” and further defines scheduled storage tank system as “a tank(s) owned or operated by [the insured], including any connecting piping, ancillary equipment and containment system that is on, within, or under a ‘scheduled location, ' identified in the Declarations or applicable Endorsement and described in the Application.” (Id. at 3.) The Policy includes a policy period of April 1, 2003 to April 1, 2004, with a retroactive date of February 19, 1994, and further provides that the insured “shall provide notice to [Zurich] of your intention to perform a voluntary ‘scheduled storage tank system' removal or replacement.” (Id. at 8 (emphasis added).) Additionally, the Policy contains certain exclusions. The Policy specifically “does not apply to ‘claims, ' ‘cleanup costs' or ‘loss(es) based upon or arising out of: A. any ‘release' known to an ‘insured' prior to the effective date of the ‘policy period.'” (Id. at 3.)

         Attached to the Policy is a Site Schedule listing different sites owned by the Plaintiff and covered by the Policy. That Site Schedule lists “Courthouse Service” as covered location number two with four underground storage tanks. (Id. at 11.) The Courthouse Service Station site is the site at issue. (Pl.'s Complaint at ¶ 5.) This site has been used as a gasoline station since the 1920s and has had several different underground storage tanks used on the property since that time. (Def.'s Mot. for Sum. Judg., Exhibit E.) According to the Plaintiff's expert witness, previous USTs were likely the cause of releases of chemicals into the ground investigated by the West Virginia Department of Environmental Protection (“WVDEP”) in 1996, well before this case. (Def.'s Mot. for Sum. Judg., Exhibit E; M. Alamong Depo. at 25:10-26:20, 32:2-17 (Document 41-7); J. Newbill Depo. at 12:1-9 (Document 41-8).)

         On June 18, 2003, the Plaintiff hired third-party contractor Petrocon to remove the USTs from the Courthouse Service Station site, including the associated piping and other equipment attached to the tanks. (Pl.'s Complaint at ¶ 5; R. Rogers Depo. at 15:7-21 (Document 41-2).) Upon removing the tanks, Petrocon also conducted a soil sample from the removal site, as per WVDEP requirements. (T. Bess Depo. at 18:24-19:6.) Based on the test results from the soil sample, on July 21, 2003, WVDEP informed the Plaintiff that a petroleum release had occurred and soil and ground water remediation would be necessary. (Def.'s Mot. for Sum. Judg., Exhibit L.) The Plaintiff hired consultants Simon & Associates and began investigation and remediation on the site. (Def.'s Mot. for Sum. Judg., Exhibits C and D.)

         On June 24, 2003, six days after the tanks were removed from the site, the Plaintiff notified Zurich of the removal of the USTs by submitting to Zurich a 48-Hour CST Tank Pull Notification form. (Pl.'s Complaint at ¶ 5.) Greg Rogers, the owner of R.T. Rogers Oil, testified during his deposition that, at the time the USTs were removed, he did not believe he needed to give Zurich notice that the tanks were being removed. (R. Rogers Depo. at 21:13-21.) After removal of the USTs and before the results of the soil sample tests were obtained, the Plaintiff disposed of the tanks at the Mercer County Landfill. (T. Bess Depo. at 20:10-20.)

         On July 18, 2003, Zurich sent the Plaintiff a correspondence acknowledging its receipt of the filing of a potential claim surrounding the removal of the USTs. Zurich also informed the Plaintiff in this correspondence that it retained its own environmental consultant to conduct an investigation surrounding the issue, and that “[n]othing in this letter, and no actions undertaken by Zurich to monitor or investigate this incident, should be construed as an admission of coverage or as a waiver of any defenses available to Zurich.” (Def.'s Mot. for Sum. Judg., Exhibit O.) On October 10, 2003, the Plaintiff, through its counsel, made an official demand for coverage under the Policy. The Plaintiff demanded coverage of the full amount of cleanup costs incurred. (Def.'s Mot. for Sum. Judg., Exhibit P.) In response to this demand, and after completing its own investigation, Zurich informed the Plaintiff by correspondence on May 28, 2004, that it would cover forty-two percent (42%) of the Plaintiff's necessary and reasonable cleanup costs incurred on the site in question. (Def.'s Mot. for Sum. Judg., Exhibit N.) Zurich noted that the Plaintiff's consultant's report itself indicated evidence of historical petroleum leaks on the property that occurred before the Policy's retroactive date, and that the Plaintiff failed to give Zurich the opportunity to assess the removed tanks and attached equipment after filing the claim. Zurich therefore found that the investigation did not prove that the leaks came exclusively from the Plaintiff during the policy period. (Id.)

         On September 20, 2004, the Plaintiff corresponded with Zurich for a second time, again requesting that Zurich pay the full amount for the cleanup costs. On November 2, 2004, Zurich informed the Plaintiffs that its “proposed allocation [of forty-two percent of the cleanup costs] is fair and reasonable and in accordance with the terms and conditions of the policy in light of the historical and current information presented.” (Def.'s Mot. for Sum. Judg., Exhibit Q.) Zurich also stated that it was still willing to pay forty-two percent of the Plaintiff's cleanup costs related to the UST removal. (Id.) On September 13, 2005, the Plaintiff submitted a third correspondence, again requesting Zurich to provide coverage for one hundred percent of the cleanup costs surrounding the UST removal. (Id.) On January 30, 2006, Zurich responded a third time, stating that its original May 28, 2004 offer of forty-two percent coverage was fair and reasonable under the policy and was still being extended to the Plaintiffs. (Id.) On December 14, 2015, more than twelve years after originally demanding coverage, the Plaintiff filed its complaint in the Circuit Court of Summers County, West Virginia, seeking a declaration that the Defendant breached the insurance contract and committed statutory bad faith. (Pl.'s Comp. at ¶ 17.) From Zurich's January 30, 2006 correspondence with the Plaintiff until the filing of the complaint, Zurich received no further communication from the Plaintiff. The Plaintiff has not accepted Zurich's offer to pay for forty-two percent of the Plaintiff's cleanup costs, and remediation of the site was still ongoing at the time the Plaintiff filed its complaint.


         The well-established standard in consideration of a motion for summary judgment is that “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a)-(c); see also Hunt v. Cromartie, 526 U.S. 541, 549 (1999); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Hoschar v. Appalachian Power Co., 739 F.3d 163, 169 (4th Cir. 2014). A “material fact” is a fact that could affect the outcome of the case. Anderson, 477 U.S. at 248; News & Observer Publ'g Co. v. Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). A “genuine issue” concerning a material fact ...

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