Agency of Natural Resources v. Glens Fall Insurance Co.

Agency of Natural Resources v. Glens Fall Insurance Co. (98-073); 169 Vt. 426;
736 A.2d 768

[Opinion Filed 25-Jun-1999]
[Motion for Reargument Denied 2-Aug-1999]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter  of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.


                                  No. 98-073


Agency of Natural Resources,	                   Supreme Court
State of Vermont
                                                   On Appeal from
     v.		                                   Washington Superior Court

Glens Falls Insurance Co., Continental	           November Term, 1998
Insurance Co., Liberty Mutual Insurance 
Co. and Tamarack Services of South 
Burlington


Alan W. Cheever, J.

       William H. Sorrell, Attorney General, and William Griffin, Chief
  Assistant Attorney General,  Montpelier, for Plaintiff-Appellee.

       William F. Ellis and Kevin J. Coyle of McNeil, Leddy & Sheehan,
  Burlington, for Defendants- Appellees Glens Falls Insurance Co. and
  Continental Insurance Co.

       Michael B. Clapp, Burlington, for Defendant-Appellant Liberty Mutual
  Insurance Co.


PRESENT:  Dooley, Morse, and Johnson, JJ., Norton, Supr. J., Specially Assigned, and 	
	Gibson, J.(Ret.), Specially Assigned.


       JOHNSON, J.   This case concerns a dispute among the parties and their
  insurers over  the allocation of costs for the cleanup of a series of
  gasoline leaks.  The superior court ruled that  Liberty Mutual Insurance
  Company (Liberty) was responsible for approximately 92% of the costs,  that
  the Continental/Glens Falls Insurance Company (Continental) was responsible
  for the balance,  and that Liberty's counter-claim against the State of
  Vermont for contribution was without merit.  Liberty appeals, contending
  the court erred in: (1) dismissing its counter-claim against the State; 
  (2) making certain findings concerning the amount of petroleum released and
  the allocation of  remediation costs among the parties; (3) ordering a
  set-off against Liberty's restitution award from  Continental; and (4)
  declining to award prejudgment interest.  Continental has cross-appealed, 
  contending the court erred in rejecting its defenses of waiver, unclean
  hands, 

 

  and laches against Liberty's cross-claim for restitution.  We reverse and
  remand on the issue of  prejudgment interest, and otherwise affirm.

                                    FACTS

       As found by the trial court, the facts were as follows.  In 1983,
  gasoline began to leak  from underground storage tanks at Spillane's
  Service Center on Route 7 in Shelburne, a site  owned by Tamarack Services
  of South Burlington.  The leak was discovered in 1985, and shortly 
  thereafter the State ordered corrective action.     

       The volume of the release was large.  Free-product gasoline spread
  thoughout the site and  migrated to adjacent properties.  Liberty,
  Tamarack's insurer at the time of the leak, was notified  of the release
  and accepted responsibility for payment of the costs of remediation. 
  Tamarack hired  Ground Water Technologies, Inc. (GTI) to monitor
  contamination levels and perform the cleanup.

       Liberty's policy expired in August 1986, at which time Continental
  became the insurer.  Continental's policy, which was renewed in 1987 and
  1988, contained several pollution exclusion  endorsements.  Liberty
  continued to pay the costs of remediation through this period.

       In November 1987, GTI discovered a second release of gasoline at the
  site consisting of  several leaking fuel lines.  These were repaired by
  January 1988.  During the summer of 1989,  more leaks occurred.  The
  parties presented a variety of expert evidence and opinion at trial 
  relating to the rate, duration, and overall volume of the three releases. 
  The court found that the  initial release, which Continental's expert had
  characterized as "massive," consisted of 11,000  gallons.  The court found
  that the second and third releases, which were much smaller and were 
  discovered relatively quickly through GTI's previously installed monitoring
  equipment, each  consisted of 450 gallons.

       Tamarack made no claims under its policies with Continental at the
  time of the second and  third releases, believing that the pollution
  exclusion clauses precluded coverage.  Liberty received  actual notice of
  the third release no later than September 1989, and continued to pay
  remediation  costs until 1990, when it requested that GTI provide an
  estimate of the remediation