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This is a COMPLAINT FOR DECLARATORY AND OTHER RELIEF by PLANTATION PIPE LINE COMPANY against two of its excess liability insurance carriers. Plantation seeks monetary damages (plus interest) suffered by Plantation as a result of MRAm's breach of its contractual obligation to indemnify Plantation. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C SSSS 1332, et seq.
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PLANTATION PIPE LINE COMPANY v. MUNICH REINSURANCE AMERICA, INC. et al complaint
This is a COMPLAINT FOR DECLARATORY AND OTHER RELIEF by PLANTATION PIPE LINE COMPANY against two of its excess liability insurance carriers. Plantation seeks monetary damages (plus interest) suffered by Plantation as a result of MRAm's breach of its contractual obligation to indemnify Plantation. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C SSSS 1332, et seq.
This is a COMPLAINT FOR DECLARATORY AND OTHER RELIEF by PLANTATION PIPE LINE COMPANY against two of its excess liability insurance carriers. Plantation seeks monetary damages (plus interest) suffered by Plantation as a result of MRAm's breach of its contractual obligation to indemnify Plantation. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C SSSS 1332, et seq.
_________________________________________ ) PLANTATION PIPE LINE COMPANY, ) ) Plaintiff, ) ) v. ) Civil Action ) No. _____________ MUNICH REINSURANCE AMERICA, INC., ) and CENTURY INDEMNITY COMPANY, ) ) Defendants. ) __________________________________________)
COMPLAINT FOR DECLARATORY AND OTHER RELIEF 1. This is a Complaint for declaratory and other relief by Plantation Pipe Line Company (Plantation) against two of its excess liability insurance carriers, Munich Reinsurance America (MRAm) and Century Indemnity Company (Century) (collectively referred to herein as Defendants or Insurers). Plantation seeks the following relief in this action from MRAm: (1) monetary damages (plus interest) suffered by Plantation as a result of MRAms breach of its contractual obligation to indemnify Plantation for its losses arising out of a release of petroleum product from Plantations underground pipeline near Ramah Creek in Mecklenburg County, North Carolina (the Pipeline Leak); and (2) extra-contractual damages and attorneys fees, pursuant to O.C.G.A. 33-4-6, for bad faith handling of Plantations coverage claim. In addition, Plantation seeks the following relief from both MRAm and Century: (1) a declaration that these Insurers are contractually obligated to indemnify Plantation, up to the limits of their respective insurance policies, for losses Plantation incurs in the future as Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 1 of 13
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a result of the Pipeline Leak; and (2) reimbursement of all costs and fees incurred by Plantation in bringing and prosecuting this action. JURISDICTION AND VENUE 2. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C 1332, 2201, and 2202. The matter in controversy exceeds $75,000, exclusive of interest and costs, and there is complete diversity of citizenship between Plantation (which is incorporated in Delaware and Virginia, and headquartered in Georgia) and MRAm (which is incorporated in New Jersey and headquartered in New Jersey) and Century (which is incorporated in Pennsylvania and headquartered in Pennsylvania). 3. Venue is proper in this Court pursuant to 28 U.S.C. 1391 because Defendants are entities that are authorized to conduct business and do conduct business in Fulton County, Georgia. This Court has personal jurisdiction over Defendants because they conduct business in the State of Georgia. PARTIES 4. Plantation is an interstate common carrier by pipeline of refined petroleum products. Plantation is organized and existing under the laws of the State of Delaware and the Commonwealth of Virginia. It has its principal place of business in Alpharetta, Georgia. 5. Defendant MRAm is an insurance company incorporated under the laws of the State of New Jersey, with its principal place of business in Princeton, New Jersey. MRAm is authorized to sell insurance and does sell insurance in the State of Georgia. Until September 1996, MRAm was named American Re-Insurance Company of America (AmRe). MRAm has succeeded to the rights and obligations of AmRe under the policy of insurance that AMRe sold to Plantation that is at issue in this coverage dispute (MRAm Policy). Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 2 of 13
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6. Defendant Century is an insurance company incorporated under the laws of the Commonwealth of Pennsylvania with its principal place of business in Philadelphia, Pennsylvania. Century is authorized to sell insurance and does sell insurance in the State of Georgia. Century is a successor to CCI Insurance Company, which is a successor to CIGNA Specialty Insurance Company, which was formerly known as California Union Insurance Company (Cal Union). Plantation brings this action against Century as the entity that has succeeded to the rights and obligations of Cal Union under the policy of insurance that Cal Union sold to Plantation that is at issue in this coverage dispute (Century Policy). GENERAL ALLEGATIONS The Pipeline Leak 7. On March 5, 1975, Plantation discovered that No. 2 heating oil was leaking from its underground 10-inch pipeline near Ramah Creek and Huntersville Concord Road in Mecklenburg County, North Carolina. Plantation refers to the property impacted by the Pipeline Leak (including subsurface soil and groundwater) as the Ramah Creek Site (referred to herein as the Site). 8. Upon discovery of the Pipeline Leak, Plantation shut down the flow of petroleum product through the pipeline, excavated the line, and repaired the Pipeline Leak. The repairs were concluded and the line put back in service on March 6, 1975. 9. Shortly after repairing the Pipeline Leak, Plantation recovered approximately 1,000 barrels of No. 2 heating oil from a creek bed at the Site. 10. In December 2009, while conducting a Phase II site assessment for a property owner at the Site, Plantation discovered free-phase petroleum product in one of its groundwater monitoring wells. Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 3 of 13
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11. Immediately following its discovery of the free-phase product at the Site in December 2009, Plantation retained a remedial contractor, CH2MHill, to evaluate the source and extent of the contamination and to develop a plan to investigate and remediate the Site in accordance with government directives and regulatory requirements. 12. Plantation has performed the majority of site assessment activities and has concluded that all of the petroleum product contamination detected at the Site in 2009 resulted from the 1975 Pipeline Leak. 13. Prior to its discovery of the Pipeline Leak on March 5, 1975, Plantation was not aware of any release of petroleum product from its pipeline or any other facility that may have contributed to the petroleum product contamination detected at the Site. 14. Plantation did not expect or intend the Pipeline Leak or the resulting property damage at the Site. Plantations Response to the Pipeline Leak 15. Promptly after discovering free-phase petroleum product on groundwater at the Site in December 2009, Plantation reported that discovery to the North Carolina Department of Environment and Natural Resources (NCDENR), as required by law. In a letter to Plantation dated January 5, 2010, NCDENR advised that it had determined that Plantation was responsible for the release of petroleum product at the Site. The letter directed Plantation to investigate the contamination and prepare an Initial Assessment Report summarizing the results of that investigation. A true and correct copy of this letter is attached hereto as Exhibit A. 16. By letter dated April 7, 2010, NCDENR advised Plantation that [a]s a responsible party, you must comply with the assessment and cleanup requirements of Title 15A Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 4 of 13
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NCAC 2L.0106(c) and 2L.0106(g). A true and correct copy of this letter is attached hereto as Exhibit B. 17. Plantation has undertaken site assessment activities, and is prepared to undertake all remedial activities at the Site that are necessary to protect human health and the environment in accordance with NCDENRs regulatory requirements. 18. Plantation is legally obligated under North Carolina law to take all necessary and appropriate remedial measures at the Site as may be necessary to protect human health and the environment. 19. As of June 1, 2014, Plantation had incurred approximately $300,000 for remedial activities at the Site. 20. Based on current cost projections, Plantation anticipates that it will ultimately incur an additional $1 million to $3 million to remediate the Site as necessary to protect human health and the environment and to comply with NCDENRs regulatory requirements. Plantations Insurance Coverage The MRAm Policy 21. At the time of Plantations discovery and repair of the Pipeline Leak in March 1975, Plantation was the Named Insured under the MRAm Policy (Policy No. C-1055095), which was in effect from November 30, 1973 to November 30, 1976. A true and correct copy of the MRAm Policy is attached hereto as Exhibit C. The MRAm Policy provides $900,000 in excess coverage above a $100,000 self-insured retention (SIR). That is, the attachment point of the MRAm Policy is $100,000.
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The Century Policy 22. At the time Plantation discovered and repaired the Pipeline Leak in March 1975, Plantation was also the Named Insured under the Century Policy (Policy No. SCX001154), which was in effect from November 30, 1974 through November 30, 1975. A true and correct copy of a Certificate of Excess Insurance evidencing the Century Policy is attached hereto as Exhibit D. The Century Policy provides $2 million per occurrence coverage excess of the MRAm Policy. That is, the attachment point of the Century Policy is $1,000,000. 23. The Insuring Agreements in the MRAm Policy provide in relevant part that MRAm agrees to indemnify the Insured for ultimate net loss in excess of the retained limits hereinafter stated, which Insured may sustain by reason of the liability imposed upon the Insured by law [f]or damages because of injury to or destruction of tangible property, including the loss of use thereof, caused by an occurrence or accident as defined herein. The MRAm Policy further provides that it applies only to occurrences or accidents which happen during the Policy period 24. The MRAm Policy defines occurrence or accident as follows: As respects Coverages IA [personal injury liability] and IB [property damage liability], the word occurrence and the word accident as used in this Policy means an event which unexpectedly or unintentionally caused injury during the Policy period or a continuous or repeated exposure to conditions which unexpectedly or unintentionally causes injury to persons or tangible property during the Policy period. All such exposure to substantially the same general conditions existing at or emanating from each premises location shall be deemed one occurrence or accident.
25. The Century Policy follows form to the MRAm Policy. Its stated purpose is to indemnify the Insured in accordance with the applicable insuring agreements, exclusions and conditions of the primary insurance for excess loss specified in the declarations. Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 6 of 13
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26. The petroleum product contamination at the Site resulting from the Pipeline Leak constitutes injury to or destruction of tangible property caused by an occurrence or accident within the meaning of the MRAm and Century Policies. 27. The occurrence or accident that caused the property damage at the Site was the Pipeline Leak. 28. The Pipeline Leak took place during the Insurers policy periods. The Insurers Responses to Plantations Coverage Claims MRAm 29. By letter dated July 12, 2010, Plantation notified MRAm of the occurrence of property damage at the Site resulting from the Pipeline Leak. A true and correct copy of that notice is attached hereto as Exhibit E. The notice informed MRAm that although Plantations losses resulting from the Pipeline Leak had not yet exceeded the $100,000 attachment point of the MRAm Policy, Plantation believes it likely that its response costs will exceed $100,000 the amount of self-insured retention in the Policyby late 2010. 30. By email received by Plantation on October 29, 2010, Thomas V. OKane, Vice President of MRAm, acknowledged receipt of Plantations notice of the occurrence at the Site. A true and correct copy of Mr. OKanes email is attached hereto as Exhibit F. This email was the first and last correspondence Plantation received from MRAm in response to Plantations coverage claim. 31. Plantation sent five follow-up letters to MRAm, dated July 6, 2011, June 22, 2012, January 11, 2013, February 19, 2013, and December 18, 2013. True and correct copies of this correspondence are attached hereto as Exhibits G-K. Plantation has heard nothing, either Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 7 of 13
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orally or in writing, from MRAm or any MRAm representative, in response to any of this correspondence. Century 32. By letter dated October 29, 2013, Plantation put Century on notice of the occurrence at the Site. Plantation advised Century that it was being notified of the occurrence because the cost of the cleanup at the Site may exceed the $1 million attachment point of the Century Policy. A true and correct copy of Plantations notice to Century (without the exhibits) is attached hereto as Exhibit L. 33. By letter dated November 26, 2013, the Brandywine Group responded on behalf of Century to Plantations notice letter. The Brandywine Group advised that it was handling this claim on behalf of Century and requested additional information regarding the claim and the Site. 34. By letter dated July 1, 2014, Brandywine Group advised Plantation that it disagreed that only the Century and MRAm Policies had been triggered by the Pipeline Leak and that it had seen no evidence that the underling coverage had been exhausted. That letter purported to reserve Century's right to deny coverage. CLAIMS FOR RELIEF COUNT I (MRAms Breach of Contract)
35. The above paragraphs 1 to 34 are realleged as if fully set forth herein. 36. Plantation has fulfilled its contractual obligations under the MRAm Policy, including the notice requirement in the policy, and has satisfied all conditions precedent to coverage under the policy. Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 8 of 13
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37. MRAm has a contractual obligation under the MRAm Policy to indemnify Plantation (up to its policy limit) for the losses in excess of the $100,000 SIR incurred by Plantation as a result of the Pipeline Leak. 38. MRAm has breached its contractual obligation to indemnify Plantation for its losses to date arising out of the Pipeline Leak. 39. As a direct and proximate result of its contractual breach, MRAm has deprived Plantation of the benefits of the insurance coverage for which Plantation timely paid all required premiums. COUNT II (Declaratory ReliefPlantations Future Costs)
40. The above paragraphs 1-34 are realleged as if fully set forth herein. 41. The Insurers are contractually obligated to indemnify Plantation, up to their respective policy limits, for costs incurred by Plantation in the future as the result of the Pipeline Leak. Plantation currently estimates that its future (i.e., post-July 1, 2014) costs arising out of the Pipeline Leak will total at least $1 million. The upper range of this estimate is subject to revision, and is highly dependent on the nature and scope of the permanent remedy for the Site that is ultimately approved by NCDENR. 42. Plantation has fulfilled its contractual obligations under the Century Policy, including the notice requirement in the policy, and has satisfied all conditions precedent to coverage under the policy. 43. Because the Insurers have refused to acknowledge their respective coverage obligations, there exists an actual controversy between them and Plantation, entitling Plantation to a declaration of rights and further relief pursuant to O.C.G.A. 9-4-2. Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 9 of 13
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44. A declaration of Plantations rights pursuant to O.C.G.A. 9-4-2 would alleviate much of the uncertainty facing Plantation with respect to whether it will have insurance coverage for costs it incurs in the future to respond to the property damage caused by the Pipeline Leak. 45. Accordingly, Plantation requests that the Court declare that the Insurers are contractually obligated, subject to their respective policy limits, to reimburse Plantation for all reasonable and necessary future costs Plantation becomes legally obligated to pay in response to the Pipeline Leak. COUNT III (MRAms Bad Faith)
46. The above paragraphs 1-34 are realleged as if fully set forth herein. 47. After Plantation sent MRAm initial notice of the occurrence of property damage at the Site on July 12, 2010, MRAm acknowledged receipt of that notice in an email message from Thomas V. OKane, its Vice President, on October 29, 2010. Mr. OKanes email advised that MRAm handles claims reported against policies issued by American Re Insurance Company to Plantation Pipe Line Co. Mr. OKanes email asked that he be kept informed of the factual, liability, and damage issues as this matter develops. He also asked Plantation to clarify what action(s) Plantation Pipe Line took to respond, investigate and clean up soil or groundwater damages [at the Site]. 48. In its letter dated July 6, 2011 (Exhibit G), Plantation provided the information that Mr. OKane had requested in his October 29, 2010 email. Plantation advised MRAm that because the $100,000 SIR in the MRAm Policy had recently been exceeded, that policy was triggered. Accordingly, Plantation asked MRAm to acknowledge that the MRAm policy provided coverage for Plantations losses at the Site. MRAm never responded to this letter. Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 10 of 13
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49. By letter to Mr. OKane dated June 22, 2012 (Exhibit H), Plantation reminded MRAm that the $100,000 SIR had been exceeded and again asked MRAm to acknowledge its coverage obligation. Plantation submitted an invoice with this letter for $145,812.71the amount of MRAms obligation to Plantation at that time. MRAm never responded to this letter. 50. By letter dated January 11, 2013 (Exhibit I), Plantations outside counsel wrote to Mr. OKane noting that 18 months had passed since Plantation advised MRAm that the $100,000 SIR had been exceeded. The letter stated We do not understand why we have not heard anything from Munich Re [MRAm] over the past 18 months with respect to this claim. The letter again asked MRAm to acknowledge its coverage obligation or, if it was denying there was such an obligation, to provide an explanation for that denial. MRAm never responded to this letter. 51. Plantations January 11, 2013 letter to MRAm further stated: Be advised that this letter constitutes a demand for payment pursuant to the State of Georgias bad-faith statute, O.C.G.A. 33-4-6. 52. By letter dated February 19, 2013 (Exhibit J), Plantations outside counsel again wrote to Mr. OKane complaining of MRAms total lack of response to any of Plantations previous letters. The letter stated: Please advise us immediately if MRAm acknowledges its coverage obligation for this occurrence? My client has directed me to prepare this matter for litigation if we do not hear from you within the next 10 days. MRAm never responded to this letter. 53. By letter dated December 18, 2013, Plantation wrote to Mr. OKane conveying Plantations second claim submission, for $49,712.46 (Exhibit K). The letter stated: Since the policy has now been triggered, I would appreciate Munich Res acknowledgment of coverage Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 11 of 13
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(emphasis in original). MRAm never responded to this letter. To date, MRAm has paid nothing to Plantation for this claim. 54. MRAms complete lack of cooperation with its insuredin failing to communicate with Plantation in any way over the four-year period following its initial acknowledgment of Plantations notice of claim, and despite five letters from Plantation over that period requesting MRAms acknowledgment of its coverage obligationconstitutes bad-faith refusal of coverage pursuant to O.C.G.A. 33-4-6, entitling Plantation to the full measure of relief provided by that statute. 55. Pursuant to O.C.G.A 33-4-6, MRAms failure to pay Plantations loss under the MRAm Policy within 60 days after Plantation demanded such payment, coupled with MRAms bad-faith handling of Plantations coverage claim, entitles Plantation to an additional sum equal to 50% of the amount owing under the MRAm policy, plus all reasonable attorneys fees incurred by Plantation in prosecuting this action. JURY DEMAND 56. Plantation demands a trial by jury of all issues properly tried to a jury. PRAYER FOR RELIEF Wherefore, Plantation respectfully prays that this Court: A. Enter judgment against MRAm for costs in excess of $100,000 incurred to date by Plantation in responding to the Pipeline Leak, plus prejudgment interest. B. Enter judgment, pursuant to O.C.G.A. 9-4-2, declaring that MRAm and Century are obligated to indemnify Plantation, subject to their respective policy limits, for reasonable and necessary costs incurred in the future by Plantation in response to the Pipeline Leak. Case 1:14-cv-02257-TCB Document 1 Filed 07/16/14 Page 12 of 13
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C. Enter judgment against MRAm, pursuant to O.C.G.A. 33-4-6, for monetary damages, including attorneys fees and costs incurred in this action to the maximum extent allowable under that statutory provision, for MRAms bad-faith handling of Plantations coverage claim. D. Grant such further relief is the Court deems just and proper.
Respectfully submitted this 16 th day of July, 2014,
s/Shattuck Ely__________________ Shattuck Ely (Georgia Bar No. 246944) Christina M. Baugh (Georgia Bar No. 241880) FELLOWS LABRIOLA 225 Peachtree Street, NE - Suite 2300 Atlanta, GA 30303 Tel: 404-586-9200
Thomas K. Bick D.C. Bar No. 938944 (to seek admission pro hac vice) BUTZEL LONG TIGHE PATTON, PLLC 1747 Pennsylvania Avenue NW, Suite 300 Washington, D.C. 20006 Tel: 202-454-2800
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