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JOSLYN MFG. CO. v. LIBERTY MUT. INS. CO.

February 25, 1998

JOSLYN MANUFACTURING COMPANY, Plaintiff,
v.
LIBERTY MUTUAL INSURANCE COMPANY, Defendant.



The opinion of the court was delivered by: BUCKLO

MEMORANDUM OPINION AND ORDER

 The defendant, Liberty Mutual Insurance Company ("Liberty"), moves this court to reconsider its August 16, 1996 Memorandum Opinion and Order ("August 16 Order"). The plaintiff, Joslyn Manufacturing Company ("Joslyn"), in turn, moves for summary judgment as to Counts IV, V, and VI of the First Amended Complaint. Joslyn also seeks to amend the First Amended Complaint to add four additional sites. For the reasons set forth below, Liberty's motion for reconsideration is denied, Joslyn's motion for summary judgment is granted in part and denied in part, and Joslyn's motion to file a Second Amended Complaint is denied.

 Background

 In the August 16 Order, I held that Liberty, by delaying to reserve its rights, waived its coverage defenses with regard to the claims in Johnson, et al. v. Lincoln Creosote Co., et al., Number 70481, 26th Judicial District Court, Bossier Parish, Louisiana ("Johnson Lawsuit") and to the Environmental Protection Agency ("EPA") Claim. Liberty now moves for reconsideration of that Order. Since there are no new facts, the facts of the August 16 Order are incorporated herein.

 Joslyn, in turn, moves for summary judgment as to Counts IV, V, and VI of the First Amended Complaint, relying primarily on the August 16 Order and its reasoning. Joslyn has incurred over $ 3.6 million in cleanup costs at the Bossier City, Louisiana Site ("Bossier Site") under the EPA Claim and over $ 3.5 million at the Panama, Oklahoma Site ("Panama Site"). Joslyn also expects to incur future defense and cleanup costs for the EPA Claim (Count IV), the Johnson Lawsuit (Count V), and the Panama Site (Count VI).

 Finally, Joslyn seeks to amend its complaint. Joslyn filed its original complaint on June 26, 1995 seeking environmental coverage for six sites ("Original Complaint"). On January 4, 1996, Joslyn amended its Original Complaint by adding a new count involving an additional claim arising from one of the six sites ("First Amended Complaint"). Joslyn now moves to file a Second Amended Complaint, adding four new sites to the First Amended Complaint: Sandpoint, Idaho ("Sandpoint Site"); Tama, Iowa ("Tama Site"); Chehalis, Washington ("Chehalis Site"); and Rosen Superfund Site, Cortland, New York ("Rosen Site"). All of these sites were formerly owned and operated by Joslyn.

 On July 21, 1986, the Sandpoint Site owner, B.J. Carney Industries ("Carney"), demanded contribution from Joslyn for necessary response costs. Carney's lawyers sent Joslyn a draft complaint on June 17, 1987 which they proposed to "file within the next week or so." Second Am. Compl. P 78. The complaint was never filed.

 On April 24, 1990, Joslyn received a letter from the owner of the Tama Site, Ronald Kenyon Construction Company and Kenyon Enterprises, Inc. ("Kenyon"). The letter stated that in an environmental audit by a prospective purchaser, contamination was discovered. Kenyon wanted to meet with Joslyn "to exchange information, discuss various strategies for proceeding and attempt to reach an agreement on a specific strategy for proceeding in this matter." Second Am. Compl. P 88.

 On August 30, 1984, Joslyn received a letter from the then owner of the Chehalis Site, American Crossarm & Conduit Company ("American Crossarm"), stating that the Washington Department of Ecology had ordered American Crossarm to cease certain operations in 1983 and to take steps to alleviate degradation of the surrounding environment resulting from its operations. American Crossarm stated that "we believe that [Joslyn] must share in the financial responsibility of cleaning up the American Crossarm site." Second Am. Compl. P 97.

 On October 1, 1993, Cooper Industries ("Cooper") wrote Joslyn stating that it was involved at the Rosen Site because of EPA allegations that it had disposed of hazardous substances at that site. The letter sought "indemnification for the claims assessed against [Cooper] relative to the Rosen site" and stated that Cooper "may assert a claim for contribution pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act . . . ." Second Am. Compl. P 108.

 All of the above letters were forwarded to Liberty. Liberty denied coverage of the Sandpoint, Tama, and Chehalis Sites in 1991. Liberty did not offer a defense, request further information, or assert coverage defenses on the Rosen Site.

 Nothing further was received from the four site owners. Joslyn did not bring any actions against Liberty regarding these sites until now.

 Motion to Reconsider

 "Motions for reconsideration serve a limited function: to correct manifest errors of law or fact or to present newly discovered evidence." Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir. 1996) (quoting Keene Corp. v. Int'l Fidelity Ins. Co., 561 F. Supp. 656, 665 (N.D. Ill. 1982), aff'd, 736 F.2d 388 (7th Cir. 1984)).

 Liberty first contends that the court erred in its interpretation of Louisiana law on waiver. Liberty argues that since it did not assume the defense of Joslyn in the Johnson Lawsuit and the EPA Claim until after it had reserved its rights, waiver is inapplicable. This argument was addressed in the August 16 Order. Specifically, I found that "under Louisiana law, the duty of an insurer to reserve its rights can arise once the insurer is notified of an occurrence even if the ...


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