The Travelers Indemnity Company v. Northrop Grumman Corporation

Background

This action concerns whether Travelers and Century owe insurance coverage for litigation arising from alleged contamination around Grumman’s Bethpage Facility. The parties moved for reconsideration of three earlier summary-judgment opinions involving the Romano lawsuit and a natural-resource-damages claim. A motion for reconsideration asks the court to correct a clear error, account for new evidence, or apply a change in controlling law; it is not ordinarily a chance to reargue issues already decided.

The insurers had argued that Grumman’s coverage was eliminated because it did not provide timely notice of an occurrence, injury, property damage, accident, or claim, depending on the policy. The policies were divided into categories, including Travelers’ primary and umbrella policies and Century’s primary and excess policies.

Rulings concerning the Romano lawsuit

The court denied Travelers’ and Grumman’s motions to reconsider the Romano Opinion. The court maintained that, under the relevant notice-of-injury or notice-of-property-damage provisions, Grumman’s duty to give notice required knowledge of actual injury, not merely knowledge of earlier events or suspected health trends that might eventually result in injury. The court concluded that the Romano complaint supplied sufficient factual information about injury and that Grumman timely notified Travelers.

The court also maintained its ruling that Travelers timely disclaimed coverage. The Hartmann Letter described residents’ illnesses and concerns but expressly did not assert a legal claim or seek damages. The court therefore concluded that the letter did not trigger Travelers’ duty to disclaim coverage. Travelers’ filing of this declaratory-judgment action 42 days after receiving the Romano complaint was timely as a matter of law; even assuming the period was 46 days, the result was unchanged.

Rulings concerning the natural-resource-damages claim

Grumman’s motion concerning the Travelers umbrella policies was denied. Although the court accepted Grumman’s description of the notice standard for excess coverage—that notice is required when the insured has information from which it could reasonably conclude that the excess policies are likely to be reached—the court held that Grumman nevertheless gave late and insufficient notice. For the policies in effect from 1968 to 1973, Grumman should reasonably have known by August 1976 that liability could exceed the $100,000 attachment point. For the policy in effect from 1973 to 1974, Grumman should reasonably have known by August 2002 that liability would likely exceed $100 million, but it did not next attempt notice until February 2007.

The court granted reconsideration concerning Travelers’ primary policies issued from 1977 through 1985. It rejected both sides’ positions that the 1976 notice automatically resolved the notice issue under those later policies. Grumman had no notice duty under a policy that was not yet in effect, but Travelers’ late-notice defense also could not eliminate coverage as a matter of law based on the 1976 notice. Because the parties had not fully addressed policy exclusions or how late notice applies when the relevant occurrence, injury, or property damage arose before a policy began, the ruling was without prejudice to Travelers continuing to assert late notice or other defenses.

Rulings concerning Century’s policies

The court denied Century’s motion to reconsider the Century Opinion. The court maintained that the meaning of “occurrence” and “accident” in Century’s primary policies was not resolved sufficiently to decide the late-notice defense on summary judgment. The court also rejected Century’s arguments that the policies necessarily required notice by the dates when Grumman learned of groundwater and soil contamination.

The court denied in part and granted in part Grumman’s motion concerning Century’s policies. For Century’s excess policies requiring notice of an “accident,” the court held that “accident” was ambiguous as applied to property-damage claims in the Romano lawsuit and the natural-resource-damages claim. Accordingly, late notice could not be held to eliminate coverage for those property-damage claims as a matter of law on the existing record. That ruling was without prejudice to Century asserting late notice or other coverage defenses on a more developed record.

The court rejected Grumman’s other arguments concerning Century’s excess policies. It held that the pre-1963 excess policies contained grouping language treating a series of accidents or occurrences arising from one event as a single accident or occurrence, and that Grumman’s notice of the groundwater and soil contamination was untimely, including for the Romano bodily-injury claims under those policies. The court also rejected or treated as waived Grumman’s argument that it reasonably delayed notice because it did not know the excess policies would be reached.

Disposition

The court’s conclusion states that the motions for reconsideration were denied, except that Grumman’s motion to reconsider the natural-resource-damages opinion was granted in part and Grumman’s motion to reconsider the Century Opinion was granted in part. At the summary-judgment stage, late notice could not be deemed to eliminate coverage for the natural-resource-damages claim under Travelers’ 1977–1985 primary policies or for property-damage claims in the Romano lawsuit or natural-resource-damages claim under Century’s excess policies. The court directed the clerk to close the listed docket entries.