The Travelers Indemnity Company v. Northrop Grumman Corporation

Background

This environmental insurance-coverage action concerns a putative mass-tort class action, Romano et al. v. Northrop Grumman Corporation et al., involving alleged contamination from Grumman’s Bethpage aircraft-manufacturing and testing facility. The operative complaint alleges negligence, strict liability, nuisance, and trespass, and seeks damages for bodily injury and property damage allegedly caused by exposure to chemicals released into the air, soil, and groundwater. The alleged injuries and property damage date from at least the late 1930s through at least 2016.

Northrop Grumman Corporation and Northrop Grumman Systems Corporation, referred to together as Grumman, sought summary judgment declaring that The Travelers Indemnity Company, The Travelers Indemnity Company of Connecticut, and Century Indemnity Company had duties to defend Grumman in the underlying lawsuit. Travelers and Century sought declarations that they had no such duties.

The Century policies covered consecutive one-year periods from January 1, 1955, through January 1, 1962. They required written notice of an accident or occurrence as soon as practicable. The Travelers umbrella policies covered consecutive one-year periods from January 1, 1968, through January 1, 1972. Their defense provision applied when insurance for the alleged injury or damage was not provided by the underlying policies or other applicable insurance, but was covered by the umbrella policies.

Century’s Duty to Defend

The court denied Century’s motion for a declaration that it had no duty to defend. Earlier decisions in the same case had held that the summary-judgment record did not permit the court to determine the relevant occurrence or occurrences underlying the Romano lawsuit. In particular, the record did not show whether each plaintiff’s exposure was a separate occurrence or whether some exposures could be grouped based on similar timing and location.

The court applied the law-of-the-case doctrine, which generally prevents reconsideration of issues already decided in the same case absent a compelling reason such as new evidence, an intervening change in law, or a clear error. The court found no such reason to revisit the earlier decisions. It also rejected Century’s argument that a later decision concerning the Bethpage contamination had resolved the occurrence question. That later decision addressed the types of discharges at the facility, not the timing and circumstances of the plaintiffs’ alleged exposures or the grouping of those exposures.

Because the relevant occurrence could not yet be identified, the court did not decide whether Grumman gave Century timely notice. The court therefore denied Century’s motion.

Century’s Immediate Defense Obligation

The court also denied Grumman’s motion seeking an immediate defense from Century. Under the policies and applicable law, timely notice was a condition that had to be satisfied before Century’s duty to defend arose. Because the current record did not establish whether Grumman’s notice was timely, Grumman could not establish that condition.

The court concluded that Century had no immediate duty to defend and no obligation to pay defense costs while the notice issue remained unresolved. The court stated that if Grumman ultimately proves that it gave timely notice, Century would be obligated to reimburse Grumman for defense costs. The court did not finally resolve Century’s overall duty to defend.

Travelers’ Duty to Defend

The court granted Travelers’ motion and denied Grumman’s contrary motion. The dispute centered on the meaning of the word “afforded” in the umbrella policies. Grumman argued that insurance was not “afforded” by the underlying policies because Grumman had not actually recovered defense costs under them. The insurers argued that insurance was “afforded” when the risk or loss fell within the scope of the underlying policies, regardless of whether payment was actually made.

The court held that “afforded” had its ordinary meaning of made available, given, or provided. The umbrella policies therefore required Travelers to defend only when the underlying policies did not make the relevant insurance available. The court rejected Grumman’s interpretation because it would effectively treat “insurance” as meaning actual payment, which the policy language did not support.

The court also noted that the policies used terms such as “collectible” or “recoverable” when referring to whether insurance could actually be collected. Because the policies did not use those terms in the defense provision, the court would not add that meaning. It held that the relevant policy language was unambiguous and that the underlying policies provided insurance for the type of risk involved. Travelers therefore had no duty to defend Grumman under the umbrella policies.

Disposition

The court denied Grumman’s motion for summary judgment, denied Century’s cross-motion, and granted Travelers’ cross-motion. It ruled that Century had no immediate duty to defend under the Century policies while the notice issue remained unresolved, and that Travelers had no obligation to defend under the umbrella policies. The parties were directed to file a joint status letter proposing next steps by October 5, 2022.