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PLANTATION PIPE LINE COMPANY v. MUNICH REINSURANCE AMERICA, INC. et al

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Case Number: 
1:14-cv-02257 Search Pacer
ACE Group party(s): 
Opposing Party: 
Plantation Pipe Line Company
Court Type: 
Federal
US District Court: 
Northern District of Georgia
Date Filed: 
Jul 16 2014

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
MRAm's breach of its contractual obligation to indemnify Plantation for its losses arising out of
a release of petroleum product from Plantation's 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, forbad faith handling of Plantation's
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
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").
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.
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.
Plantation's 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
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 NCDENR's 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 NCDENR's regulatory requirements.
Plantation's Insurance Coverage
The MRAm Policy
21. At the time of Plantation's 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.
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."
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 Plantation's 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 Plantation's
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 Policy—by late 2010."
30. By email received by Plantation on October 29, 2010, Thomas V. O'Kane, Vice
President of MRAm, acknowledged receipt of Plantation's notice of the occurrence at the Site.
A true and correct copy of Mr. O'Kane's email is attached hereto as Exhibit F. This email was
the first and last correspondence Plantation received from MRAm in response to Plantation's
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
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 Plantation's 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 Plantation's 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
(MRAm's 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.
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 Relief—Plantation's 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.

44. A declaration of Plantation's 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
(MRAm's 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. O'Kane, its Vice President, on October 29, 2010. Mr. O'Kane's email advised
that MRAm "handles claims reported against policies issued by American Re Insurance
Company to Plantation Pipe Line Co." Mr. O'Kane's 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. O'Kane 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 Plantation's losses at the Site. MRAm never responded to this letter.
49. By letter to Mr. O'Kane 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 $145,812.71—the
amount of MRAm's obligation to Plantation at that time. MRAm never responded to this letter.
50. By letter dated January 11, 2013 (Exhibit I), Plantation's outside counsel wrote to
Mr. O'Kane 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. Plantation's January 11, 2013 letter to MRAm further stated: "Be advised that this
letter constitutes a demand for payment pursuant to the State of Georgia's bad-faith statute,
O.C.G.A. § 33-4-6."
52. By letter dated February 19, 2013 (Exhibit J), Plantation's outside counsel again
wrote to Mr. O'Kane complaining of MRAm's total lack of response to any of Plantation's
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. O'Kane conveying
Plantation's second claim submission, for $49,712.46 (Exhibit K). The letter stated: "Since the
policy has now been triggered, I would appreciate Munich Re's acknowledgment of coverage"
11
(emphasis in original). MRAm never responded to this letter. To date, MRAm has paid nothing
to Plantation for this claim.
54. MRAm's complete lack of cooperation with its insured—in failing to
communicate with Plantation in any way over the four-year period following its initial
acknowledgment of Plantation's notice of claim, and despite five letters from Plantation over that
period requesting MRAm's acknowledgment of its coverage obligation—constitutes 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, MRAm's failure to pay Plantation's loss under the
MRAm Policy within 60 days after Plantation demanded such payment, coupled with MRAm's
bad-faith handling of Plantation's coverage claim, entitles Plantation to an additional sum equal
to 50% of the amount owing under the MRAm policy, plus all reasonable attorney's 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.
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 MRAm's bad-faith handling of Plantation's
coverage claim.
D. Grant such further relief is the Court deems just and proper.

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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