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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

UNITED NATIONAL INSURANCE COMPANY et al v. NCR CORPORATION et al

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
1:15-cv-00635 Search Pacer
ACE Group party(s): 
Opposing Party: 
United National Insurance Company
Court Type: 
Federal
US District Court: 
Western District of Michigan
Date Filed: 
Jun 16 2015

COMPLAINT FOR DECLARATORY JUDGMENT

Plaintiffs, United National Insurance Company ("United National"), Federal Insurance
Company ("Federal") and Munich Reinsurance America, Inc., f/k/a American Re-Insurance
Company, successor-in-interest to Executive Risk Indemnity Inc., f/k/a American Excess
Insurance Company ("MRAm"), by and through their attorneys, for their Complaint against
Defendant NCR Corporation ("NCR"), allege as follows:

INTRODUCTION

1.    This is an action for declaratory judgment pursuant to 28 U.S.C. §2201 and
§2202, seeking a determination as to the respective rights and obligations of the parties under
excess liability insurance policies issued to NCR with respect to claims against NCR arising out
of the contamination of the Allied Paper Inc./Portage Creek/Kalamazoo River Superfund Site
("Kalamazoo River Superfund Site") in Kalamazoo County, Michigan.
2.    In November 2010, the United States Environmental Protection Agency
("EPA") issued a "General Notice of Potential Liability" to NCR with respect to the
Kalamazoo River Superfund Site in which EPA stated that "NCR may be liable under Section
107 of CERCLA ... as an arranger, who by contract or agreement, arranged for the disposal,
treatment and/or transportation of hazardous substances at the Site."
3.    In addition, claims have been asserted against NCR with respect to the
Kalamazoo River Superfund Site in a suit filed in this Court captioned Georgia-Pacific
Consumer Products LP, et al. v. NCR Corp., et al., No. l:ll-cv-00483 (the “Georgia-Pacific
Suit”), which seeks contribution under Section 113(f)(1) and/or Section 107(a)(4)(B) of the
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA").
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THE PARTIES

4.    United National Insurance Company is an insurance company organized under the
laws of Pennsylvania, with its principal place of business in Pennsylvania.
5.    Federal Insurance Company is an insurance company organized under the laws of
Indiana, with its principal place of business in New Jersey.
6.    MRAm is an insurance company organized under the laws of the State of
Delaware, with its principal place of business in New Jersey.
7.    Upon information and belief, NCR is a Maryland corporation with its principal
place of business located in Duluth, Georgia.
8.    Allianz Underwriters Insurance Company is an insurance company organized
under the laws of California with its principal place of business in Illinois.
9.    Century Indemnity Company, as successor to CCI Insurance Company, as
successor to Insurance Company of North America, is an insurance company organized under
the laws of Pennsylvania, with its principal place of business in Pennsylvania.
10.    National Surety Corporation is an insurance company organized under the laws of
Illinois, with its principal place of business in California.
11.    St. Paul Mercury Insurance Company is an insurance company organized under
the laws of Minnesota, with its principal place of business in Minnesota.
12.    Safety National Casualty Corporation is an insurance company organized under
the laws of Missouri, with its principal place of business in Missouri.
13.    21st Century Centennial Insurance Company, f/k/a Colonial Penn Insurance
Company, is an insurance company organized under the laws of the Commonwealth of
Pennsylvania, with its principal place of business in Delaware.
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14.    The parties listed in paragraphs 4-6 and 8-13 will collectively be referred to as the
"Insurers."

JURISDICTION AND VENUE

15.    This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332, based
upon diversity of citizenship. In a diversity case, the court is to align the parties according to
their interests in the litigation in accordance with the primary dispute that is in controversy.
Cleveland Hous. Renewal Project v. Deutsche Bank Trust Co., 621 F.3d 554, 559 (6th Cir.
2010). In an insurance coverage declaratory judgment action, the parties should generally be
aligned with the insurers on one side, and the insured on the other. Market Ins. Co. of Canada v.
Progressive Mich. Ins. Co., 2010 WL 5353105, at *2 (W.D. Mich. 2010); Aetna Cas. & Sur. Co.
v. Dow Chem. Co., 44 F.Supp.2d 870, 875 (E.D.Mich.1999); see also United States Fid. and
Guar. Co. v. Thomas Solvent Co., 955 F.2d 1085, 1090 (6th Cir. 1992). The Excess Insurers, on
one hand, and NCR on the other hand, are citizens of different states.
16.    This case is one of actual, justiciable controversy between the Insurers and NCR.
The Insurers have an interest which will be affected by this declaration of rights and obligations.
17.    The amount in controversy, exclusive of interest and costs, exceeds the sum of
$75,000.00.
18.    Venue is proper in this District pursuant to 28 U.S.C. § 1391:
(a)    The Kalamazoo River Superfund Site is located in the Western District
of Michigan.
(b)    The Georgia-Pacific Suit is pending in the Western District of
Michigan.
(c)    The Georgia-Pacific Suit was transferred to this District from the
Eastern District of Wisconsin on a motion filed by NCR to transfer the
action pursuant to 28 U.S.C. § 1404(a).
(d)    In ruling in favor of the transfer, the Eastern District of Wisconsin
ruled that “the interests of justice strongly favor a venue in the
Western District of Michigan.” Georgia-Pacific Consumer Products
LP, et al. v. NCR Corp., et al., No. 10-C-1087, slip op. at 7 (E.D.
Wise. May 10,2011).
(e)    A prior declaratory judgment action relating to the Kalamazoo River
Superfund Site was filed in this District by one of NCR's primary
insurers, Liberty Mutual, Liberty Mutual Ins. Co. v. NCR Corporation,
No. 13-cv-00332-JTN. That action has been resolved.
19.    Venue is also proper in this District pursuant to 28 U.S.C. § 1391(b)(3) in that
this is a judicial district in which NCR is subject to personal jurisdiction.

FACTUAL BACKGROUND

20.    By letter dated April 8, 2003, EPA sent to NCR a “Request for Information
Pursuant to Section 104(e) for the Allied Paper/Portage Creek/Kalamazoo River Superfund Site
in Kalamazoo and Allegan Counties in Michigan” seeking information regarding NCR's past
sales of paper broke to paper recycling mills adjacent to the Kalamazoo River and/or Portage
Creek.
21.    EPA asserts that Kalamazoo River Superfund Site is contaminated primarily with
polychlorinated biphenyls (PCBs).
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Case l:l5-cv-00635-GJQ Doc #1 Filed 06/16/15 Page 6 of 12 Page ID#6
22.    Upon information and belief, Georgia-Pacific is a member of the Kalamazoo
River Study Group (“KRSG”), an unincorporated association of four paper companies which
operated paper recycling mills conducting recycling and deinking operations, adjacent to the
Kalamazoo River or Portage Creek.
23.    Upon information and belief, Georgia-Pacific and the other members of the
KRSG “each contributed PCBs to the [Kalamazoo River Superfund Site] in large quantities, on a
regular basis, and over a long period of time, as a result of their deinking and paper recycling
operations.” Kalamazoo River Study Group v. Rockwell Int’l (KRSG), 107 F. Supp. 2d 817, 828
(W.D. Mich. 2000).
24.    On or about November 24, 2010, EPA issued the "General Notice of Potential
Liability" to NCR with respect to the Kalamazoo River Superfund Site.
25.    Georgia-Pacific Consumer Products, LP, Fort James Corporation, and Georgia-
Pacific LLC (collectively, "Georgia-Pacific"), instituted the Georgia-Pacific Suit by filing a
complaint in the Eastern District of Wisconsin on or about December 10, 2010.
26.    On or about January 18, 2011, NCR filed a motion to transfer the Georgia-Pacific
Suit to the Western District of Michigan pursuant to 28 U.S.C. § 1404(a).
27.    By Decision and Order dated May 10, 2011, the Georgia-Pacific Suit was
transferred to the Western District of Michigan.
28.    On or about June 24, 2011, Georgia-Pacific filed its First Amended Complaint
("FAC") in the Georgia-Pacific Suit.
29.    In the Georgia-Pacific Suit, Georgia-Pacific has demanded that NCR pay a "fair
portion" of the costs associated with the site, which Georgia-Pacific has alleged exceed $79
million.
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30.    Georgia-Pacific alleges that "[beginning no later than 1954, and lasting at least
through 1971, PCBs were released into the Kalamazoo River (and connected Portage Creek,
which flows directly into the Kalamazoo River) in part through the past discharge, release, and
disposal of PCB-contaminated solids and paper residuals by paper de-inking and recycling
companies." (Doc. No. 80, FAC, ]f 3)
31.    Georgia-Pacific alleges further that "PCBs were released into the Kalamazoo
River because waste paper that was de-inked and/or recycled by companies near the Kalamazoo
River included PCB-laden 'broke' and 'trim.' Broke and trim were wastes that resulted from the
manufacture of proprietary, PCB-coated 'carbonless copy paper' ("CCP") pioneered by
Defendant NCR Corporation." (Doc. No. 80, FAC, If 4)
32.    Georgia-Pacific has asserted that it is entitled to contribution from NCR pursuant
to Section 113(f)(1) of the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"), 42 U.S.C. § 9613(f)(1) and/or Section 107(a)(4)(B) of CERCLA, 42
U.S.C. § 9607(a)(4)(B). (Doc. No. 80, FAC, First and Second Counts.)
33.    On September 26, 2013, after a two-week bench trial in Phase I, which included
25 expert and lay witnesses, the Court issued findings of fact and conclusions of law
determining "that NCR is directly liable as an arranger under CERCLA, 42 U.S.C. § 9607
(a)(3)." (Doc. No. 432 at 2).
34.    The Court stated that its conclusion was "based on its finding, as a matter of fact,
that NCR understood, no later than 1969, that CCP broke was a waste, not a useful product,
because no rational paper recycler, fully apprised of the fact that NCR was, would use CCP
broke in its recycling process. Even after NCR's knew hazardous waste disposal necessarily
resulted from the process of recycling CCP broke, NCR continued to manufacture CCP and
Case l:15-cv-00635-GJQ Doc #1 Filed 06/16/15 Page 8 of 12 Page ID#8
encourage recyclers-like those in the Kalamazoo River Valley-to use CCP broke in the recycling
operations to avoid other, higher cost means of disposing of the CCP broke." (Doc. No. 432 at
p. 3).
35.    Trial in Phase II of the Georgia-Pacific Suit will determine relative shares of
liability among the parties, and is set for trial on September 22, 2015.
36.    In its Trial Brief in Phase I of the Georgia-Pacific Suit, NCR stated that
"[sjpecific intent to dispose of a hazardous substance is an element of arranger liability." Thus, a
company “may not be held liable as an arranger under CERCLA unless the plaintiff proves that
the company entered into the relevant transaction with the specific purpose of disposing of a
hazardous substance." (NCR Trial Brief at 12)(DocNo. 363)(internal citations omitted).
37.    The Insurers issued excess liability insurance policies to NCR during the period
1979-1986 (the "Excess Policies").
38.    Including by letter dated August 26, 2014, NCR advised that in the event NCR is
found liable for any costs in the Georgia-Pacific Suit, whether by settlement or judgment, NCR
will expect the Insurers to cover such loss under their respective insurance policies.
39.    The Insurers have disputed that such loss would be covered under the Excess
Policies.
40.    Because, inter alia, the Excess Policies contain "other insurance" clauses, the
Insurers are entitled to a declaration of rights that is binding on NCR and all of its other insurers.
41.    The Insurers and NCR have adverse interests with respect to whether NCR is
entitled to insurance coverage for its liability with respect to the Kalamazoo River Superfund
Site, including NCR’s liability alleged in the Georgia-Pacific Suit. Thus, an actual controversy
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exists among the parties concerning their respective rights and obligations under the Excess
Policies.

COUNT I
DECLARATORY JUDGMENT

42.    Plaintiffs repeat and reincorporate each of the allegations set forth in paragraphs 1
through 41 above, as though fully set forth herein.
43.    Plaintiffs seek a declaration of the rights and obligations of the parties under the
Excess Policies identified in Exhibit 1, including as set forth in paragraphs 44 through 53, below.
44.    Under the terms, conditions, and exclusions of the Excess Policies, there is no
coverage for NCR's claims with respect to the Kalamazoo River Superfund Site and the Georgia-
Pacific Suit.
45.    The Excess Policies do not provide coverage for NCR's claims with respect to the
Kalamazoo River Superfund Site and the Georgia-Pacific Suit, including because and/or to the
extent:
a.    Such claims arise, in whole or in part, from bodily injury or property
damage arising out of any discharge, dispersal, release or escape of smoke,
vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases,
waster materials or other irritants, contaminants or pollutants into or upon
land, the atmosphere or any watercourse or body of water unless such
discharge, dispersal, release or escape is both sudden and accidental;
b.    Such claims, in whole or in part, do not arise from an occurrence as that
term is used or defined in the Excess Policies;
c.    Such claims arise, in whole or in part, from bodily injury or property
damage expected or intended from the standpoint of the insured, or,
alternatively, the injury or damage was intentionally caused;
d.    Such claims arise, in whole or in part, from bodily injury or property
damage which occurred outside of the Insurers' policy periods; and
e.    Such claims do not arise, in whole or in part, from bodily injury or
property damage as those terms are used or defined in the Excess Policies.
46.    The Insurers have no obligations under the Excess Policies until and unless NCR
demonstrates proper exhaustion of all triggered policies and self-insured retentions.
47.    The Excess Policies do not contain a duty to defend and/or loss as defined in the
Excess Policies does not include investigation, defense or appeal costs and expenses nor costs or
expenses incident to any of the same.
48.    To the extent NCR failed to comply with any condition precedent to coverage,
there would be no coverage under the Excess Policies.
49.    To the extent coverage is sought for any occurrence that was underway when the
Excess Policies were issued, there would be no coverage under such Policies.
50.    There may be no coverage for fines, penalties, punitive, exemplary, or treble
damages under the terms of the Excess Policies, or on public policy grounds, and/or to the extent
of applicable law.
51.    To the extent there is any coverage for the claims under the Excess Policies, the
Excess Policies contain "other insurance" clauses that define or limit the Insurers' obligations to
NCR.
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52.    To the extent NCR’s claims are barred, in whole or in part, by the applicable
statute of limitations, there would be no coverage under the Excess Policies.
53.    To the extent NCR's claims are barred, in whole or in part, by the doctrines of
waiver, estoppel, or laches, there would be no coverage under the Excess Policies.
54.    Insofar as any of the Excess Policies were obtained by false or misleading
representations or omissions, there would be no coverage under such policy.

WHEREFORE, Plaintiffs respectfully request that the Court:
1.    Declare that Plaintiffs have no obligations to NCR with respect to the Kalamazoo
River Superfund Site and the Georgia-Pacific Suit;
2.    In the alternative, declare the respective rights and obligations of the parties under
the Excess Policies, and the extent, if any, of the Insurers' obligations to NCR with respect to the
Kalamazoo River Superfund Site and the Georgia-Pacific Suit;
3.    Award Plaintiffs their costs and attorneys' fees; and
4.    Grant Plaintiffs such other and further relief as may be necessary and just.
 

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.