Healy Tibbitts Construction Company v. Foremost Insurance Company

482 F. Supp. 830 (1979)

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Nature of the Case

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Facts

P is a building and construction company that maintains and uses floating equipment. P is an insurance company with headquarters in Michigan. Carl Hoag, P's insurance broker procured a policy from James E. Moore & Co. naming D as the insurer and P as the assured. The policy extended coverage to several vessels owned by P, including a crane barge known as the HT-4. The parties have stipulated that the policy was valid and in effect at all relevant times. P was obligated to give D notice of any incidents wherein the policy was to be invoked. The policy has a pollution exclusion where no liability attaches to D for any loss, damage, cost, liability, expense, fine, or penalty, of any kind or nature whatsoever, whether statutory or otherwise, imposed by the actual or potential discharge, spillage or leakage of oil, fuel, cargo, petroleum products, chemicals or other substances of any kind or description. P chartered the HT-4 to Claus von Wendel on a hire-purchase basis. On October 15, 1975, while being operated by von Wendel to remove piling and debris at the U.S. Naval Supply Center, Oakland, pursuant to a contract between von Wendel and the Navy, the barge began listing as water entered through a hole in the hull. von Wendel and his crew moved the HT-4 into shallow water, where it came to rest, partially submerged, still within the area of the Naval Supply Center. As the barge submerged, oil escaped into the water through an open vent in the fuel tank which supplied the boiler for the barge's steam crane. D agrees, as it must, that the sinking of the HT-4 was the proximate cause of the escape of oil. There was no evidence to suggest that the leakage would have occurred but for the sinking of the HT-4. P reported the sinking of the HT-4 and suggested the possibility that some liability might be imputed to P, as owner of the barge. The Navy eventually brought suit seeking $55,028.44 for cleaning up the oil that had escaped from the barge when it sunk. D invoked the pollution clause and P took this declaratory action.