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Emerson Electric Co. v. Aetna Casualty and Surety Co.8/30/2004
cession on the part of Republic. Rather, more discovery is needed, as the parties marshalled their respective evidence with regard to the wrong temporal standard, as discussed above.
We must, however, now determine whether the grant of summary judgment in favor of Republic was proper on other grounds because the "known loss" doctrine may apply and preclude coverage. As a general rule in Missouri, it is against public policy to insure a loss that is known or apparent to the insured. United Capitol Insurance Co. v. Hoodco, Inc., 974 S.W.2d 572, 574 (Mo. App. 1998); Presley v. National Flood Insurers Ass'n, 399 F. Supp. 1242, 1244 (E.D. Mo. 1975). The "known loss" doctrine is rooted in preventing fraud on the part of the insured, who would obtain an insurance policy knowing that it has suffered or is in imminent danger of suffering a loss, and who would fail to disclose these facts to the insurer. Hoodco, 974 S.W.2d at 575. The practical application of this doctrine invokes two questions: (1) what is a "loss" and (2) when does a loss become "known"? Insurers would like to interpret both terms expansively-including in the definition of loss spills, discharges or contamination-and urge that such loss becomes known, thereby precluding coverage, at the time spills and discharges occur, contamination is first discovered, or when a third-party waste disposal facility used by the insured is closed and/or placed on the National Priorities List. See G. Rothschild, Resolving Environmental Insurance Claims, 20 No. 1 Prac. Real Est. Law 15, 25 (2004). Many states, including Missouri, have not had occasion to address this issue in the context of coverage under a comprehensive general liability (CGL) policy for damages due to environmental pollution. Of those that have, many hold that an environmental loss is not known until a policyholder learns that it has potential liability for investigation and/or remediation. See 20 No. 1 Prac. Real Est. Law at 25. However, as discussed below, there is disagreement as to whether the precise standard should be (1) that of policyholder's awareness of conditions, facts, or events that may lead to a future claim and the imposition of environmental liability; (2) that of substantial awareness of either impending environmental contamination or imminent CERCLA liability; or (3) that of awareness of a known liability, rather than merely a potential liability, at the time the insurance was purchased. See K. Kolesar, Insurance Coverage for CERCLA Claims Under Comprehensive General Liability Policies: Cleaning Up Hazardous Waste in the Legal Environment, 68 Notre Dame L. Rev. 549, 565-66 (1993).
Republic appears to argue that the applicable standard governing the outcome of this matter is the second standard, namely, that of substantial awareness on the part of plaintiffs of either impending environmental contamination or imminent (or known) liability. Republic specifically argues that even if plaintiffs did not intend or expect the property damage at the time they disposed of the waste, as long as plaintiffs knew or should have known, at the time they purchased the 1983-84 policy, that there was a substantial probability that they would suffer or had already suffered a loss, plaintiffs' claim for coverage should be barred.
Plaintiffs, on the other hand, contend that the third standard is applicable here. More specifically, plaintiffs argue that under Missouri law, claims under CGL policies, such as the one involved here, are not uninsurable under the "known loss" doctrine as long as all the material facts are not concealed and the extent of legal liability is yet to be determined. In support, plaintiffs principally rely on Monsanto Co. v. Aetna Casualty & Surety Co., No
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