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City of Grosse Pointe Park v. Michigan Municipal Liability & Property Pool10/30/2003
UNPUBLISHED
In this action for declaratory judgment involving an insurance coverage dispute, defendant Michigan Municipal Liability and Property Pool (the Pool) appeals as of right the circuit court's order granting plaintiff City of Grosse Pointe Park (the Park) summary disposition on its breach of contract claim and awarding the Park indemnification for the Park's share of the settlement amount in an underlying class-action. The Park cross-appeals several rulings. Because we conclude that questions of fact remained regarding the parties' construction of the pollution exclusion and whether the Pool was estopped from asserting the absolute pollution exclusion clause, we reverse the grant of summary disposition to the Park and remand for further proceedings. We also direct that the court address exclusions (b) and (c) to Coverage D. In all other respects, we affirm.
Since 1940 or earlier, pursuant to written agreements with the City of Detroit, the Park utilized Detroit's sewer system and discharged combined sewage and stormwater flow to Fox Creek, a neighborhood creek in Detroit just across the Park border, during storm events when the combined sewer flow (CSF) exceeded the park's storage capacity. Fox Creek area residents complained numerous times, dating back to the 1940s, regarding the discharge. Beginning around the 1970s, the Park obtained permits to discharge combined sewage overflow to FoX Creek under the National Pollutant Discharge Elimination System (NPDES), to comply with the Federal Water Pollution Control Act (Clean Water Act), 33 USC 1251 et seq.
Beginning in 1985, through and including 1995, the Park purchased from the Pool one year "occurrence based" commercial general liability (CGL) policies. The instant case involves the policy issued on August 1, 1994, and effective from that date until August 1, 1995.
Underlying the instant case is Etheridge et al v Grosse Pointe Park , a class action in which the plaintiffs sought damages and injunctive relief as a result of the Park's discharge of CSF into Fox Creek, along and near which the Etheridge plaintiffs lived. The City of Detroit was also named as a defendant in the Etheridge action.
The Etheridge complaint was filed on September 14, 1995. The Pool provided a defense to the Park under a reservation of rights letter dated October 6, 1995, which letter quoted the CGL's pollution exclusion clause, among other provisions. See n 7, infra. The Etheridge suit proceeded, a special facilitator was appointed in June or July 1997, and after facilitation hearings on August 10 and 26, 1997, and while dispositive motions were pending, a settlement in principle was reached, under which the Park and City of Detroit each agreed to pay the Etheridge plaintiffs $1.9 million, and to take steps needed to terminate sewage discharge into Fox Creek.
After the Pool notified the Park that it would deny indemnification coverage, the Park filed the instant suit asserting that the Pool was obligated to pay the $1.9 million settlement. On the parties' cross-motions for summary disposition, the circuit court determined that the Pool was equitably estopped from asserting the absolute pollution exclusion because it had paid sewage backup claims of the Park's residents in the past. The court granted the Park's motions for summary disposition on Coverages A and D, finding the discharges constituted "occurrences" under the policy, and ordered the Pool to pay the Park the amount of the Etheridge settlement. This appeal and cross-appeal ensued.
I.
The Pool argues that there was no genuine issue whether the absolute pollution exclusion precluded coverage in Etheridge, and that the c
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