Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

City of South Sioux City v. Charter Oak Fire Insurance Co.

United States District Court, D. Nebraska

March 27, 2018

CITY OF SOUTH SIOUX CITY, NEBRASKA Plaintiff,
v.
THE CHARTER OAK FIRE INSURANCE COMPANY and PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendants.

          MEMORANDUM AND ORDER

          JOHN M. GERRARD UNITED STATES DISTRICT JUDGE

         The defendant, Philadelphia Indemnity Insurance Company, issued a commercial insurance policy to the plaintiff, the City of South Sioux City, Nebraska. Pursuant to that policy, Philadelphia agreed to indemnify the City for losses sustained as the result of environmental contamination. The City submitted a claim under that policy after it discovered that hydrogen sulfide gas had backed up in the City's sewer system. Philadelphia denied that claim. The City has sued Philadelphia for breach of contract, and Philadelphia has moved to dismiss that claim. For the reasons explained below, that motion will be denied.

         BACKGROUND

         In October 2016, the City began sending its sewage to Big Ox Energy, LLC, a waste disposal provider located in South Sioux City, Nebraska. Filing 1 at 2. Big Ox would remove methane gas from the City's sewage and discharge the treated waste back into the City's sanitary system (i.e., sewage system). Filing 1 at 2. But soon after the sewage returned to the City, residents began reporting an intense and unpleasant odor emanating from their plumbing. Filing 1 at 2. At some point, the residents discovered that the odor was the result of hydrogen sulfide gas that had backed up in the City's sewage system. Filing 1 at 3. Those residents filed tort claims against the City for property damage and bodily harm caused by the odor. Filing 1 at 3.

         According to the City, the backup of hydrogen gas was a result of contaminated sewage that had been discharged from Big Ox's facility. See filing 1 at 3. So, the City filed a claim with Philadelphia seeking indemnification under its environmental liability policy. See filing 1 at 3, filing 1-2 at 10. Pursuant to the policy, Philadelphia agreed to indemnify the City for losses "arising out of contamination on, under or migrating from [the] insured location"-which the policy specifically defined as 1615 1st Ave, South Sioux City, Nebraska (i.e. the address of City Hall). Filing 1-2 at 14 (emphasis omitted). The policy also contained a "non-owned location" endorsement which provided additional coverage for damages "arising out of contamination on, under or migrating from a non-owned location." Filing 1-2 at 28 (emphasis omitted). Philadelphia denied the City's claim, and the City has sued Philadelphia for its denial of coverage.

         STANDARD OF REVIEW

         A complaint must set forth a short and plain statement of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). This standard does not require detailed factual allegations, but it demands more than an unadorned accusation. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint need not contain detailed factual allegations, but must provide more than labels and conclusions; and a formulaic recitation of the elements of a cause of action will not suffice. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). For the purposes of a motion to dismiss a court must take all of the factual allegations in the complaint as true, but is not bound to accept as true a legal conclusion couched as a factual allegation. Id.

         And to survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint must also contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Iqbal, 556 U.S. at 678. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but has not shown-that the pleader is entitled to relief. Id. at 679.

         Determining whether a complaint states a plausible claim for relief will require the reviewing court to draw on its judicial experience and common sense. Id. The facts alleged must raise a reasonable expectation that discovery will reveal evidence to substantiate the necessary elements of the plaintiffs claim. See Twombly, 550 U.S. at 545. The court must assume the truth of the plaintiffs factual allegations, and a well-pleaded complaint may proceed, even if it strikes a savvy judge that actual proof of those facts is improbable, and that recovery is very remote and unlikely. Id. at 556.

         When deciding a motion to dismiss under Rule 12(b)(6), the Court is normally limited to considering the facts alleged in the complaint. If the Court considers matters outside the pleadings, the motion to dismiss must be converted to one for summary judgment. Fed.R.Civ.P. 12(d). However, the Court may consider exhibits attached to the complaint and materials that are necessarily embraced by the pleadings without converting the motion. Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003).

         DISCUSSION

         The parties' dispute turns on the legal significance of the "non-owned location" endorsement.[1] As briefly noted above, the underlying insurance policy contains a "non-owned location" endorsement requiring Philadelphia to indemnify the City for any losses it becomes legally obligated to pay "arising out of contamination on, under or migrating from a non-owned location." Filing 1-2 at 28. Philadelphia acknowledges that the City purchased a "non-owned location endorsement" and does not dispute its enforceability. Rather, the parties' disagreement turns on whether the endorsement covers contamination in this particular instance.

         Philadelphia raises two arguments as to why, in its view, the City's claim must be dismissed. First, Philadelphia claims that "the non-owned location" endorsement only provides coverage for materials generated at the City's insured location. Filing 12 at 13. And because the City's complaint fails to allege facts tracing the contamination to waste generated at the "insured location" (i.e., City Hall), Philadelphia urges dismissal. Second, Philadelphia claims that even if the "non-owned location" definition includes waste not linked to its "insured location, " the City's complaint still fails to state a claim for relief. To that end, Philadelphia contends that the contamination arose out of, and migrated from, the City's sewage system. And because the City's sewage system is owned and operated by the City, Philadelphia says, there is no coverage under the "non-owned location" endorsement. Filing 12 at 11.

         Philadelphia's former contention is easily disposed of, so the Court will begin there. In support of its argument that the "non-owned location" endorsement only provides coverage for materials generated at the City's insured location, Philadelphia points to the definition of "non-owned location." The endorsement specifically defines a "non-owned location" as "a facility used for the recycling, treatment, storage or disposal of the insured's waste or materials generated at [the] insured location, but only if at the time the facility accepts the insured's waste" the facility was not owned or operated by the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.