REVISED, June 24, 1998

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 97-20730

_____________________

GUARANTY NATIONAL INSURANCE COMPANY

and LANDMARK AMERICAN INSURANCE COMPANY,

Plaintiffs-Counter

Defendants-Appellees,

versus

VIC MANUFACTURING COMPANY,

Defendant-Counter

Claimant-Appellant.

_______________________________________________________

Appeal from the United States District Court for

the Southern District of Texas

_______________________________________________________

June 5, 1998

Before REAVLEY, DeMOSS and PARKER, Circuit Judges.

REAVLEY, Circuit Judge:

Guaranty National Insurance Company sued Vic Manufacturing

Company, seeking a declaratory judgment that it did not have a

duty to defend Vic under its product liability insurance policy. 

The district court granted summary judgment in favor of Guaranty. 

We affirm.

Background

Vic manufactures dry cleaning equipment that uses

perchlorethylene (perc), a toxic chemical classified as a
 

140 C.F.R. § 261.32 (1997).

2

“hazardous waste” by the Environmental Protection Agency.1

Pilgrim Enterprises, Inc., purchased the equipment from Vic for

use in its dry-cleaning business. The equipment contaminated

Pilgrim’s property as well as adjoining properties. Pilgrim sued

Vic, together with other manufacturers of dry cleaning equipment

and suppliers of perc, seeking to recover substantial cleanup

costs. Harold and Georgina Agim, who live next door to a Pilgrim

facility, sought to intervene to recover for pollution on their

property.

Guaranty issued several general liability and umbrella

policies to Vic that cover the relevant period. The policies at

issue contain a “sudden and accidental” pollution exclusion which

states that the policy does not provide coverage for:

bodily injury or property damage arising out

of the discharge, dispersal, release or

escape of smoke, vapors, soot, fumes, acids,

alkalis, toxic chemicals, liquids or gases,

waste materials or other irritants,

contaminants or pollutants into or upon land,

the atmosphere or any water course or body of

water; but this exclusion does not apply if

such discharge, dispersal, release or escape

is sudden and accidental. (emphasis added)

The district court found that the Pilgrim suit did not allege

damages within the “sudden and accidental” exception to the

pollution exclusion, and, thus, that Guaranty had no duty to

defend Vic in the underlying suit.
 

2New York Life Ins. Co. v. Travelers Ins. Co., 92 F.3d 336,

338 (5th Cir. 1996).

 

3Fed. R. Civ. P. 56(c).

 

4Salve Regina College v. Russell, 499 U.S. 225, 239 (1991).

 

5See National Union Fire Ins. Co. v. Merchants Fast Motor

Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997).

 

6Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387

S.W.2d 22, 24 (Tex. 1965).

3

Discussion

We review a district court’s grant of summary judgment de

novo.

2 Summary judgment is proper when “the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to judgment as a matter of law.”3

We review a district court’s determination of state law de

novo.

4 The parties agree that Texas law governs this diversity

suit. Texas law provides that insurance coverage is determined

under the “Eight Corners” or “Complaint Allegation” test. The

court compares the four corners of the insurance policy with the

four corners of the plaintiff’s pleading to determine whether any

claim alleged by the pleading is potentially within the policy

coverage.5 The duty to defend is determined “without reference

to the truth or falsity of such allegations.”6

The insured bears the initial burden of showing that there

is coverage, while the insurer bears the burden of proving the
 

7Telepak v. United Servs. Auto. Ass’n, 887 S.W.2d 506, 507

(Tex. Civ. App.--San Antonio 1994, writ denied).

 

8Id.

 

9Heyden, 387 S.W.2d at 26.

 

10Mustang Tractor & Equip. v. Liberty Mut. Ins. Co., 76 F.3d

89, 91 (5th Cir. 1996).

 

11Id.

 

12Id. at 93 (citations omitted).

4

applicability of any exclusions in the policy.7 Once the insurer

has proven that an exclusion applies, the burden shifts back to

the insured to show that the claim falls within an exception to

the exclusion.8 The perc contamination is clearly within the

pollution exclusion, so Vic has the burden to show, at this stage

to plead satisfactorily, that the pollution was “sudden and

accidental.” Even so, all doubt is resolved in the insured’s

favor.9

The Texas Supreme Court has not addressed the “sudden and

accidental” pollution exclusion clause.10 This court, reviewing

Texas appellate court decisions and Texas contractual

interpretation rules, has held that the clause contains a

temporal element in addition to the requirement of being

unforseen or unexpected.11

The court held that the “sudden and accidental” requirement

unambiguously excluded coverage for all “pollution that is not

released quickly as well as unexpectedly and unintentionally.”12
 

13Heyden, 387 S.W.2d 22.

 

14Rhodes v. Chicago Ins. Co., 719 F.2d 116, 119 (5th Cir.

1983).

5

The general rule is that the insurer’s duty to defend is

determined solely from the allegations in the petition.13 A

total of four petitions have been filed in the underlying case:

Pilgrim’s Original petition, First Amended Petition, Second

Amended Petition, and Agim’s Plea in Intervention. An amended

pleading completely supersedes prior pleadings, such that the

duty to defend rests on the most recent pleading.14

In the Seconded Amended Petition, Pilgrim brings claims for

negligence, gross negligence, strict products liability,

negligent misrepresentation, breach of warranties, and violations

of the Texas Deceptive Trade Practices Act. The petition lists

37 dry-cleaning sites polluted with perc. The petition alleges

that Vic and the other manufacturers “were aware of the use of

PERC in the dry cleaning process and in this equipment and

materials, but despite such knowledge, designed the equipment in

a manner that was inherently defective and which would result in

spills and/or discharges of PERC during Plaintiff’s operations.” 

Additionally, Pilgrim alleges that Vic instructed Pilgrim to

drain perc into the sewage system knowing that perc would sink to

the bottom and remain a potentially hazardous material. The Plea

in Intervention that the Agim family filed alleges that Vic was

“aware of the use of PERC in the dry cleaning process, but

despite such knowledge, designed the equipment in a manner that
 

15The first two petitions are relevant in that Guaranty’s

duty to defend prior to the filing of the Second Amended Petition

is based on the earlier petitions. However, those petitions do

not even try to obscure the gradual by amending with “sudden and

accidental” as in the later pleading.

 

16Gonzales v. American States Ins. Co. of Tex., 628 S.W.2d

184, 187 (Tex. Civ. App.--Corpus Christi 1982, no writ) (emphasis

in original).

6

was inherently defective and which would result in spills and/or

sudden and accidental discharges of PERC during Pilgrim’s

operations.” Although the petitions append the words “sudden and

accidental,” they describe gradual pollution in the regular

course of the dry-cleaning business.15

The court may look at evidence outside the pleadings under

certain circumstances. A Texas court of appeals summarized the

rule on extrinsic evidence as follows: 

Where the insurance company refuses to defend

its insured on the ground that the insured is

not liable to the claimant, the allegations

in the claimant’s petition control, and facts

extrinsic to those alleged in the petition

may not be used to controvert those

allegations. But, where the basis for the

refusal to defend is that the events giving

rise to the suit are outside the coverage of

the insurance policy, facts extrinsic to the

claimant’s petition may be used to determine

whether a duty to defend exists.16

This court held in Western Heritage Ins. Co. v. River

Entertainment that the court may look to evidence outside the

pleadings and policy “when the petition does not contain
 

17998 F.2d 311, 313 (5th Cir. 1993) (citing State Farm Fire

& Cas. Co. v. Wade, 827 S.W.2d 448, 452-53 (Tex. Civ. App. --

Corpus Christi 1992, writ denied); see also John Deere Ins. Co.

v. Truckin’ U.S.A., 122 F.3d 270, 272 (5th Cir. 1997) (“If the

underlying complaint, however, does not allege facts, if taken as

true, sufficient to state a cause of action under the policy,

evidence adduced in a declaratory judgment action may also be

considered.” Vic tries to limit Western Heritage by pointing to

Lafarge Corp. v. Hartford Cas. Ins. Co.,

 61 F.3d 389 (5th Cir. 1995), which held that the exception set

out in Western Heritage is not a broad one. In that case,

however, the underlying petition clearly alleged damages which

were covered under the insurance policy. The question was

whether those damages occurred within the applicable coverage

period. Because the petition alleged damages from a continuous

event, the factual allegations were sufficient to trigger

coverage under the insurance policy in effect prior to the actual

date when the damages were discovered. 

7

sufficient facts to enable the court to determine if coverage

exists.”17.61 F.3d 389 (5th Cir. 1995).18 

To the extent that the Pilgrim pleadings are incomplete, the

extrinsic evidence shows that there is no duty to defend in this

case. The interrogatories demonstrate that the perc pollution

was not the result of “sudden and accidental” events. Pilgrim’s

answers list seventy-seven spills at nineteen of the facilities,

occurring over a period of approximately forty years. Several of

the listed spills actually are multiple spills, so that the perc

pollution is the result of over a hundred separate events. 

Listed events include multiple still boilovers, small spills of

perc upon removal and changing of filter cartridges, spills from

failed filter gaskets, and spills while cleaning the machines. 

The amounts range from small spills of undetermined amounts to

one spill of almost sixty gallons.
 

19Rhodes, 719 F.2d at 119.

 

20Snydergeneral Corp. v. Great American Ins. Co., 928 F.

Supp. 674, 680 (N.D. Tex. 1996) (citations omitted).

 

21Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d

81,82 (Tex. 1997)(citing National Union Fire Ins. Co., 939 S.W.2d

at 141.

 

2240 F.3d 146 (7th Cir. 1994).

8

A single covered claim will suffice to require the insurer

to defend the entire case.19 In this case, the factual

allegations do not create a single covered cause of action. Vic

cannot create a duty to defend by microanalyzing the case and

finding a single spill that may have been “sudden and

accidental.” The pollution exclusion clause prevents coverage

“where the insured has engaged in the deliberate discharge of

contaminants in the routine course of business over many years. 

The fact that the insured may have also experienced isolated

spills or minor accidents over the same period of time is

irrelevant.”20

The Texas Supreme Court recently confirmed that “a court

must focus on the factual allegations rather than the legal

theories asserted in reviewing the underlying petition.”21 In

this case, regardless of the catch phrases used in the petition,

pollution is not “sudden and accidental” when it consists of

repeated, regular discharges over numerous years in the usual

course of business operation.

A case out of the Seventh Circuit, Cincinnati Insurance

Company v. Flanders Electric Motor Service, Inc.,

22 provides a
 

23Id. at 154.

 

24See Quaker State Minit-Lube, Inc. v. Fireman’s Fund Ins.

Co., 52 F.3d 1522 (10th Cir. 1995) (Utah law); Smith v. Hughes

Aircraft Co., 22 F.3d 1432 (9th Cir. 1993) (California law);

Lumbermens Mut. Cas. Co. v. Belleville Indus., Inc., 938 F.2d

1423 (1st Cir. 1991); A. Johnson & Co., Inc. v. Aetna Cas. & Sur.

Co., Inc., 933 F.2d 66 (1st Cir. 1991) (Maine law); United States

Fidelity & Guar. Co. v. Star Fire Coals, Inc., 856 F.2d 31 (6th

Cir. 1988) (Kentucky law); Great Lakes Container Corp. v.

National Union Fire Ins. Co., 727 F.2d 30 (1st Cir. 1984) (New

Hampshire law); Cessna Aircraft Co. v. Hartford Accident & Indem.

Co., 900 F. Supp. 1489 (D. Kan. 1995). A California court has

reached an opposing result. In A-H Plating, Inc. v. American

Nat’l Fire Ins. Co.,

 67 Cal. Rptr.2d 113 (Cal. Ct. App. 1997), a California appellate

court found that there was a duty to defend under very similar

circumstances. However, the case is distinguishable on the

grounds that the court placed the burden on the insurer to prove

that the “sudden and accidental” exception to the pollution

exclusion did not apply. Id. at 116, 118. Texas law places the

burden on the insurer to show that an exclusion applies, but once

9

similar scenario. The insured company, Flanders, sent electric

transformers over a twenty year period to a service shop for

repairs. Flanders was later held liable for part of the cost to

cleanup leaks of polychlorinated biphenyls (PCBs) from

transformers at the repair site. The court held that the

insurer did not have a duty to defend or indemnify Flanders. 

“Because these releases of PCBs were commonplace events which

occurred in the course of MEW’s regular business, they cannot be

considered sudden and accidental. The fact that one or more of

these spills or leaks may have occurred suddenly and accidentally

does not alter our conclusion.”23 Several other circuits have

also held that numerous pollution discharges over the years are

not within the “sudden and accidental” exception to the coverage

exclusion.24.67 Cal. Rptr. 113 (Cal. Ct. App. 1997).25
it has done so, the insured bears the burden to show that an

exception to that exclusion applies. See

Snydergeneral, 928 F.Supp. at 680 n.5. Moreover, the court noted

that the evidence indicated only four or five spills, not of such

frequency that they could be considered expected. A-H Plating,

67 Cal. Rptr.2d at 118-19.

 

26955 S.W.2d 81 (Tex. 1997).

10

The trial court dismissed the issue of Guaranty’s duty to

indemnify Vic. Guaranty argues that the issue should be decided

at this time, based on the Texas Supreme Court’s recent decision

in Farmers Texas Mutual Insurance Company v. Griffin,26 in which

the Texas Supreme court held that the duty to indemnify is

justiciable in a liability lawsuit when the insurer has no duty

to defend. However, Guaranty stipulated in the trial court that

the issue of a duty to indemnify should not be decided at that

point. It was not decided by the district court and was not

brought forward in the appeal. Therefore we do not reach the

issue of Guaranty’s duty to indemnify.

AFFIRMED.