Opinion ID: 682466
Heading Depth: 2
Heading Rank: 2

Heading: The Sudden and Accidental Exception to the Pollution Exclusion Clause

Text: 14 The pollution exclusion clause bars coverage for property damages caused by pollution unless the release of pollutants was sudden and accidental. Flanders argues that the term sudden is ambiguous because it is susceptible to more than one reasonable interpretation. Because ambiguous terms must be construed against the drafter of the policy, the insurer, and in favor of the insured, Flanders argues that the court should construe sudden to mean simply unexpected or unintended. Flanders reasons that its three policies provide coverage for property damage claims arising from the contamination at the MEW site because the contamination was neither intended nor expected. Cincinnati argues that the term sudden necessarily incorporates a temporal component and must be interpreted as abrupt or quick. The insurer urges this court to affirm the summary judgment granted in its favor, arguing that the releases of PCBs at the MEW site could be classified as neither abrupt nor quick, but occurred continually over a twenty year period. 15 Under Indiana law, the interpretation of an insurance policy presents a question of law to be decided by the court. Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind.1992). The insured has the initial burden of proving coverage under an insurance policy. Southbend Escan Corp. v. Federal Ins. Co., 647 F.Supp. 962, 966 (N.D.Ind.1986). If an insurer relies on an exclusion within a policy to deny coverage, the insurer must establish that the exclusion applies. Id. 16 Clear and unambiguous language in an insurance policy must be given its plain and ordinary meaning. Fidelity & Guar. Ins. Underwriters v. Everett I. Brown Co., L.P., 25 F.3d 484, 486 (7th Cir.1994) (citing City of Muncie v. United Nat'l Ins. Co., 564 N.E.2d 979, 982 (Ind.Ct.App.1991)). An unambiguous provision in an insurance policy must be enforced, even if it results in a limitation of the insurer's liability. Interstate Auction, Inc. v. Central Nat'l Ins. Group, Inc., 448 N.E.2d 1094, 1098 (Ind.Ct.App.1983). However, where the language of an insurance policy is ambiguous, in that it is susceptible to more than one reasonable interpretation, the court must construe the language in favor of the insured. Alexander v. Erie Ins. Exchange, 982 F.2d 1153, 1157 (7th Cir.1993) (citing Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind.1985)). 17 Although special rules of construction for terms within insurance policies have been developed due to the disparity in bargaining power between insurers and insureds, Southbend Escan Corp., 647 F.Supp. at 966, a court cannot create an ambiguity where none exists; if no ambiguity exists the policy will not be interpreted to provide greater coverage than the parties bargained for.... Alexander, 982 F.2d at 1157; see also Heller v. Equitable Life Assurance Society, 833 F.2d 1253, 1256 (7th Cir.1987) (interpreting Illinois law). If the underlying factual basis of a claim, even if proved true, would not result in liability under an insurance policy, the insurer may properly refuse to defend its insured. Cincinnati Ins. Co. v. Mallon, 409 N.E.2d 1100, 1105 (Ind.Ct.App.1980). 18 The proper interpretation of the phrase sudden and accidental within the pollution exclusion clause of the standard form comprehensive general liability policy has been the subject of enormous debate by courts and commentators alike. See generally Nancer Ballard & Peter M. Manus, Clearing Muddy Waters: Anatomy of the Comprehensive General Liability Pollution Exclusion, 75 Cornell L.Rev. 610 (1990). There is substantial disagreement among the courts regarding the meaning of sudden. The highest courts of Colorado, Georgia, Illinois, New Jersey, Washington, West Virginia, and Wisconsin have found the term sudden to be ambiguous, and have construed the term sudden to mean simply unexpected or unintended. 7 In contrast, the highest courts of Florida, Massachusetts, Michigan, Minnesota, North Carolina, and Ohio have found that the term sudden is unambiguous and has a temporal meaning. 8 A majority of federal appellate courts, anticipating the interpretation of sudden the highest courts in the remaining states might adopt, have ascribed a temporal meaning to the term. 9 19 Nearly every court that has examined the term sudden within the pollution exclusion clause has initially relied on dictionary definitions. Some dictionaries define sudden as happening without previous notice or with very brief notice; coming or occurring unexpectedly; unforeseen; unprepared for. See Black's Law Dictionary 1432 (6th ed. 1990); Webster's Third New International Dictionary 2284 (1981). Other dictionaries define sudden as occurring ... unexpectedly or without warning, abrupt, abnormally rapid, hurried. See The Concise Oxford Dictionary of Current English 1066 (1982). 20 Flanders argues that because sudden has more than one reasonable meaning, evidenced by these varied dictionary definitions, the term is necessarily ambiguous, and the court must apply the primary meaning that favors the insured, i.e., unexpected or unintended. We disagree. The existence of multiple dictionary definitions does not compel the conclusion that a term is ambiguous. New Castle County v. Hartford Accident and Indemnity Co., 933 F.2d 1162, 1193-94 (3d Cir.1991) (dictionaries are imperfect yardsticks of ambiguity); Trico Industries, Inc. v. Travelers Indemnity Co., 853 F.Supp. 1190, 1195 (C.D.Cal.1994) (nearly every word can be considered ambiguous when read by itself and out of context); Fireman's Fund Ins. Companies v. Ex-Cell-O Corp., 702 F.Supp. 1317, 1324 (E.D.Mich.1988) (if merely applying a definition in the dictionary suffices to create ambiguity, no term would be unambiguous). Nor does the presence of profound judicial disagreement over the interpretation of sudden make it ambiguous. New Castle County, 933 F.2d at 1196; Fireman's Fund Ins. Companies, 702 F.Supp. at 1323 n. 7. 10 21 We agree that sudden connotes an unexpected and unintended event or occurrence. However, sudden can also mean abrupt or quick, and we believe that in the context of the pollution exclusion clause, sudden must be construed as meaning both unexpected and abrupt. The standard form comprehensive general liability policy excludes coverage for property damage claims arising from pollution unless the release of the pollutants was both sudden and accidental. An accident is generally understood to mean an unexpected or unintended occurrence. Hartford Accident & Indemnity Co. v. United States Fidelity & Guar. Co., 962 F.2d 1484 (10th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 411, 121 L.Ed.2d 335 (1992). Sudden must necessarily mean more than simply unexpected or unintended if it is to be given any independent significance. See Smith v. Hughes Aircraft Co., 22 F.3d 1432, 1437 (9th Cir.1994) (quoting Shell Oil Co. v. Winterthur Swiss Ins. Co., 12 Cal.App.4th 715, 755, 15 Cal.Rptr.2d 815 (1993)) ( '[A]ccidental' conveys the sense of an unexpected or unintended event, while 'sudden' conveys the sense of an unexpected event that is abrupt or immediate in nature); Northern Ins. Co. v. Aardvark Associates, Inc., 942 F.2d 189, 192 (3d Cir.1991) (quoting Lower Paxton Township v. United States Fidelity & Guar. Co., 383 Pa.Super. 558, 557 A.2d 393, 402 (1989)) ( '[t]o define sudden as meaning only unexpected or unintended, and therefore as a mere restatement of accidental, would render the suddenness requirement mere surplusage' ); Lumbermens Mut. Casualty Co. v. Belleville Industries, Inc., 407 Mass. 675, 555 N.E.2d 568, 572 (1990) ([f]or the word 'sudden' to have any significant purpose, and not to be surplusage when used generally in conjunction with the word 'accidental,' it must have a temporal aspect to its meaning, and not just the sense of something unexpected). 22 Although the Georgia Supreme Court concluded that the multiple meanings of sudden rendered the term ambiguous, it explained the full meaning of sudden as including an abrupt beginning as well as an element of surprise: 23 [I]t is, indeed, difficult to think of sudden without a temporal connotation: a sudden flash, a sudden burst of speed, a sudden bang.... [O]n reflection one realizes that ... sudden does not usually describe the duration of an event, but rather its unexpectedness: a sudden storm, a sudden turn in the road, sudden death. Even when used to describe the onset of an event, the word has an elastic temporal connotation that varies with expectations: Suddenly, it's spring. 24 Claussen v. Aetna Casualty & Sur. Co., 259 Ga. 333, 380 S.E.2d 686, 688 (1989). Thus, a child might dart between two parked cars and appear suddenly in the path of an oncoming car. An ill patient might take a sudden turn for the worse. In turbulence, an airplane might experience a sudden change in altitude. As these examples illustrate, a sudden event is one with an abrupt or unexpected onset. 11 25 Our interpretation of sudden as meaning abrupt as well as unexpected or unintended comports with the Indiana Supreme Court's interpretation of sudden in the context of Indiana's Strict Product Liability Act, Ind.Code Ann. Secs. 33-1-1.5-1 through 33-1-1.5-8 (West 1983 & Supp.1992). See Reed v. Central Soya Co., Inc., 621 N.E.2d 1069 (Ind.1993); Martin Rispens & Son v. Hall Farms, Inc., 621 N.E.2d 1078 (Ind.1993).  '[S]udden' contemplates both the elements of time during which the damage occurs, as something marked by abruptness or haste, and the element of surprise in relation to the damage. Reed, 621 N.E.2d at 1075; accord, Martin Rispens & Son, 621 N.E.2d at 1089 (sudden, major damage must have happened quickly, unexpectedly and be of a calamitous nature). We see no reason to construe the term sudden in the context of the standard form comprehensive general liability policy any differently than the Indiana Supreme Court has interpreted it in the context of Indiana's Strict Product Liability Act. 26 Flanders argues that the drafting and regulatory history of the pollution exclusion clause contradicts Cincinnati's temporal construction of the clause. Although several courts have considered the public record from the development and regulatory approval of the pollution exclusion, see, e.g., Morton Int'l, Inc. v. General Accident Ins. Co., 134 N.J. 1, 629 A.2d 831 (1993), cert. denied, --- U.S. ----, 114 S.Ct. 2764, 129 L.Ed.2d 878 (1994), we will not look beyond the unambiguous policy language. See Dimmitt Chevrolet, Inc. v. Southeastern Fidelity Ins. Corp., 636 So.2d 700, 705 (Fla.1994). We believe that the phrase sudden and accidental within the pollution exclusion clause is  'clear and plain, something only a lawyer's ingenuity could make ambiguous.'  United States Fidelity & Guar. Co. v. Star Fire Coals, Inc., 856 F.2d 31, 34 (6th Cir.1988) (quoting American Motorists Ins. Co. v. General Host Corp., 667 F.Supp. 1423, 1429 (D.Kan.1987)). 27 Applying the unambiguous policy language to the facts of this case, we hold that property damage claims arising from the environmental contamination at the MEW site are outside the scope of coverage provided in Flanders's three insurance policies. The EPA determined that the PCB contamination at the MEW site resulted from years of improper waste handling and storage practices. 12 The EPA found that spills or leaks of transformer oil and dielectric fluids onto the surface soil had occurred over a twenty year period. 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. See Ray Industries, Inc. v. Liberty Mut. Ins. Co., 974 F.2d 754, 768-69 (6th Cir.1992) (under this theory, all releases would be sudden; one can always isolate a specific moment at which pollution actually enters the environment); Smith, 22 F.3d at 1438 (rejecting the insured's effort to break down its long-term waste practices into temporal components in order to find coverage). The recurring spills and leaks at the MEW site over a twenty year period were not sudden and accidental within the meaning of the pollution exclusion clause.