Opinion ID: 2975885
Heading Depth: 3
Heading Rank: 2

Heading: The meaning of “sudden and accidental”

Text: 8 No. 07-5060 The insurance policies provide no definition of the words “sudden and accidental,” and the parties disagree as to their meaning. While Plaintiff asserts that these words apply to any toxic discharge which is “unexpected and unintended,” (Plaintiff’s Br. 22,) Defendant argues that they only encompass discharges which are both unexpected and “abrupt in time.” (Defendant’s Br. at 21.) We find Defendant’s arguments more convincing. In Sunbeam Corp v. Liberty Mut. Ins. Co., 781 A.2d 1189 (Pa. 2001), the Supreme Court of Pennsylvania noted a consensus among Pennsylvania courts that “sudden and accidental” means “simply that damages resulting from a pollution discharge are covered only if the discharge itself is both sudden, meaning abrupt and lasting only a short time, and accidental, meaning unexpected.” Id. at 1194 (quoting Lower Paxton, 557 A.2d at 399) (emphasis added). Nevertheless, the court in Sunbeam added that this facially “unambiguous” meaning of “sudden and accidental” may not apply in the context of the insurance industry if that industry has adopted a different, customary meaning for that term. Id. at 503-04. Accordingly, the court remanded Sunbeam to allow fact finding on whether industry custom trumps the otherwise unambiguous meaning of “sudden and accidental.” Id. at 505. In the instant case, the district court conducted exactly the same inquiry into the customary meaning of “sudden and accidental” which the Supreme Court of Pennsylvania required in Sunbeam. Defendant presented several experts who suggest that, if “sudden and accidental” does have a meaning within the insurance industry, that meaning matches the lower Pennsylvania courts’ definition encompassing both abruptness and unexpectedness. Defendant’s expert Jerome McAvoy, a twenty-seven year veteran of the insurance industry with twelve years of experience in insurance 9 No. 07-5060 regulation, testified in a deposition that “‘Sudden’ meant quick or abrupt,” and that the “sudden and accidental” exemption was not meant to allow claims for “damage caused by gradual pollution discharges.” (J.A. 260.) Similarly, James Kilgore, who worked as an examiner in the Pennsylvania Insurance Department from 1965 until 1978, testified that I would have understood [“sudden and accidental”] to restrict pollution coverage to a pollution “accident.” That is precisely what the explanation says. Obviously, damage caused by gradual pollution discharges would be excluded. (J.A. 263-64.) Admittedly, Defendant’s expert Robert Lazarus reached a somewhat different conclusion than McAvoy and Kilgore. According to Lazarus, an insurance consultant, “the interpretation of the word ‘sudden’ is not universal” throughout the insurance industry. Instead, Lazarus maintains, “[i]t is individually interpreted by each company that writes the coverage . . . .” (J.A. 773.) While Lazarus’ testimony differs from that of Defendant’s other experts, however, his testimony does not lead to a different conclusion regarding the legal meaning of “sudden and accidental.” Applying the facts of the instant case to the legal framework created by Sunbeam, either McAvoy and Kilgore are correct that “sudden and accidental” has a customary meaning, in which case that meaning encompasses abruptness, or Lazarus is correct that “sudden and accidental” has no such customary meaning. If no customary meaning exists, however, then Sunbeam requires this Court to apply the facially unambiguous meaning of the term, and hold that “damages resulting from a pollution discharge are covered only if the discharge itself is both sudden, meaning abrupt and lasting only a short time, and accidental, meaning unexpected.” 781 A.2d at 1194. In either event 10 No. 07-5060 the result is the same: the “sudden and accidental” exemption applies only to toxic discharges which are both abrupt and unexpected. On appeal, Plaintiff cites no evidence in the record to rebut this conclusion, instead stating simply that “[a]lthough Mueller disagrees with the District Court’s determination of the meaning of ‘sudden and accidental’ for the purposes of this appeal, such issue is ultimately not relevant.” (Plaintiff’s Br. 22.) Presented with no arguments contradicting Defendant’s proposed meaning of “sudden and accidental,” we hold that these words mean both abrupt and unexpected under Pennsylvania law.