968 F.2d 707 (8th Cir. 1992), 91-2252, Aetna Cas. and Sur. Co. v. General Dynamics Corp.
|Docket Nº:||91-2252, 91-2254.|
|Citation:||968 F.2d 707|
|Party Name:||AETNA CASUALTY AND SURETY COMPANY, Appellant, v. GENERAL DYNAMICS CORPORATION, Appellee. AETNA CASUALTY AND SURETY COMPANY, Appellee, v. GENERAL DYNAMICS CORPORATION, Appellant.|
|Case Date:||July 06, 1992|
|Court:||United States Courts of Appeals, Court of Appeals for the Eighth Circuit|
Submitted Jan. 9, 1992.
Rehearing Denied Sept. 2, 1992.
James E. Rocap, Washington, D.C., argued (Niki Kuckes and D. Bradley Clements, Washington, D.C. and Robert T. Haar, St. Louis, Mo., on the brief), for appellant.
James T. Price, Kansas City, Mo., argued (Thomas J. Wilcox and Marilyn P. Dunn, Kansas City, Mo., and Thomas E. Douglass and Bruce D. Ryder, St. Louis, Mo., on the brief), for appellee.
Before WOLLMAN and BEAM, Circuit Judges, and VAN SICKLE, [*] Senior District Judge.
WOLLMAN, Circuit Judge.
Aetna Casualty and Surety Company appeals, and General Dynamics Corporation cross-appeals, from the district court's 1 declaratory judgment interpreting four comprehensive general liability insurance policies. We affirm in part and reverse and remand in part.
Between May 1, 1975, and July 1, 1978, Aetna issued four consecutive comprehensive general liability insurance policies (CGLs) to General Dynamics. Each of the four policies provides that Aetna will indemnify General Dynamics only for those "sums which the insured shall become legally obligated to pay as damages because of ... bodily injury or property damage." Each policy further provides that Aetna shall have "the right and duty to defend any suit against the insured seeking damages on account of such bodily injury [or] property damage." Each policy also contained the following exclusionary provision:
This insurance does not apply:
... to 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.
After being served with lawsuits concerning environmental contamination at seven sites and with letters from federal and state environmental protection agencies or from private parties demanding that it clean up environmental wastes at nine other sites (the sixteen sites being located in eight different states), General Dynamics forwarded to Aetna notice of these lawsuits and environmental protection agency letters and demanded that Aetna provide a defense of the actions and reimburse any sums paid by General Dynamics to resolve the matters. In response, Aetna denied coverage as to two of the sites, but agreed to defend the other lawsuits under a reservation of rights. Aetna later withdrew its defense commitment and filed this action for declaratory judgment in November of 1988.
The district court held that the case was not ripe as to four of the sixteen sites because no suit had been filed nor any settlements achieved at the four sites. As to the remaining twelve sites, the district court applied this court's decision in Continental Insurance Co. v. Northeastern Pharmaceutical & Chemical Co., 842 F.2d 977 (8th Cir.) (en banc ), cert. denied, 488 U.S. 821, 109 S.Ct. 66, 102 L.Ed.2d 43 (1988) (NEPACCO ). The district court held that Aetna had no duty to defend or indemnify General Dynamics in connection with suits seeking solely the recovery of environmental response costs because the CGL term "damages," under Missouri law, does not include equitable relief. At six of the twelve sites, however, claims were included for damage to natural resources. As the district court noted, under NEPACCO claims for natural resource damages are claims for "damages." Id. at 983-84, 987. The district court then determined that the CGL's pollution exclusion did not exempt Aetna from its duty to defend claims for natural resource damages at the six sites. It reasoned that the words "sudden and accidental" mean only "unexpected."
The district court also determined that Aetna's duty to defend General Dynamics against "any suit ... seeking damages" was not triggered by the demand letters issued by the Environmental Protection Agency and its state counterparts in Massachusetts and New Hampshire. Finally, the district court concluded that Aetna was not obligated to pay for defense costs at
four sites on the basis of promises not contained in the CGLs.
Aetna contends that the district court improperly interpreted the pollution exclusion clause in the CGLs. As set forth above, this exclusion forecloses coverage for all discharges, dispersals, releases, and escapes of pollutants that are not "sudden and accidental." The district court found the term "sudden" to be ambiguous and concluded that a "sudden" discharge, dispersal, etc., may include events occurring over a long period of time, as long as the resulting damage is "unexpected."
A number of courts have found the pollution exclusion to be unambiguous and have concluded that "sudden" connotes a temporal element and requires that the pollution-causing event be abrupt, not gradual. See, e.g., Hartford Accident & Indemnity Co. v. United States Fidelity and Guaranty Co., 962 F.2d 1484 (10th Cir.1992) (Utah law); Liberty Mut. Ins. Co. v. Triangle Indus., Inc., 957 F.2d 1153, 1157 (4th Cir.1992) (New Jersey law); Northern Ins. Co. of N.Y. v. Aardvark Assoc., Inc., 942 F.2d 189, 192-94 (3d Cir.1991); A. Johnson & Co. v. Aetna Cas. & Sur. Co., 933 F.2d 66, 72-73 (1st Cir.1991); Ogden Corp. v. Travelers Indem. Co., 924 F.2d 39, 42 (2d Cir.1991); Florida Aerospace v. Aetna Cas. & Sur. Co., 897 F.2d 214, 219 (6th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 284, 112 L.Ed.2d 238 (1990); Olin Corp. v. Insurance Co. of N. Am., 762 F.Supp. 548, 560 (S.D.N.Y.1991); Liberty Mut. Ins. Co. v. SCA Serv., Inc., 412 Mass. 330, 588 N.E.2d 1346, 1349 (1992).
Some courts have reached a contrary result, holding that "sudden and accidental" means only unexpected or unintended. See, e.g., CPC Int'l Inc. v. Northbrook Excess and Surplus Ins. Co., 962 F.2d 77 (1st Cir.1992) (New Jersey law); New Castle County v. Hartford Accident and Indemnity Co., 933 F.2d...
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