County of Fulton v. U.S. Fidelity and Guar. Co.

• Decision Date: 22 July 1993
• Citation: 195 A.D.2d 864,600 N.Y.S.2d 972
• Parties: COUNTY OF FULTON, Respondent, v. UNITED STATES FIDELITY AND GUARANTY COMPANY et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 972

600 N.Y.S.2d 972

195 A.D.2d 864

COUNTY OF FULTON, Respondent, v. UNITED STATES FIDELITY AND GUARANTY COMPANY et al., Appellants.

Supreme Court, Appellate Division,

Third Department.

July 22, 1993.

Saperston & Day, P.C. (Judith Treger Shelton, of counsel), Buffalo, for U.S. Fidelity and Guaranty Co., appellant.

Rowley, Forrest, O'Donnell & Hite, P.C. (John H. Beaumont, of counsel), Albany for Firemen's Ins. Co. of Newark, N.J., appellant.

Miller, Mannix & Pratt, P.C. (Benjamin R. Pratt, Jr., of counsel), Glens Falls, for respondent.

Mudge, Rose, Guthrie, Alexander & Ferdon (Robert D. Goldaber, of counsel), New York City, for Ins. Environmental Litigation Ass'n, amicus curiae.

Before WEISS, P.J., and MIKOLL, CREW, MAHONEY and CASEY, JJ.

MIKOLL, Justice.

Appeal from an order of the Supreme Court (White, J.), entered August 18, 1992 in Fulton County, which, inter alia, granted plaintiff's cross motion for summary judgment and declared that defendants must defend plaintiff in another action.

The issue on this appeal is whether the complaint alleges facts or grounds which bring the action within the protection purchased by plaintiff and within the scope of the risk undertaken by defendants. Plaintiff commenced this declaratory action against defendants, United States Fidelity and Guaranty Company (hereinafter USF & G) and Firemen's Insurance Company of Newark, New Jersey, seeking a declaration that both insurance companies were obligated to defend and indemnify plaintiff in a third-party action brought against plaintiff for any costs of clean-up of hazardous substances found at the landfill operated by plaintiff from 1957 to 1987 (hereinafter the third-party action).

Plaintiff alleged that between 1980 and 1981 it constructed seven solid waste transfer stations within Fulton County, that until 1989 solid waste was collected from the transfer stations and deposited at the landfill site, that any release of hazardous substances at the site was sudden and accidental, and that USF & G and Firemen's were thus obligated to defend and indemnify plaintiff pursuant to the respective insurance contracts issued by them. USF & G and Firemen's separately moved for summary judgment dismissing the complaint. Plaintiff opposed both motions and cross-moved for summary judgment.

Supreme Court granted plaintiff's cross motion for summary judgment, holding that because the allegations in the third-party complaint did not necessarily negate the possibility that the release of pollution upon the site was sudden and accidental, the pollution exclusion was inapplicable and that USF & G and Firemen's therefore had a duty to defend plaintiff in the third-party action. USF & G and Firemen's appeal.

USF & G and Firemen's contend that plaintiff has failed to meet the burden of establishing that the pollution exclusion does not apply here in that the allegations in the underlying complaint and the third-party complaint fall within the exception to the pollution exclusion clauses of the respective insurance contracts. They urge that because plaintiff has failed to raise a possibility that the insured may be held liable for some act or omission covered by the policy, they are not obligated to defend plaintiff (see, Meyers & Sons Corp. v. Zurich Am. Ins. Group, 74 N.Y.2d 298, 302, 546 N.Y.S.2d 818, 545 N.E.2d 1206).

For the pollution exclusion exception to apply, the underlying complaint and/or the third-party complaint "must allege a discharge, dispersal, release or escape of a toxic or hazardous waste which has actually resulted in pollution" (Technicon Elecs. Corp. v. American Home Assur. Co., 74 N.Y.2d 66, 74, 544 N.Y.S.2d 531, 542 N.E.2d 1048) and that the alleged discharge is both sudden and accidental (id., at 74-75, 544 N.Y.S.2d 531, 542 N.E.2d 1048; see, Powers Chemco v. Federal Ins. Co., 74 N.Y.2d 910, 911, 549 N.Y.S.2d 650, 548 N.E.2d 1301; Borg-Warner Corp. v. Insurance Co. of N. Am., 174 A.D.2d 24, 30-31, 577 N.Y.S.2d 953, lv. denied 80 N.Y.2d 753, 587 N.Y.S.2d 905, 600 N.E.2d 632). A "sudden" discharge is instantaneous, not long-lasting or...