Guaranty Nat. Ins. Co. v. Vic Mfg. Co., No. 97-20730

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtBefore REAVLEY, DeMOSS and PARKER; REAVLEY
Citation143 F.3d 192
Parties28 Envtl. L. Rep. 21,366 GUARANTY NATIONAL INSURANCE COMPANY and Landmark American Insurance Company, Plaintiffs-Counter Defendants-Appellees, v. VIC MANUFACTURING COMPANY, Defendant-Counter Claimant-Appellant.
Docket NumberNo. 97-20730
Decision Date05 June 1998

Page 192

143 F.3d 192
28 Envtl. L. Rep. 21,366
GUARANTY NATIONAL INSURANCE COMPANY and Landmark American
Insurance Company, Plaintiffs-Counter Defendants-Appellees,
v.
VIC MANUFACTURING COMPANY, Defendant-Counter Claimant-Appellant.
No. 97-20730.
United States Court of Appeals,
Fifth Circuit.
June 5, 1998.
Rehearing Denied July 8, 1998.

Daniel F. Shank, Norman William Peters, Davis & Shank, Houston, TX, for Plaintiff-Counter Defendants-Appellees.

Kenneth Scott Statham, Lynn G. Haufrect, David H. Brown, Kathryn Lynn Hays, Vinson & Elkins, Houston, TX, for Defendant-Counter Claimant-Appellant.

Appeal from the United States District Court for the Southern District of Texas.

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.

Page 193

Background

Vic manufactures dry cleaning equipment that uses perchlorethylene (perc), a toxic chemical classified as a "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.

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 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

Page 194

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

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 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...

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112 practice notes
  • Miller v. Monumental Life Ins. Co., No. CIV 04-0970 JB/RHS.
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • June 30, 2005
    ...261 F.3d 466, 471 (5th Cir.2001); W. Alliance Ins. Co. v. N. Ins. Co., 176 F.3d 825, 831 (5th Cir.1999); Guar. Nat'l Ins. v. Vic Mfg., 143 F.3d 192, 193 (5th Cir.1998); Data Specialties, Inc. v. Transcon. Ins. Co., 125 F.3d 909, 911 (5th Cir.1997); Leafland Group-II, Montgomery Towers Ltd. ......
  • Nat. Union Fire Ins. Co. v. Puget Plastics, Civil Action No. B-05-050.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • August 12, 2009
    ...F.3d 825, 831 (5th Cir.1999)); Fiess v. State Farm Lloyds, 392 F.3d 802, 807 (5th Cir.2004) (citing Guar. Nat. Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir.1998)); Wallis v. United Servs. Auto. Ass'n, 2 S.W.3d 300, 303 (Tex.App.San Antonio 1999, pet. denied). "No duty to indemnify a......
  • Bitco Gen. Ins. Corp. v. Acadia Ins. Co., CIVIL ACTION NO. 1:18-CV-526
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • December 16, 2019
    ...Loving Home Care, Inc. , 363 F.3d 523, 528 (5th Cir. 2004) ; Harken Expl. Co. , 261 F.3d at 471 ; Guar. Nat'l Ins. Co. v. Vic Mfg. Co. , 143 F.3d 192, 194 (5th Cir. 1998) ; accord Colony Ins. Co. v. Custom Ag Commodities, LLC , 272 F. Supp. 3d 948, 958 (E.D. Tex. 2017). An insurer is obliga......
  • Texas Mut. Ins. Co. v. Wood Energy Group, Inc., Civil No. A-07-CA-530-LY.
    • United States
    • U.S. District Court — Western District of Texas
    • February 19, 2009
    ...the burden shifts back to the insured to prove that an exception to the exclusion applies. Guar. Nat'l Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir.1998) (applying Texas Under Texas law, insurance policies are subject to the rules of contract interpretation. Azrock Indus., 211 F.3d ......
  • Request a trial to view additional results
112 cases
  • Miller v. Monumental Life Ins. Co., No. CIV 04-0970 JB/RHS.
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • June 30, 2005
    ...261 F.3d 466, 471 (5th Cir.2001); W. Alliance Ins. Co. v. N. Ins. Co., 176 F.3d 825, 831 (5th Cir.1999); Guar. Nat'l Ins. v. Vic Mfg., 143 F.3d 192, 193 (5th Cir.1998); Data Specialties, Inc. v. Transcon. Ins. Co., 125 F.3d 909, 911 (5th Cir.1997); Leafland Group-II, Montgomery Towers Ltd. ......
  • Nat. Union Fire Ins. Co. v. Puget Plastics, Civil Action No. B-05-050.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • August 12, 2009
    ...F.3d 825, 831 (5th Cir.1999)); Fiess v. State Farm Lloyds, 392 F.3d 802, 807 (5th Cir.2004) (citing Guar. Nat. Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir.1998)); Wallis v. United Servs. Auto. Ass'n, 2 S.W.3d 300, 303 (Tex.App.San Antonio 1999, pet. denied). "No duty to indemnify a......
  • Bitco Gen. Ins. Corp. v. Acadia Ins. Co., CIVIL ACTION NO. 1:18-CV-526
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • December 16, 2019
    ...Loving Home Care, Inc. , 363 F.3d 523, 528 (5th Cir. 2004) ; Harken Expl. Co. , 261 F.3d at 471 ; Guar. Nat'l Ins. Co. v. Vic Mfg. Co. , 143 F.3d 192, 194 (5th Cir. 1998) ; accord Colony Ins. Co. v. Custom Ag Commodities, LLC , 272 F. Supp. 3d 948, 958 (E.D. Tex. 2017). An insurer is obliga......
  • Texas Mut. Ins. Co. v. Wood Energy Group, Inc., Civil No. A-07-CA-530-LY.
    • United States
    • U.S. District Court — Western District of Texas
    • February 19, 2009
    ...the burden shifts back to the insured to prove that an exception to the exclusion applies. Guar. Nat'l Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir.1998) (applying Texas Under Texas law, insurance policies are subject to the rules of contract interpretation. Azrock Indus., 211 F.3d ......
  • Request a trial to view additional results

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