Jonesville Products, Inc. v. Transamerica Ins. Group, Docket No. 86746

• Decision Date: 04 May 1987
• Docket Number: Docket No. 86746
• Citation: 402 N.W.2d 46,156 Mich.App. 508
• Parties: JONESVILLE PRODUCTS, INC., Plaintiff-Appellant, v. TRANSAMERICA INSURANCE GROUP, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 46

402 N.W.2d 46

156 Mich.App. 508

JONESVILLE PRODUCTS, INC., Plaintiff-Appellant, v. TRANSAMERICA INSURANCE GROUP, Defendant-Appellee.

Docket No. 86746.

Court of Appeals of Michigan.

Submitted April 15, 1986.

Decided Dec. 2, 1986.

Released for Publication March 24, 1987.

Leave to Appeal Denied May 4, 1987.

Holahan, Malloy, Maybaugh & Monnich (by John R. Monnich), Troy, for plaintiff-appellant.

Stanton, Bullen, Nelson, Moilanen & Klaasen, P.C. (by Charles A. Nelson, Jackson, for defendant-appellee.

Before ALLEN, P.J., and MacKENZIE and SWALLOW, ^* JJ.

SWALLOW, Judge.

Plaintiff appeals from the trial court's grant of summary disposition to defendant, MCR 2.116(C)(10), on plaintiff's claim for a declaratory judgment that defendant had a duty to defend plaintiff under a contract of insurance between plaintiff and defendant. We reverse.

Gayle and Mary Alice Lape filed a complaint against plaintiff alleging that plaintiff, which operated its business on property adjacent to the Lapes', had permitted continuous discharge of Trichlorethylene (TCE) onto its property, resulting in contamination of the Lapes' soil, contamination of its well water, and possible physical harm to the Lapes.

When defendant refused to represent plaintiff under plaintiff's policy of insurance with defendant, plaintiff filed a complaint for a declaratory judgment that defendant had a duty to defend. Defendant answered and filed a motion for summary disposition, contending that the pollution exclusion provision in its policy freed it from any duty to defend. That exclusion, included in the policy and submitted with defendant's motion, provides:

"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."

Plaintiff countered with its own motion for summary disposition alleging that defendant had a duty to defend under the "sudden and accidental" exception to the pollution exclusion. Plaintiff's motion was supported by the affidavit of its vice-president averring that since November 19, 1980, plaintiff had disposed of all TCE by state-approved disposal companies. The affiant further claimed that he had no knowledge of prior complaints from authorities or private parties made to plaintiff regarding dumping or spillage from any cause of TCE on plaintiff's property.

The trial court found that the pollution exclusion provision relieved defendant of a duty to defend. The trial court concluded that the Lapes' allegation that the discharge of TCE had been "continuous" precluded a finding that defendant had a duty to defend under the "sudden and accidental" discharge exception to the exclusion.

In Detroit Edison Co. v. Michigan Mutual Ins. Co., 102 Mich.App. 136, 301 N.W.2d 832 (1980), this Court described an insurer's duty to defend:

"The duty of the insurer to defend the insured depends upon the allegations in the complaint of the third party in his or her action against the insured. This duty is not limited to meritorious suits and may even extend to actions which are groundless, false, or fraudulent, so long as the allegations against the insured even arguably come within the policy coverage. An insurer has a duty to defend, despite theories of liability asserted against any insured which are not covered under the policy, if there are any theories of recovery that fall within the policy. Dochod v Central Mutual Ins Co, 81 MichApp 63; 264 NW2d 122 (1978). The duty to defend cannot be limited by the precise language of the pleadings. The insurer has the duty to look behind the third party's allegations to analyze whether coverage is possible. Shepard Marine Construction Co v Maryland Casualty Co, 73 MichApp 62; 250 NW2d 541 (1976). In a case of doubt as to whether or not the complaint against the insured alleges a liability of the insurer under the policy, the doubt must be resolved in the insured's favor. 14 Couch on Insurance 2d, 51:45, p 538." 102 Mich.App. at 141-142, 301 N.W.2d 832.

In the present case, the Lapes' Count I laid out the factual allegations supporting their claim against the plaintiff:

"6. Upon information and belief, the Defendant employed the use of Trichlorethylene, hereinafter referred to as TCE, and other toxic chemicals in their ongoing enterprise.

"7. By employing the use of the dangerous chemical, TCE, the Defendant owed a duty to the Plaintiffs to exercise due care and caution in the use of the TCE and other highly toxic chemicals and the discharge of same.

"8. Defendant negligently discharged the TCE and other highly toxic chemicals onto its property and the TCE subsequently encroached upon Plaintiffs' property.

* * *

* * *

...