Niagara County v. Utica Mut. Ins. Co.
| Court | New York Supreme Court Appellate Division |
| Writing for the Court | DOERR |
| Citation | 80 A.D.2d 415,439 N.Y.S.2d 538 |
| Decision Date | 15 May 1981 |
| Parties | NIAGARA COUNTY, Respondent-Appellant, v. UTICA MUTUAL INSURANCE COMPANY, Appellant-Respondent. |
Page 538
v.
UTICA MUTUAL INSURANCE COMPANY, Appellant-Respondent.
Fourth Department.
Page 539
Palmer, Heffernan, Wickser & Beyer, Buffalo, for appellant-respondent; John Heffernan, Buffalo, of counsel.John V. Simon, Lewiston, for respondent-appellant; Sheldon Hurwitz, Buffalo, of counsel.
Before DILLON, P. J., and CARDAMONE, DOERR, DENMAN and MOULE, JJ.
DOERR, Justice.
Plaintiff Niagara County is one of several defendants in a series of lawsuits commenced by some 65 claimants in what has come to be known as the "Love Canal" litigation. The allegations contained in the several complaints are not substantially dissimilar. The defendants, collectively, are charged with recklessly dumping and abandoning chemicals, waste products and debris which were, or subsequently became, noxious, poisonous and inherently dangerous. The complaints also allege other theories of liability, including nuisance, violation of statutes and ordinances, wrongful conveyance of the allegedly contaminated properties to plaintiffs or their predecessors in title without notice of the complained of infirmities, strict liability and common law landowner's liability. The plaintiffs all claim damages and injuries caused by toxic wastes and chemicals which were dumped or abandoned at the Love Canal site where they resided.
At the time when the "Love Canal" litigation was commenced, and since January 1, 1975, there was in existence a special multi-peril liability policy issued by Utica Mutual Insurance Company, the defendant herein, to plaintiff Niagara County. As plaintiff received the various notices of claim and summonses and complaints in the underlying actions, it forwarded them to Utica Mutual pursuant to the multi-peril policy conditions. Utica Mutual disclaimed liability and refused to defend any of the actions. Niagara County thereupon commenced the present action for a declaratory judgment construing the insurance policy issued to it by defendant so as to, inter alia, require Utica Mutual to provide a defense to the County in the "Love Canal" litigation and to reimburse the County for expenses incurred to date in defending the said claims. 1
In its answer Utica Mutual asserted, inter alia, that no coverage exists because of a
Page 540
pollution exclusionary clause contained in the policy it had issued.Special Term granted partial summary judgment in favor of plaintiff declaring that Niagara County is entitled to a defense in the "Love Canal" litigation from Utica Mutual and that Utica Mutual reimburse the County for all reasonable expenses it has expended to date in defending the "Love Canal" claims, except for expenses incurred in bringing the action for declaratory judgment to determine coverage. 103 Misc.2d 814, 427 N.Y.S.2d 171.
The insurance policy in question states that coverage is provided to the insured for all sums, within the policy limits, which the insured shall become legally obligated to pay because of bodily injury or property damage to which the policy applies, caused by an occurrence, and that the insurance company has the right and duty to defend any suit against the insured seeking damages, even if any of the allegations or the suit are groundless, false or fraudulent. (It is not disputed that the underlying complaints allege an "occurrence" as referred to in this coverage provision.) This coverage provision is a basic ingredient of all liability policies. The exclusions contained in the policy which qualify the standard coverage provisions then become critical to the determination of whether coverage is provided.
The exclusionary clause which Special Term properly denominated as the "crux" of the proceedings provides as follows:
"This insurance does not apply:
* * *
* * *
"(f) 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."
The origin of this exclusion is statutory (Insurance Law, § 46, subds. 13, 14) and is required in all policies issued to "commercial or industrial enterprises". Indeed, the pollution exclusion clause contained in the policy tracks the language contained in the statute. Clearly, the addition of subdivisions 13 and 14 to section 46 of the Insurance Law was calculated to buttress New York's strict environmental protection standards. These standards could be undermined if commercial enterprises were able to purchase insurance to protect...
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