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Liberty Mut. Ins. Co. v. FAG Bearings Corp.

Citation: 29 ELR 20040
No. 97-1480 et al., 153 F.3d 919/(8th Cir., 09/08/1998)

The court affirms a district court decision holding that an insurer has no duty to indemnify a manufacturer for costs incurred in response to claims alleging trichloroethylene (TCE) contamination due to leaking equipment. The court first holds that it was not clearly erroneous for the district court to conclude that the only source of TCE pollution was airborne releases from the manufacturer's vapor recovery system. The manufacturer failed to set forth any facts to support its allegations that there were other releases of TCE pollution that could have caused the contamination at issue and were sudden and accidental. The court next holds that the district court properly held that the TCE releases were not sudden and accidental. Although the manufacturer may not have intended that such pollution occur, it did not do enough to stop the continuous recurrence of its vapor recovery system's malfunction so as to prevent future releases of TCE. Because the manufacturer was aware of the recurring malfunction, the TCE releases were not accidental. The court then rejects the manufacturer's argument that the district court erred by applying the pollution exclusion clause in its insurance policy to alleged personal injury claims. The pollution exclusion clause states that the insurance policy does not apply to bodily injury or property damage caused by pollution.

The court also holds that the insurer is not entitled to reimbursement of all defense costs paid to the manufacturer. The policies at issue provide that the insurer has the duty to defend any suit against the manufacturer seeking damages caused by bodily injury or property damage. The underlying complaints in this action allege claims for bodily injury and property damage. Therefore, the insurer remained obligated to defend the manufacturer so long as there remained any question as to whether the underlying claims were covered by the policies. Upon determination that the pollution was not sudden and accidental and that the claims against the insurer were excluded from coverage, the district court properly concluded that the insurer's duty to defend the manufacture in this action expired. The court next holds that the manufacturer failed to show that the district court properly denied its Fed. R. Civ. P. 60(b) motion for a new trial based on new evidence. The manufacturer failed to show that it exercised due diligence to discover the new evidence before the district court issued its summary judgment order.

Counsel for Appellee
Paul A. Williams
Shook, Hardy & Bacon
One Kansas City Pl.
1200 Main St., Kansas City MO 64105
(816) 474-6550

Counsel for Appellant
Daniel R. Young
Law Offices of Bryan Cave
3500 One Kansas City Pl.
1200 Main St., Kansas City MO 64105
(816) 474-7400/374-3200

Before McMillian and Hansen, JJ.