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Morrow Corp. v. Harleysville Mut. Ins. Co.

Citation: 30 ELR 20657
No. No. Civ.A. 99-1782-A, 101 F. Supp. 2d 422/(E.D. Va., 06/22/2000)

The court holds that two insurers did not have a duty to defend or a duty to indemnify an insured dry cleaning store owner for soil and groundwater contamination while policies containing absolute pollution exclusion clauses were in effect, but one of the insurers had a duty to defend the insured under additional policies containing a sudden and accidental exception and a pollution liability clause. The court first holds that the absolute pollution exclusion clauses in three policies clearly exclude coverage for any damage resulting from the discharge of pollutants. Thus, the insurers are free from any duty to defend or indemnify the insured from damage that occurred during those policy periods. Moreover, a sudden and accidental exception that was part of the absolute pollution exclusion clause did not survive replacement of the pollution exclusion clause by an attachment to one of the policies.

The court next holds that the allegations in the insured's complaint reasonably include sudden and accidental releases, and, thus, the insurer that issued the policy with a sudden and accidental exception has a duty to defend the insured. Although the releases at the store could be characterized as a continuous pattern of discharges, the inquiry at summary judgment is not whether the releases were in fact sudden and accidental, but simply whether the underlying complaint's allegations reasonably included sudden and accidental releases. The court then holds that the same insurer had a duty to defend based on a pollution liability clause contained in a subsequent policy that replaced the previous policy's pollution exclusion clause. By its terms, the pollution liability clause provided insurance coverage for precisely the type of damage alleged in the complaint. Further, although the contamination may have initiated before the policy with the pollution liability clause went into effect, contamination continued to occur during the relevant policy period. Moreover, while the complaint did contain a request for the unavailable relief of an order directing the insurer to cleanup the property, it also sought reimbursement costs, which are covered by the policy. Last, the court holds that environmental remediation costs constitute damages within the meaning of a comprehensive general liability insurance policy. Thus, the underlying claim for remediation costs falls within the policies issued by the second insurer.

The full text of this decision is available from ELR (15 pp., ELR Order No. L-236).

Counsel for Plaintiffs
William D. Sullivan
Collier, Shannon, Rill & Scott
3050 K St. NW, Ste. 400, Washington DC 20007
(202) 342-8400

Counsel for Defendants
Edward H. Grove III
Brault, Palmer, Grove, Zimmerman, White & Mims
10533 Main St., Fairfax VA 22030
(703) 273-6400

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