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Ogden Corp. v. Travelers Indem. Co.

Citation: 21 ELR 20862
No. No. 90-7613, 924 F.2d 39/32 ERC 1637/(2d Cir., 01/22/1991)

The court holds that two insurance companies are not required to defend or indemnify former operators of a scrap metal processing and storage business in an action for reimbursement of hazardous waste cleanup costs by the owner of the property where the business was conducted. One of the plaintiffs' insurance policies contained a pollution exclusion exception that provided that the insurer would defend the plaintiffs if there was any indication in a complaint filed against them that a discharge, dispersal, release, or escape of pollutants was sudden or accidental. Applying New York law, the court first holds that the contamination alleged in the complaint against the plaintiffs was not sudden. The complaint alleged that the discharge occurred continuously over a 33-year period. The court also notes that it is doubtful whether the continuous discharge of pollutants resulting from the purposeful operation of a scrapyard can be construed as accidental. The court next holds that, since there is no duty to defend, there is no corresponding duty to indemnify. Finally, the court holds that the plaintiffs' failure to notify the second insurance company until over two years after the property owner informed them of environmental problems at the site was unreasonable. The property owner's letter apprising plaintiffs of the situation should have alerted them to promptly notify their insurers.

Counsel for Appellants
Hugh N. Fryer
Fryer, Ross & Gowen
551 Fifth Av., New York NY 10176

Counsel for Appelless
Seth A. Ribner
Simpson, Thacher & Bartlett
425 Lexington Ave., New York NY 10017

James M. Sweet
Drinker, Biddle & Reath
1100 Philadelphia National Bank Bldg., Broad & Chestnut Sts., Philadelphia PA 19107

Before FEINBERG, TIMBERS and MINER, Circuit Judges.