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Fireman's Fund Ins. Cos. v. Ex-Cell-O Corp.

Citation: 19 ELR 20911
No. No. 85-71371, 702 F. Supp. 1317/(E.D. Mich., 12/14/1988) "Sudden and accidental" construed

The court holds that the sudden and accidental exception to the pollution exclusion clause of a comprehensive general liability insurance policy contains a temporal aspect meaning only a short time rather than incorporating the concept of an unexpected and unintended event from the viewpoint of the insured. In a note, the court first rejects insureds' argument that conflicting judicial interpretations establish as a matter of law that the sudden and accidental exception is ambiguous, though such interpretations may provide some evidence of ambiguity. The court also notes that the absence of a definition of "sudden and accidental" in a policy does not establish ambiguity. The court then holds that the term "sudden and accidental" in these insurance policies has a temporal aspect and does not mean unexpected. The term "accident" is not defined as including continuous or repeated exposure to conditions, as insureds argue; rather, this language is part of the definition of "occurrence" contained in the policies. The court holds that the words "sudden and accidental" are not ambiguous or conflicting. "Happening or coming unexpectedly" is not the preferred definition of "sudden" in this context, since the best sense of a word is the one that most aptly fits the context of an actual utterance. Moreover, interpretation of "sudden" as "unexpected and unintended" is not supported by Michigan law. The court also holds that the pollution exclusion clause makes no distinction between active versus passive polluters. The court holds that "sudden" as used in the exception to the pollution exclusion clause means brief, momentary, or lasting only a short time. Although "sudden" can mean unexpected or unintended in some contexts, interpreting the word thusly here would render "accidental" as surplusage, since this is the usual meaning of "accidental."

The court holds that insureds have not shown that the state of New Hampshire, where several of the hazardous waste sites are located, has a state policy against pollution exclusion clauses. Even if there were a state policy against these clauses, it would not render the pollution exclusion in these policies inapplicable to the New Hampshire sites, because the policies were drafted elsewhere. The court holds that the applicable law is that of Michigan, the place of contract performance. Since Michigan has no policy against pollution exclusion clauses, the court holds, the pollution exclusion clauses in these insurance policies apply to the New Hampshire sites. Finally, the court holds that the policyholders have the burden of proving that the sudden and accidental exception to the pollution exclusion clause applies. The policyholders have greater access to information about their own activities and it would be unfair to require the insurers to investigate the nature of the insureds' numerous discharges.

Counsel for Plaintiffs
Jeffrey Silberfeld
Rivkin, Radler, Dunne & Bayh
EAB Plaza, Uniondale NY 11556-0111
(516) 357-3000

Counsel for Defendants
Robert B. Webster, Richard C. Sanders
Hill, Lewis, Adams, Goodrich & Tait
32nd Fl., 100 Renaissance Ctr., Detroit MI 48243
(313) 259-3232