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Hartford Accident & Indem. Co. v. U.S. Fidelity & Guar. Co.

ELR Citation: 22 ELR 21446
Nos. No. 91-4057, 962 F.2d 1484/35 ERC 1570/(10th Cir., 04/30/1992)

The court, in a case of first impression under Utah law, holds that the "sudden and accidental" phrase in a comprehensive general liability policy pollution exclusion clause means abrupt or quick and unexpected or unintentional. An insurer denied indemnification to a natural gas company for continuous or routine, intentional discharges directly into the environment of waste products containing polychlorinated biphenyls (PCBs) from its natural gas transmission system, about which the company was unaware of the PCB contamination. The court first notes that an equivocal insurance policy must be interpreted in favor of the insured. The court next finds that "sudden" must be read with a temporal component. Given the conjunctive association of "sudden" with "accidental," the court holds that it is obliged to construe the terms as separate, conditional requirements for coverage, otherwise "accidental" is rendered redundant. The court holds that when the temporal element of "sudden" is joined with "accidental," there is no ambiguity and the policy must be interpreted in favor of the insurer. Though the meaning of "sudden and accidental" may include the unexpected, it plainly cannot comprehend unexpected, unintentional, and gradual. The court next holds that the pollution exclusion restores coverage only for polluting discharges that are "sudden and accidental," and not "occurrences" or pollution damage. The "occurrence" and pollution exclusion provisions speak to different eventualities. Though an accidental "occurrence" may be gradual, the discharge of pollution has more precise requirements for coverage. It is the discharge that must be sudden and accidental to qualify for coverage, not the pollution damage. Moreover, the PCB contamination that occurred with this discharge was unintended and unexpected, but not sudden.

Counsel for Defendant, Counter-Claimant/Appellant
Alan L. Sullivan, R. Stephen Marshall, William R. Richards
Van Cott, Bagley, Cornwall & McCarthy
50 S. Main St., Ste. 1600, Salt Lake City UT 84145
(801) 532-3333

Counsel for Defendants
Joy L. Clegg, Paul C. Droz
Snow, Christensen & Martineau
Ten Exchange Pl., 11th Fl., Salt Lake City UT 84145
(801) 521-9000

Before MOORE and McWILLIAMS, Circuit Judges, and HUNTER, District Judge.*