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SnyderGeneral Corp. v. Century Indem. Co.

ELR Citation: 27 ELR 21326
Nos. 95-11177, 113 F.3d 536/(5th Cir., 05/19/1997)

The court holds that environmental cleanup costs incurred by an insured who voluntarily undertook the cleanup are damages under the insured's comprehensive general liability policy and that a "care, custody, and control" exclusion in the policy only precludes coverage when the insured totally and physically manipulates property. The court first holds that cleanup costs are damages whether incurred by the government under the Comprehensive Environmental Response, Compensation, and Liability Act or by an individual who voluntarily undertakes the cleanup of hazardous waste. Such a reading of the subject insurance policy is consistent with the conclusions of several federal courts and with decisions of Texas courts. The court rejects the insurer's argument that the policy covers legal damages, not equitable relief such as the cleanup costs the insured incurred in voluntarily cleaning up approximately 500 gallons of trichloroethane spilled from an above-ground storage tank.

The court next holds that the term "sudden" in the pollution exclusion clause of the policy has a temporal component, and that the insured's allegation that the discharge occurred in a 24-hour period creates a question of fact as to the suddenness of the spill. Additionally, the court holds that under Texas law, the policy's care, custody, and control exclusion only precludes insurance coverage in which the insured totally and physically manipulates the property. Because the insurer failed to show that the insured totally and physically used or controlled the entire pool of contaminated groundwater, the insurer is not entitled to summary judgment.

Counsel for Plaintiff
David Reneker
Bush Craddock & Reneker
Texas Commerce Bank Bldg.
6517 Hillcrest Ave., Ste. 110, Dallas TX 75205
(214) 750-3550

Counsel for Defendant
Joseph M. Malkin
O'Melveny & Myers
Embarcadero Ctr. W. Tower
275 Battery St., San Francisco CA 94111
(415) 984-8700

Before POLITZ, Chief Judge, and SMITH and DUHE, Circuit Judges.