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Power Eng'g Co. v. Royal Ins. Co. of Am.

ELR Citation: 30 ELR 20756
Nos. No. Civ.A. 98-B-1547, 105 F. Supp. 2d 1196/(D. Colo., 07/21/2000)

The court holds that under Colorado law, an insurer has no duty to defend or indemnify an industrial crankshaft reconditioning company that was the subject of state and federal lawsuits for spilling chromic acid at its plant, thereby contaminating surrounding groundwater. The insurer issued the reconditioning company three separate policies, and each policy contained an absolute pollution exclusion clause. The court first holds that the absolute pollution exclusions are unambiguous and, thus, the insurer has no duty to defend. The pollution exclusion endorsement to the first policy clearly and unambiguously replaced the limited pollution exclusion clause contained in the body of that policy. Additionally, the Notice to Policyholders in the second policy did not suggest that the insurer was confused about the coverage in the first policy and, therefore, did not render the first policy ambiguous. The first policy is unambiguous, thus, the court cannot consider the second policy in interpreting the first policy. But even considering the second policy, the first policy remains unambiguous. Further, an endorsement in the first policy that relates to business autos and trucks does not affect the pollution exclusion clause because the auto and truck endorsement is distinct from other portions of the policy. Language in one part of a policy cannot affect the coverage in another part unless it explicitly addresses coverage provided elsewhere in the policy. Likewise, the commercial property coverage in the second and third policies did not conflict with the pollution exclusions in those policies. The court next holds that the reasonable expectations doctrine and a state statute concerning notice to insureds does not render the second and third policies unenforceable. The pollution exclusion in the second and third policies did not reduce the coverage offered in the previous policies and, therefore, did not require written notice to the company. Last, the court holds that because the insurer does not have a duty to defend, it does not have a duty to indemnify.

The full text of this opinion is available from ELR (15 pp., ELR Order No. L-244).

Counsel for Plaintiffs
John J. Zodrow
Zodrow et al.
Independence Plaza
1050 17th St., Ste. 1700, Denver CO 80265
(303) 572-0243

Counsel for Defendant
Lorraine M. Armenti
McElroy, Deutsch & Mulvaney
1099 18th St., Ste. 3120, Denver CO 80202
(303) 293-8800