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Employers Ins. of Wausau v. Neal Feay Co.

ELR Citation: 39 ELR 20155
Nos. No. B196754, (Cal. App. 2d Dist., 06/24/2009)

A California appellate court affirmed a lower court decision that an insurer has no duty to defend or indemnify a metal coating company in underlying proceedings filed against it concerning soil and groundwater contamination at the company's metal anodizing facility. The insurance policy excluded coverage for property damage arising out of the release of pollutants into the environment unless the release was "sudden and accidental." The court ruled that under California law, the company must prove there was at least a potential that a sudden and accidental release occurred during the policy periods and was a substantial cause of the property damage at issue. The company failed to carry that burden. There was no substantial evidence that a sudden and accidental release potentially occurred during the policy period. Nor was there any substantial evidence that a sudden and accidental release contributed substantially to the alleged property damage alleged. And although the company's expert witness testified that small amounts of chemicals may have been spilled during the policy period, an expert's opinion that it is theoretically possible for an accidental release to have occurred during the policy period is not evidence that such a release actually occurred, or that it contributed more than trivially to the contamination. Because the company failed to "identify particular sudden and accidental events and prove they contributed substantially to causing" the groundwater contamination, the lower court properly concluded that there was no potential for coverage under the policy.