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West Bend Mut. Ins. Co. v. U.S. Fidelity & Guar. Co.

ELR Citation: 40 ELR 20091
Nos. No. 09-2519, (7th Cir., 03/25/2010)

The Seventh Circuit affirmed a lower court’s grant of summary judgment in favor of insurers in a breach of contract action related to the insurers’ refusal to defend a gas station in a class action filed against it for allegedly contaminating groundwater in a residential neighborhood. Applying state law, the court held that the pollution exclusion in the insured station’s policy was sufficiently explicit to exclude gasoline contamination from coverage even though the policy did not explicitly define “pollutant” to include “gasoline.” In addition, based on the plain language of the contract, the policy made excess liability coverage coextensive with the primary commercial general liability coverage. Since the primary coverage effectively excluded liability from gasoline leaks, the excess liability policy did the same. Finally, despite weak wording, the policy’s products-hazard clause covered only knowingly completed market transactions and abandoned product. There is no doubt that the class action was predicated on the accidental leak of gasoline from the insured’s storage tanks, and there was never any contention that the gas station abandoned its product. Accordingly, the policy does not provide an independent source of recovery.