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Prime Tanning Co. v. Liberty Mutual Insurance Co.

ELR Citation: 40 ELR 20023
Nos. No. CV-09-359-B, (D. Me., 11/10/2010)

A district court held that an insurer has no duty to defend or indemnify a leather tanning company in underlying lawsuits brought by farmers who used sludge from the company's tanning activities as fertilizer. The sludge, which the company applied on the farms free of charge to avoid landfilling fees, was contaminated with hexavalent chromium, a toxic chemical. The company argued that the policy's pollution exclusion clause did not apply because it prepared and used the byproduct as a fertilizer. But under Maine law, the pollution exclusion applies because the discharge was done in the course of a business traditionally associated with environmental pollution—the spreading of fertilizer. The exclusion also applies under Missouri law since it excludes coverage for damage arising from exposure to toxic substances. In the alternative, the company argued that the policy's sudden and accidental exception applied. But the spreading of fertilizer was neither sudden nor accidental.