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House of Clean, Inc. v. St. Paul Fire and Marine Insurance Co.

ELR Citation: 41 ELR 20200
Nos. No. 07-10839, (D. Mass., 05/27/2011)

A district court held that an insurer has no duty to defend or indemnify a dry cleaner for PCE pollution stemming from repeated flooding under the terms of its insurance policy. The policy contained a pollution exclusion clause, and the dry cleaner argued that the exception for sudden and accidental occurrences should apply. It is clear from the case law that an unexpected or one-time event, such as a fire or a flood, on its own constitutes a sudden and accidental occurrence. It is also well-settled that pollution discharges caused by an insured's routine and regular business practices are not considered sudden and accidental. Here, the basement floodings were sudden and accidental events but the storage of PCE powder in cardboard boxes in the dry cleaner's basement was an intentional and regular business practice. The court ultimately concluded that the first time the basement flooded, the release of PCE qualified as sudden and accidental, but thereafter the dry cleaner's continued practice of storing PCE in the same manner for 16 years was intentional and the resulting pollution was not accidental. Accordingly, the PCE discharges caused by the flooding were not sudden and accidental, and the insurance policy's pollution exclusions apply.