“Sudden and Accidental” Exception to Standard Pollution Exclusion Clause Not Ambiguous, Must Be Given “Temporal” Meaning
 
May 9, 2002
 

On February 26, 2002, the Connecticut Supreme Court issued its decision in the case in Buell Industries, Inc. v. Greater New York Mutual Ins. Co. et al., SC 16464. In this seminal decision, the Buell court definitively established the proper interpretation under Connecticut law, of the "sudden and accidental" exception to the standard pollution exclusion (standard pollution exclusion).

The Connecticut Supreme Court's decision in Buell addressed the meaning and applicability of the sudden and accidental exception to the standard pollution exclusion in the context of a dispute regarding whether comprehensive general liability policies issued by certain insurers provided coverage for environmental claims asserted by a manufacturer of metal parts. In Buell, the Connecticut Supreme Court held that, as a matter of Connecticut law, the term "sudden" as used in the standard pollution exclusion requires that the release in question occur abruptly or within a short amount of time.

Buell Industries, Inc. had filed a declaratory judgment action against its insurers for the costs of remediating environmental contamination, after they had denied coverage. Each of the policies at issue in Buell included a standard pollution exclusion clause, precluding coverage for any claims of property damage that were the result of the discharge of pollutants. The exclusion, however, also contains the so-called sudden and accidental exception, which reinstates coverage when the release of pollutants is sudden and accidental. The Connecticut Supreme Court held that "the pollution exclusion makes clear that pollution-related claims are excluded from coverage unless the claim is based on a release of pollutants that is 'sudden and accidental.'"

The Connecticut Supreme Court further found that "the focus of the pollution exclusion is on the release or discharge of the pollutants, which must be 'sudden and accidental,' rather than on the damage caused by such an event." The Court concluded "the word sudden was included in these policies so that only a temporally abrupt release of pollutants would be covered as an exception to the general pollution exclusion."

Expanding on its decision, the Connecticut Supreme Court noted the following:

In the context of these policies, it makes sense to include, within the definition of sudden, the temporally abrupt quality of the word. This becomes evident through the juxtaposition of the word ''sudden'' with the word ''accidental'' in the exception to the pollution exclusion. We agree with the statement by other appellate courts: ''The very use of the words sudden and accidental . . . reveal a clear intent to define the words differently, stating two separate requirements. Reading sudden in its context, i.e. joined by the word and to the word [accident], the inescapable conclusion is that sudden, even if including the concept of unexpectedness, also adds an additional element because unexpectedness is already expressed by accident[al]. This additional element is the temporal meaning of sudden, i.e. abruptness or brevity. To define sudden as meaning only unexpected or unintended, and therefore as a mere restatement of accidental, would render the suddenness requirement mere surplusage."

In ruling upon which party bore the burden of proof applicable to the sudden and accidental exception to the pollution exclusion, the Connecticut Supreme Court in Buell noted that, once an insurer has established that the underlying complaint alleges damages attributable to the discharge or release of a pollutant into the environment, "the burden shifts to the insured to demonstrate a reasonable interpretation of the underlying complaint potentially bringing the claims within the sudden and accidental discharge exception to exclusion of pollution coverage, or to show that extrinsic evidence exists that the discharge was in fact sudden and accidental." The Connecticut Supreme Court further held that, in opposing an insurer's motion for summary judgment on the application of the standard pollution exclusion, an insured couldn't rely on mere speculation in order to meet its burden of demonstrating that the discharge at issue was "sudden and accidental." The Court also held that the insured cannot "'rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment.'" Where the insured failed to meet its burden, summary judgment was properly entered in favor of the insurer.

This decision may be viewed online at http://www.jud.state.ct.us/external/supapp/Cases/AROcr/259cr38.pdf.

For more information, contact Peter J. Duffy at 888-688-8500.