RHODE ISLAND SUPREME COURT LINES Up ON SIDE OF POLICYHOLDER REGARDING CONSTRUCTION OF PRE-1986 QUALIFIED OR "SUDDEN AND ACCIDENTAL"

Journal of Risk and Insurance, June 2001 | Go to article overview

RHODE ISLAND SUPREME COURT LINES Up ON SIDE OF POLICYHOLDER REGARDING CONSTRUCTION OF PRE-1986 QUALIFIED OR "SUDDEN AND ACCIDENTAL"


POLLUTION EXCLUSION; FOCUSES BOTH ON DICTIONARY AND DRAFTING HISTORY OF EXCLUSION

Textron, Inc. v. Aetna Casualty and Surety Company, 754 A.2d 742 (Rhode Island Supreme Court, 2000)

Although the qualified pollution exclusion has not been part of the standard commercial liability policy (CGL) for 15 years, it continues to generate litigation and division among jurisdictions. Furthermore, not every state supreme court has taken a position on its application. In Textron v. Aetna, the Rhode Island Supreme Court finally faced the issue and determined that the exclusion does not apply to bar coverage for claims against a policyholder where the claimant was allegedly injured by pollution discharges that were gradual but unintentional. The qualified exclusion, in effect in most CGL policies between 1970 and 1986, provides that the CGL does not apply to pollution claims unless the alleged pollution damage stemmed from a discharge of pollutant that was "sudden and accidental." As is now well known, courts have divided nearly evenly on the question of whether the discharge of pollutant must be abrupt in order to provide coverage or whether a policyholder may be covered where it did not intend to po llute or expect to pollute.

From 1960 to 1973, Textron leased an 80-acre site in New York from Bell Aircraft, purchasing the site in 1973 and operating it until 1987 for the manufacture of aerospace-related equipment.

During its long-term use of the site, Textron's manufacturing processes generated toxic chemical wastes. To capture, contain, treat, and neutralize these wastes, it employed an artificial holding pond at the site as a waste receptacle and depository. After treating these wastes, Textron would release them into the site's sanitary drainage system. However, unbeknownst to Textron, some of this toxic waste gradually seeped from the pond and, over the years, contaminated or contributed to the contamination of the surrounding groundwater.

754 A.2d at 744.

The U. S. Environmental Protection Agency (EPA) eventually charged Textron with polluting various sites across the country, including the New York site that had been owned by Bell. The EPA sued Textron under Superfund, seeking to force Textron to clean up the land or pay the EPA for its cleanup. Textron sought coverage from vanous insurers, settling most claims except that with Insurance Company of North America (INA), which case reached the Rhode Island Supreme Court. The trial court granted partial summary judgment for INA. The supreme court reversed.

Acknowledging that courts have divided closely on this issue, [1] the supreme court found the term "sudden" in the "sudden and accidental" exception to the pollution exclusion to be sufficiently ambiguous to warrant construction in favor of the policyholder. According to the court:

Giving the word "sudden" its "plain everyday meaning" is no easy task. Both sides muster dictionary support of their respective positions, half of which accord a temporal meaning to the word and the other half of which give it the meaning of unexpected. This diversity proves only that the word's meaning is legitimately subject to different interpretations--in other words, that it is ambiguous.... Here, a multitude of cases exists on both sides. Furthermore, a slim but persuasive majority of other jurisdictions holds that the word "sudden" in this type of clause is ambiguous; that is, it is susceptible to more than one reasonable interpretation, as Textron argues. …

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RHODE ISLAND SUPREME COURT LINES Up ON SIDE OF POLICYHOLDER REGARDING CONSTRUCTION OF PRE-1986 QUALIFIED OR "SUDDEN AND ACCIDENTAL"
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