Under Ground Contamination Not Covered When Known Discharge Above Ground

General Liability	No Duty To Defend
Pollution Exclusion	Sudden And Accidental

Complaints against the operator of a woodtreating facility alleged that contaminants were released above the ground from treated wood onto the soil, from the leaking of chemical storage containers, and from the overflowing of chemical collection pits. The pollutants eventually migrated under the ground. This occurred over several years and was known by the operator and confirmed by its general liability insurer.

The insurer denied any duty to defend against ensuing lawsuits based on the pollution exclusion clause contained in successive general liability policies it had issued to its insured. It filed a motion for summary judgment and appealed from a trial court judgment finding that it had a defense duty. The pollution exclusion clause contained two exceptions, providing that it did not apply "if such discharge, dispersal, release or escape is sudden and accidental or results from an underground seepage of which the insured is unaware."

The appeal court said that the "sudden and accidental" exception did not impose a duty on the insurer to provide defense. The release of contaminants was expected and intended in the course of the woodtreating process. The court concluded, furthermore, that the underground seepage exception to the pollution exclusion clause did not function to place a coverage obligation on the insurer in these circumstances. The initial discharge occurred above the ground and was known to the insured. The judgment of the trial court was reversed in favor of the insurance company and against the insured.

LIBERTY MUTUAL INSURANCE COMPANY ET AL, Appellants v. LONE STAR INDUSTRIES, INCORPORATED, Appellee. Florida District Court of Appeal, Third District. No. 90-2498. September 13, 1995. CCH 1995 Fire and Casualty Cases, Paragraph 5442.