A wood treatment facility consisting of approximately twenty acres of land treated lumber products over a period of twenty years with creosote, pentachlorophenol and other chemical preservatives. It was customary during the two decades to wash the treatment cylinders, pump the waste onto the ground and spread it throughout the plant area for weed and dust control.

After lengthy and thorough investigations, the Arkansas Department of Pollution Control and Ecology and the United States Environmental Protection Agency took formal action directing the owners and operators of the site "to undertake action to protect the public health and welfare and the environment from the endangerment presented by the actual or threatened release of hazardous substances" from the site. The EPA order also directed the parties to take precise remedial actions. There were no demands for compensation.

Seven insurance companies issued comprehensive general liability policies to the facility owners and operators over the twenty year period. Each of the policies contained a provision that ". . . .the company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies." It was also provided that "the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage."

Legal action by the insureds seeking declaration of entitlement to defense and indemnification resulted in insurer filing of declaratory action seeking a declaration that the insurance "did not cover moneys expended (by the insureds) pursuant to the governmental actions. . . ."

The insureds appealed summary judgment by the trial court in favor of the insurers. The appeal court agreed that "cleanup costs are not encompassed within the meaning of the word 'damages' in the standard form (comprehensive general liability) policies at issue."

The judgment of the trial court in favor of the insurers and against the insureds was affirmed.

(GRISHAM ET AL., Appellants v. COMMERCIAL UNION INSURANCE COMPANY, ET AL., Appellees. United States Court of Appeals, Eighth Circuit. No. 89-1481. March 8, 1991. 927 F.2d 1039. CCH 1991-92 Fire and Casualty Cases, Paragraph 3156.)