CONTAMINATION OF PROPERTY OF OTHERS HELD NOT "SUDDEN" DESPITE "SUDDEN" RELEASE OF TOXINS

Commercial General Liability	Pollution Exclusion
Commercial Umbrella	Sudden and Accidental

Bell Lumber and Pole Company (Bell) treated poles used for power and telephone lines, beginning in the 1940's, with pentachlorophenol (penta). The poles were dipped in tanks containing penta, which occasionally dripped from the poles to the ground. There was also acknowledged leakage from tanks, pumps and pipes as well as spillage from tank overflow or boil over.

The Minnesota Pollution Control Agency requested cleanup of groundwater and soil contamination at or below the process area and made claim against the insured for investigation and cleanup costs.

Bell undertook the required cleanup and then brought a diversity action against its commercial general liability and umbrella carriers (USF&G) for declaratory judgment holding them liable for cleanup and costs resulting from the contamination. The trial court ruled for USF&G because of the pollution exclusions on the policies. Bell appealed.

The pollution exclusions excluded coverage for property damage arising out of the release of contaminants into the soil or groundwater. The only exception would apply if the release or escape was both "sudden and accidental."

The appeal court found it undisputed that the damage arose from release or escape of contaminants into the soil or groundwater. The question was whether the release or escape was sudden or accidental. The insured argued that the term "release" referred to the spillage of contaminants from their containers, not to their entry into the groundwater. It cited numerous cases of sudden and accidental spillage from containers.

The appeal court was not persuaded and agreed instead that the release in the exclusion was referring to when the pollutants left the insured's property and caused damage to a third party's property. Because that release was not accidental or sudden but instead occurred over a long period of time the appellate court affirmed the trial court decision that the pollution exclusion applied.

(BELL LUMBER AND POLE COMPANY, Plaintiff-Appellant v. UNITED STATES FIRE INSURANCE COMPANY ET AL, Defendants-Appellees. United States Court of Appeals for the Eighth Circuit. No. 94-2649. July 13, 1995. CCH 1995 Fire and Casualty Cases, Paragraph 5351.)