United Nuclear Corp. v. Allstate Ins. Co. (New Mexico Court of Appeals, March 9, 2011)
This environmental coverage dispute arose from claims that plaintiff policyholder, United Nuclear Corp. (UNC), discharged contaminants in the course of its mining operations during the 1970’s and 1980’s. Specifically, plaintiff policyholder was sued in state court by a mineral lessor, Santa Fe Pacific Gold, for discharging pollutants at one of the policyholder’s New Mexico mines. Allstate provided UNC comprehensive liability insurance, but disclaimed coverage arguing that the claims were barred under the qualified pollution exclusion.
The court of appeals noted that, under the policies issued by Allstate, property damage or personal injury caused by pollution was excluded from coverage, unless such pollution was "sudden and accidental." Thus, the issue before the court was whether the liabilities arising from UNC's pollution discharges fell within the "sudden and accidental" exception to the exclusion.
Adopting Tenth Circuit precedent in Mesa Oil, Inc. v. Ins Co. of N. Amer., 123 F.3d 1333, 10th Cir. 1997), the court interpreted the terms "sudden" and "accidental" by their plain and ordinary meanings and concluded that the liabilities for which UNC sought coverage were excluded because the pollution discharges that gave rise to those liabilities were neither sudden nor accidental. Specifically, in rejecting the policyholder’s arguments, the court noted that consistent with Mesa Oil, it would not strain to define “sudden” which it concluded “is an ordinary and unambiguous word.” Thus, the district court's decision granting Allstate’s motion for partial summary judgment was affirmed.
A copy of the decision can be found here
Paul Steck and Joanna Roberto