CA1: insurance coverage fight over not-so-sudden discharge

Barrett Paving Materials v. Continental Insurance, Nos. 06-1951, 06-2017.  Ah, you gotta love insurance coverage litigation.  If you don’t love it, you need to get your head checked.  Anyway, “This case arises out of a dispute between Barrett Paving Materials, Inc. ("Barrett") and three of its insurers concerning the insurers' respective duties to defend Barrett against a third party complaint for contribution on a claim for environmental clean-up costs.”  You should keep reading.

This lawsuit began as a declaratory judgment action.  The underlying lawsuit involved the was that the “City of Bangor, Maine, sued Citizens Communications Company ("Citizens"), claiming that Citizens's manufactured gas plant had been discharging pollutants into the Penobscot River since 1851."  Wow!  150 years of pollution!  Most TV shows don’t last that long!

Like many policies, there was an exclusion for “sudden” discharges. But, in this case there were four insurance companies.  One of which seems to have disappeared.  Applying Maine law, the First explains that the question of whether an insurance company has a duty to defend is “exclusively” fact-specific.    Applying Travelers Indem. Co. v. Dingwell, 414 A.2d 220, 224 (Me. 1980), the First finds that the “sudden” exception doesn’t apply when the complaint doesn’t say “sudden.”  The First also notes that under Maine law there are cases where the underlying plaintiffs did state, in their complain, that the discharge was sudden.  And, the First explains, what I thought most people knew that, “The ‘true facts’ of the situation, however, are relevant only to Continental's ultimate duty to indemnify, not to its duty to defend.”

The District Court awarded attorneys fees, which the First also affirms, saying that Maine law was fairly clear (with cases that showed the differences between complaints for long-term discharge and sudden discharges), and therefore it wasn’t an abuse of discretion.

Finally, regarding the missing insurance company, the First holds that since it is gone, it isn’t an “other” policy for purposes of another umbrella policy, and it coverage wasn’t concurrent with the policy that is seeking to avoid defending this action.  However, the First leaves it to the parties burdens to explain what was or wasn’t covered, and they didn’t really try and reconstruct these policies.