News & Insights

District Court Finds No Duty To Defend Environmental Claims

 Between 1978 and 2002, PCS and its predecessor sent equipment to facilities in North Carolina for repairs.  During the repairs, PCBs were released.  In 2003, the EPA launched an investigation of the site.  The EPA settled with potentially responsible parties following its investigation.  

In April, 2008, PCS put American Home on notice that it had been identified as a potentially responsible party for the release of PCBs and sought defense and indemnity in any related litigation.  The following year, some of the potentially responsible parties filed suit against PCS seeking contribution and reimbursement for costs related to the EPA settlement.  American Home accepted the defense of PCS in the underlying action pursuant to a reservation of rights.  PCS filed an action for declaratory judgment, and sought a judgment for defense and indemnity from American Home Insurance in two underlying actions seeking contribution. 

The United States District Court for the Eastern District of North Carolina held American Home had no duty to defend or indemnify PSC in two underlying actions seeking contribution.  PCS Phosphate Co. v. American Home Assur. Co., 46 ELR 20081 (E.D. N.C. April 14, 2016).  The Court held PSC’s insurance policy not only contained a pollution exclusion clause, but it also contained a sudden and accidental exception.  The Court found because there was no plausible allegation of sudden and accidental release of contaminants, coverage was not triggered and the insurer had no duty to defend or indemnify.