United States Court of Appeals,
Eleventh Circuit.
No. 95-3058.
SOUTHERN SOLVENTS, INCORPORATED, Plaintiff-Appellant,
v.
NEW HAMPSHIRE INSURANCE COMPANY; Granite State Insurance
Company, Employers National Insurance Corporation, Defendants,
Canal Insurance Company, Defendant-Appellee.
Aug. 12, 1996.
Appeal from the United States District Court for the Middle
District of Florida. (No. 94-533-Civ-T-24E), Susan C. Bucklew,
Judge.
Before CARNES, Circuit Judge, and FAY and GIBSON*, Senior Circuit
Judges.
PER CURIAM:
Southern Solvents appeals the order of the District Court
granting Canal Insurance Company's motion for summary judgment.
894 F.Supp. 430. We VACATE the order of the District Court and
REMAND.
I. STATEMENT OF THE CASE
Prior to 1986, Southern Solvents, Incorporated (Southern)
operated a tetrachloroethylene ("PERC") distribution facility in
Tampa, Florida. PERC is a solvent used in the dry cleaning
industry. The PERC was held in storage tanks at Southern's Tampa
site and transported in 1,000 gallon tankers to retail dry cleaners
in the Central Florida area. 4,000 gallon tankers were also used
to transport PERC from Southern's PERC manufacturers to other
*
Honorable John R. Gibson, Senior U.S. Circuit Judge for the
Eighth Circuit, sitting by designation.
wholesale PERC distributors. Operations at the Tampa site were
discontinued sometime between 1984 and 1986.
At some time during the summer or fall of 1988, PJ Stubbs,
Southern's lessee at the Tampa site, notified Southern that the
Hillsborough County Health Department had found large levels of
PERC contamination in the site's groundwater. Southern hired an
environmental engineering company to test for contamination. Tests
coupled with a review of records and further investigation revealed
that four PERC releases had occurred at the site: in August or
September 1978, on April 29, 1982, in Summer 1982, and on July 16,
1983. Southern entered into a consent order with the Florida
Department of Environmental Regulation in August, 1989.
During its operations, Southern held comprehensive general
liability ("CGL") insurance under New Hampshire Insurance Company
and Granite State Insurance Company ("the AIG Companies"), and
occurrence-based umbrella liability insurance under Canal Insurance
Company ("Canal"), Employers National Insurance Company
("Employers"), and South American Insurance Company ("South
American"). Both Employers and South American are in receivership.
Southern notified the AIG Companies of the environmental
situation on March 15, 1989, Employers on April 29, 1992, and Canal
on or before June 30, 1992. All carriers refused to defend or
indemnify Southern. Southern then initiated a breach of contract
and declaratory judgment action against the AIG companies, Canal
and Employers.
Mediation was held and Defendants New Hampshire, Granite
State, and Employers settled and were dismissed. Defendant-
Appellee Canal moved for summary judgment alleging: 1) the
contamination was not "sudden and accidental" within the meaning of
the policy, 2) the insured did not give notice as soon as
practicable, 3) the insured made misrepresentations in the
application for insurance voiding the policy, and 4) the insured
breached the cooperation clause thus forfeiting coverage.
Although the District Court found that the initial discharges
were "sudden and accidental" within the meaning of the exception to
the pollution exclusion clause of the policy, it nevertheless found
that the resulting leaching has been continuous ever since the
initial discharge. The court stated that "[t]o rule that such
continuous pollution is "sudden and accidental' thwarts the policy
goals behind the exclusion." In granting Defendant-Appellee's
motion for summary judgment based on the "sudden and accidental"
argument, the District Court held that the public policy underlying
the pollution exclusion barred coverage. The court denied Canal's
other three arguments as moot. Final judgment was entered in favor
of Canal. Southern now appeals from the order of the District
Court.
II. STANDARD OF REVIEW
Summary judgment is proper in cases in which there is no
genuine issue of material fact. Fed.R.Civ.P. 56(c). We review the
District Court's grant of summary judgment de novo, applying the
same legal standards that bound the District Court. We must view
all of the evidence in the light most favorable to the non-moving
party. Samples ex. rel. Samples v. Atlanta, 846 F.2d 1328, 1330
(11th Cir.1988). The movant bears the initial burden of presenting
evidence sufficient to demonstrate the absence of a genuine issue
of material fact. Celotex Co. v. Catrett, 477 U.S. 317, 323, 106
S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). When the movant has
met its burden, the non-movant must then designate, by affidavits,
depositions, admissions, and answers to interrogatories, specific
facts showing the existence of a genuine issue for trial. Jeffery
v. Sarasota White Sox, Inc., 64 F.3d 590, 593-94 (11th Cir.1995).
III. ANALYSIS
Appellant contends that the District Court erred in granting
appellee's motion for summary judgment even though the court found
that the four identified PERC releases were "sudden and accidental"
within the meaning of the policy's pollution exclusion clause.
This "occurrence-based" policy defines the term "occurrence
as:
an accident which takes place during the policy period, or
that portion within the policy period of a continuous or
repeated exposure to conditions, which causes personal injury,
property damage ... neither expected nor intended by the
insured.
The policy's pollution exclusion clause provides:
It is agreed that this policy does not apply to ... property
damage arising out of the discharge, dispersal, release or
escape of smoke, vapors ... toxic chemicals, liquids or gases,
waste materials or other irritants, contaminants or pollutants
into or upon land ...; but this exclusion does not apply if
such discharge, dispersal, release or escape is sudden and
accidental.
R-1 (Exhibit E) (emphasis added).
Upon reviewing the evidence in the light most favorable to
Southern as the non-movant, the District Court found that the four
PERC discharges were separate and distinct events which were not
the result of day-to-day operations and that therefore, the
discharges were "sudden and accidental" for summary judgment
purposes.
However, the District Court found that coverage was
nevertheless barred because the leaching that resulted from the
initial discharges was continuous as opposed to "sudden and
accidental."1 Our reading of Florida law, specifically Dimmitt
Chevrolet, Inc. v. Southeastern Fidelity Insurance Corp., 636 So.2d
700 (Fla.1993), leads us to conclude that the District Court erred
in this respect. Under Florida law, the discharge must be sudden
and accidental, not the resulting environmental damage.
In Dimmitt, the Supreme Court construed a policy containing a
similar pollution exclusion clause to mean that:
(1) basic coverage arises from the occurrence of unintended
damages, but (2) such damages as arise from discharge of
various pollutants are excluded from the basic coverage,
except that (3) damages arising from the discharge of these
pollutants will fall within the coverage of the policy where
such discharge is sudden and accidental.
Dimmitt, 636 So.2d at 705 (emphasis added); see also St. Paul Fire
and Marine Insurance v. Warwick Dyeing, 26 F.3d 1195, 1203 (1st
Cir.1994) (pollution exclusion plainly refers to the discharge and
not to the environmental damages themselves); Hartford Accident &
Indemnity Co. v. United States Fidelity & Guaranty Co., 962 F.2d
1
The District Court reasoned that based on public policy
concerns of vigilance the discharges at issue were not covered by
the contract issued by Canal. However, "federalism proscribes
unwarranted federal judicial meddling in state matters because
such interference would "prevent the informed evolution of state
policy by state tribunals.' " Moore v. Sims, 442 U.S. 415, 429-
30, 99 S.Ct. 2371, 2380-81, 60 L.Ed.2d 994 (1979). Therefore,
"[federal courts are] not an appropriate forum for pronouncing [a
state's] public policy where the state constitution, statutes or
judicial opinions give no clear indication that such policy is
"well defined and dominant.' " American Home Assurance Company
v. Stone, 61 F.3d 1321, 1329 (7th Cir.1995) (citations omitted).
1484, 1491 (10th Cir.1992) (the discharge must be sudden and
accidental to qualify for coverage, not the pollution damage).
Based on the holding in Dimmitt and the unambiguous terms in the
policy issued by Canal it is clear that it is the actual discharge,
not the resulting damages or contamination, which must be sudden
and accidental in order to fall within the exception to the
pollution exclusion clause.
The trial court did not address Canal's contentions that it
was entitled to summary judgment based on the insured's: (1)
failure to give notice as soon as practicable, (2)
misrepresentations in the application which void the policy, and
(3) breach of the cooperation clause thus voiding coverage. We
leave these issues open upon remand.
IV. CONCLUSION
We VACATE the District Court's order granting summary judgment
and REMAND for proceedings in accordance with this opinion.