• Fourth Circuit Affirms Holding that Insurers are Not Required to Defend or Indemnify Arsenic and Lead Contamination Lawsuits
  • July 22, 2013 | Author: George B. Hall
  • Law Firm: Phelps Dunbar LLP - Houston Office
  • The U.S. Fourth Circuit Court of Appeals recently upheld a South Carolina district court ruling that insurers had no obligation to defend or indemnify their insured in lawsuits relating to arsenic and lead contamination at one of the insured’s former sites. Ross Development Corporation v. PCS Nitrogen Incorporated, 2013 WL 2440844 (4th Cir. June 6, 2013).

    The insured sought a declaratory judgment that policies issued by two insurers covered its liability arising out of cleanup of environmental contamination from a site formerly owned by the insured and that the insurers had breached their duty to defend in refusing to defend. The district court granted the insurers’ motions for summary judgment, from which the insured and its judgment creditor from an underlying case appealed.

    Affirming, the Fourth Circuit held that absolute and qualified pollution exclusions excluded coverage for liability arising out of the underlying action under the Comprehensive Environmental Response, Compensation and Liability Act. The Fourth Circuit found that the underlying action "clearly alleged third-party property damages arising out of the discharge of pollutants or waste materials, triggering each policy’s respective qualified or absolute pollution exclusion,” and that the complaint "raised no possibility that the discharge was ‘sudden and accidental’ or, indeed, anything other than intentional or part of [the insured’s] ordinary course of business” for the exception to the qualified exclusion to apply.