AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• The United Nuclear Corporation (UNC) was sued for environmental damages due to pollutants discharged during its mining operations in the 1970s and 1980s. UNC sought indemnification under its comprehensive liability insurance policies with Allstate Insurance Company, which included a "qualified pollution exclusion" clause. This clause excluded coverage for pollution-related damages unless the pollution was "sudden and accidental." The dispute centered on whether UNC's pollution discharges fell within this exception (paras 1-4).

Procedural History

• District Court of McKinley County: Granted Allstate's motion for partial summary judgment, concluding that the pollution discharges were neither sudden nor accidental, and thus, excluded from coverage under the insurance policies (para 7).

Parties' Submissions

• Defendant/Third-Party Plaintiff/Appellant (UNC): Argued that there are disputed material questions of fact regarding the meaning of the terms in the Allstate policies and the expectations of the parties concerning pollution coverage. UNC contended that "sudden" should mean "unintended" or "unexpected" and that the exception to the qualified pollution exclusion clause should cover gradually occurring pollution events. Alternatively, UNC argued that the term "sudden" should be deemed ambiguous (para 6).
• Third-Party Defendant/Appellee (Allstate): Asserted that UNC's claims were barred under the qualified pollution exclusion clause because the claims were for personal injury or property damage arising out of pollution discharges. Allstate maintained that the "sudden and accidental" exception could restore coverage only if UNC's pollution discharges were both "sudden and accidental," defining "sudden" as meaning "quick," "abrupt," or a temporarily short period of time, and "accidental" as meaning "unintended, unexpected, or by chance" (para 5).

Legal Issues

• Whether the liabilities arising from UNC’s pollution discharges are excluded from coverage under the insurance policies or fall within the "sudden and accidental" exception to the qualified pollution exclusion (para 1).

Disposition

• The Court of Appeals affirmed the district court's decision granting Allstate's motion for partial summary judgment, concluding that the pollution discharges were neither sudden nor accidental and thus excluded from coverage under the insurance policies (para 28).

Reasons

• The Court of Appeals, per Castillo, Chief Judge, with Kennedy, Judge concurring, and Vigil, Judge dissenting, held that the terms "sudden" and "accidental" are unambiguous and should be given their plain meanings. The court adopted Allstate's definitions of these terms, concluding that UNC's pollution discharges, being part of its regular business practices and occurring over many years, were not sudden. The court also considered the drafting history of the qualified pollution exclusion and the insurance industry's understanding of the term but determined that the focus must be on the objective expectations the language of the policy would create in the mind of a hypothetical reasonable insured. The dissent argued that the term "sudden and accidental" is ambiguous and its meaning should be decided by a jury, considering the drafting history, prior use of the term in other insurance policies, dictionary definitions, and the context of the policy as a whole (paras 7-28).