Dimmitt Chevrolet, Inc. v. Southeastern Fidelity Insurance Corp

Brief Fact Summary. Dimmitt Chevrolet, Inc. (Plaintiff) was responsible for damages resulting from oil, which leaked out of unlined bins. Plaintiff had an insurance policy that covers damage if it is “sudden and accidental.”

Synopsis of Rule of Law. Dictionaries are helpful insofar as they set forth the ordinary, usual meaning of words. However, dictionaries are imperfect yardsticks of ambiguity. It is the court’s duty to determine whether the word or phrase is ambiguous in the context of the specific document at issue.

Facts. Plaintiff operated two car dealerships and sold its used crankcase oil to Peak Oil Company (Peak) from 1974 to 1979. In 1983, the Environmental Protection Agency (EPA) determined that substantial pollution at Peak’s worksite had resulted from storage of its waste sludge in unlined bins. Plaintiff was designated as a possible responsible party. Plaintiff agreed to undertake remedial measures without conceding its liability under CERLA. Southeastern (Defendant) provided a comprehensive general liability insurance policy to Plaintiff from 1972 to 1980. The policy had numerous exclusions; but none of the exclusions would apply if the discharge were sudden and accidental. Defendant filed a declaratory judgment action against Plaintiff seeking a declaration that Defendant had no duty to defend or indemnify Plaintiff under its policy. Plaintiff filed a counterclaim seeking a contrary declaration. Both sides filed summary judgment motions. The court awarded summary judgment to Defenda
nt; the pollution at Peak had occurred over many years and could not be considered sudden and accidental. Plaintiff appealed.

Issue. Does the word ‘sudden’ mean abrupt and unexpected?

Held. Yes. Judgment affirmed.
* The ordinary and common usage of the term ‘sudden’ includes a temporal aspect with a sense of immediacy or abruptness. Plaintiff pointed to dictionary definitions of sudden which also include the meaning of happening or coming unexpectedly. Dictionaries are helpful insofar as they set forth the ordinary, usual meaning of words. However, dictionaries are imperfect yardsticks of ambiguity. It is the court’s duty to determine whether the word ‘sudden’ is ambiguous in the context of the specific insurance policy at issue.
* The use of the word sudden can connote a sense of the unexpected. However, saddened is used in conjuncture with accidental. Accidental is generally understood to mean unexpected or unintended. Thus, to construe sudden also to mean unintended and unexpected would render the words sudden and accidental entirely redundant.
* Because the court concludes that the policy language, “sudden and accidental” is unambiguous, it is inappropriate and unnecessary to consider the arguments pertaining to the drafting history of the pollution exclusion clause.
* Applying the policy language to the facts of the case, the Court finds that the pollution damage was not within the scope of the insurance policy.

Dissent. (Justice Overton) The majority: (1) ignores key factors in determining that the term “sudden and accidental,” as used in comprehensive liability insurance polices, is not ambiguous; and (2) fails to consider the facts in this record concerning the intent of the insurance industry in using that term and, consequently, is wrong on the merits.
* The term “sudden and accidental” must be found to be ambiguous given that the term is subject to more than one interpretation.
* The drafting history of the pollution exclusion clause leads to the inescapable conclusion that the insurance industry was attempting to exclude from coverage those polluters who committed their acts intentionally.
Concurrence. (Justice Grimes) I cannot wrench the words sudden and accidental to mean gradual and accidental which is what must be done to provide coverage in this case.

Discussion. Because the majority declared “sudden and accidental” to be unambiguous, it was not required to review its intent or policy. Courts will assign terms their ordinary common usage. If they are unable to do so because the phrase or term is ambiguous, then the will review the intent and policy behind the phrase or term. In this case, as pointed out in the dissenting opinion, the intent and policy reasons behind the phrase “sudden and accidental” are in conflict with the majority’s holding. However, it is irrelevant because the majority determined the “sudden and accidental” to be unambiguous.