ELR Citation: ELR 21261
No(s). 91-56356 (9th Cir. Jun 2, 1994)

The court holds that an insurer is not liable under a tenant's comprehensive general liability policies for the property owner's cleanup costs resulting from a diesel fuel leak from an underground fuel tank that the tenants installed on the leased property. After obtaining a judgment from the tenant for the cost of cleanup, the property owner sued the tenant's insurer for coverage under the policies. The court first notes that under California law the "sudden and accidental" exception to the policies' pollution exclusion clause relates to the abruptness or immediacy of the discharge. "Sudden" does not merely mean unexpected and unintended. The court holds that the property owner, acting as the insured, has the burden of proving that the sudden and accidental exception applies to its claim. While the insurer has the burden of proving that a claim is excluded, the insured has the burden of proving coverage exists. Moreover, were the burden of proof on the insurer, the property owner would have no incentive to discover whether pollutants were being gradually discharged on its property. Furthermore, shifting the burden to the property owner places the burden on the party who generally has better access to facts that reveal whether the discharge was sudden or accidental. The court holds that the property owner failed to meet its burden of proving that the discharge of diesel fuel from the tanks was sudden and accidental. The property owner produced no evidence to this effect.

Counsel for Plaintiff
Michael Hickok
Seyfarth, Shaw, Fairweather & Geraldson
2029 Century Park E., LosAngeles CA 90067
(310) 277-7200

Counsel for Defendants
Richard J. Doren
Gibson, Dunn & Crutcher
333 S. Grand Ave., Los Angeles CA 90071
(213) 229-7000

Before Gibson,^* Hall and Kleinfeld, JJ.