ELR Citation: ELR 21079
No(s). 85-436-JLL (D. Del. Oct 23, 1989)

The court holds that an insurer must defend and indemnify a county under comprehensive general liability insurance policies for claims arising from pollution leaching from two county landfills. The court first holds that the insurer must provide primary coverage to the county. The court previously held that the first of the four criteria for primary coverage had been satisfied—that the underlying lawsuits are included within the policies' definitions of damages. The court holds that both primary insurance policies were triggered because new injury continuously occurred through the policy periods. The policies' definition of "property damage" does not indicate at what time the gradual leaching of contaminants from a landfill triggers coverage. Thus, the court rejects the insurer's contention that the policy is triggered only at one of three discrete points in time—when the dumping first began, when leaching first began, or when the pollution was first discovered. The application of a continuous trigger is appropriate given the continuing damage caused by the gradual spread of leachate.

The court next holds that there was an occurrence within the meaning of the policy, and that the pollution exclusion clause does not apply. The migration of pollutants from the landfill was neither expected nor intended. The court previously held that there must have been a substantial probability that damage would occur for the damage to be excluded from coverage, and that the terms "sudden and accidental" in the pollution exclusion clause mean unexpected. The court holds that the definitions of substantial probability and expected are indistinguishable, and thus the term "occurrence" and the pollution exclusion clause are coextensive. There was not a substantial probability of an occurrence prior to the opening of the landfill. County officials could reasonably believe that there was a sufficient amount of low permeability material beneath the landfill to protect nearby property from damage. The court notes that evidence concerning the county's acceptance of chemical waste at the landfill is not relevant to the occurrence issue. The insurer has not shown that the depositing of chemical waste increased the probability of property damage. The county's alleged negligence in failing to maintain a two-foot separation between trash and groundwater does not constitute substantial probability. An action exhibiting substantial probability of harm demonstrates recklessness, not negligence. The court holds that three events in the post-operation stage of the landfills do not indicate substantial probability of an occurrence. Although a pond at one site turned black within a month after the landfill closed, the appearance of leachate on the surface indicates that leachate is being produced, not that there is migration of contaminants. Neither the discovery of contamination at another landfill nor a report prepared by undergraduate students shows a substantial probability of property damage. The court holds that the owned property exclusion in the primary policies does not apply because the property damage at issue is not damage to the county's property. The court holds that the insurer is liable to the county for all damages arising out of the landfill. The court notes that it need not decide whether liability should be allocated among all policies triggered because no other evidence of primary coverage was presented.

The court holds that the county's first excess insurance policy must provide full coverage once the first primary policy is exhausted. However, the county's claim against the second excess policy is premature concerning the duty to indemnify because the county has not shown that an underlying policy was exhausted. The court also holds that the county is not required to mitigate damages under the policies. The court holds that the county is not entitled to attorney fees. While Delaware law provides for the award of attorney fees to a prevailing plaintiff against an insurer providing property insurance, the liability insurance policies are not property insurance.

Counsel for Plaintiff
Joseph D. Tydings, Jerold Oshinsky, Catherine Serafin Sponseller
Anderson, Kill, Olick & Oshinsky
2000 Pennsylvania Ave. NW, Ste. 7500, Washington DC 20006
(202) 728-3100

George H. Seitz III
Prickett, Jones, Elliott, Kriston & Schnee
1310 King St., Wilmington DE 19801
(302) 888-6500

Counsel for Defendant
John G. Mulford, Michael J. Goodrick
Theisen, Lank, Mulford & Goldberg
Ninth Fl., One Commerce Center, P.O. Box 1470, Wilmington DE 19899
(302) 656-7712