ELR Citation: ELR 20122
No(s). 89-1077 (1st Cir. Aug 18, 1989)

The court holds that an insurance policy's pollution exclusion clause bars coverage of an insured company charged with violating state hazardous waste and water pollution laws. The insurance policy did not use the "sudden and accidental" standard found in many pollution exclusion clauses, but instead states that coverage is excluded if the insured "expected or intended" the pollution. The court first holds that the insurer has no duty to defend the insured. The insured expected or intended the discharge. The insured is alleged to have discharged 35,500 gallons of waste each day, despite warnings from local authorities and without attempting to stop the discharges. The court next holds that the insurer has no duty to indemnify the insured for penalties paid to the state. The settlement characterized the payments as civil penalties rather than damages, so they are not covered by the insurance policy's damages clause. Finally, the court holds that issues of material fact remain as to whether there is a duty to indemnify for amounts paid in settlement to the insured's landlord.

Counsel for Defendants-Appellants
Anton T. Moehrke, Kim Maree Johannessen
Wright & Moehrke
283 Dartmouth St., Boston MA 02116
(617) 266-5700

Counsel for Plaintiff-Appellee
Daniel O. Mahoney, Steven L. Schreckinger
Palmer & Dodge
One Beacon St., Boston MA 02108
(617) 227-4400

Before BOWNES, REINHARDT,^* and TORRUELLA, Circuit Judges.