74 N.Y.2d 912 (1989)

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The pollution exclusion clause in a general liability insurance policy bars coverage for environmental damage resulting from intentional discharges of waste, even if the insured did not directly cause the pollution but inherited the liability from a prior landowner.

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Summary

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Northville Industries sought coverage from its insurer, National Union Fire Insurance, for costs associated with decontaminating its property, as mandated by a consent order from the Department of Environmental Conservation. The pollution stemmed from the waste disposal practices of Northville’s predecessor, including burying drums, dumping waste into open pits, and discharging waste through pipes. The insurance policy contained a pollution exclusion clause, with an exception for “sudden and accidental” dispersals. The New York Court of Appeals held that the pollution exclusion clause barred coverage because the discharges were intentional and, therefore, not “accidental” as required by the exception. The court further clarified that the pollution exclusion applies regardless of whether the insured was the direct cause of the pollution.

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Facts

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Northville Industries acquired property contaminated by hazardous wastes due to the disposal practices of its predecessor. These practices included:

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1. Burying drums containing hazardous wastes.

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2. Dumping waste liquids from 55-gallon drums into open pits and then disposing of the drums in the pit.

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3. Discharging wastes through a pipe into pits at the site.

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The Department of Environmental Conservation issued a consent order requiring Northville to decontaminate and restore the property. Northville sought insurance coverage from National Union Fire Insurance for the expenses incurred in complying with the order.

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Procedural History

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Northville Industries brought an action seeking a declaratory judgment that National Union Fire Insurance was obligated to cover the expenses related to the consent order. The lower courts ruled in favor of the insurance company, upholding the pollution exclusion clause. Northville appealed to the New York Court of Appeals.

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Issue(s)

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1. Whether the pollution exclusion clause in the insurance policy bars coverage for environmental damage resulting from intentional waste disposal practices of the insured’s predecessor, where the insured is now responsible for remediation.

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2. Whether the discharges can be considered “accidental” under the exception to the pollution exclusion clause when they resulted from purposeful conduct.

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Holding

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1. Yes, because the pollution exclusion clause applies regardless of whether the insured directly caused the pollution. There is no language in the exclusion suggesting it is inapplicable when liability is based on the conduct of someone other than the insured.

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2. No, because the term