You are viewing a free summary from Descrybe.ai. For citation checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.

Lafarge Corporation v. Travelers Indemnity Co., Appalachian Insurance Company, Northbrook Insurance Company, First State Insurance Company

Citations: 118 F.3d 1511; 28 Envtl. L. Rep. (Envtl. Law Inst.) 20032; 1997 U.S. App. LEXIS 21146; 1997 WL 416914Docket: 96-2469

Court: Court of Appeals for the First Circuit; August 11, 1997; Federal Appellate Court

Narrative Opinion Summary

This case involves LaFarge Corporation seeking a declaratory judgment against Travelers Indemnity Co. and other insurers, claiming they were obligated to defend and indemnify LaFarge against EPA claims related to a toxic waste site in Florida. The district court ruled against LaFarge, finding that the pollution exclusion clauses in the insurance policies precluded coverage, as the discharges were not sudden and accidental. The court applied Florida law, using the significant relationship test, due to the substantial connection of the insurance contracts to Florida. LaFarge appealed, arguing for the application of Texas law under the lex loci contractus principle, but the court affirmed the district court's decision. It held that both the initial dumping and subsequent seepage were gradual, thus not covered under the 'sudden and accidental' pollution exclusion clause. Furthermore, the court found that the exclusions for non-sudden or gradual pollution and expected or intended discharges also barred coverage. The decision was supported by the alignment of Florida and Texas law on relevant contract principles, leading to the affirmation of summary judgment in favor of the insurers.

Legal Issues Addressed

Application of Significant Relationship Test

Application: The court applied Florida law, using the significant relationship test due to Florida's substantial connection to the insurance contracts involved.

Reasoning: The district court agreed with Travelers, determining that Florida had the most significant relationship to the transaction and that Florida's interest in pollution damage cases warranted the application of its substantive law.

Duty to Defend and Indemnify under Florida Law

Application: The court determined that the insurers, under Florida law, had no duty to defend or indemnify LaFarge against the EPA's environmental claims.

Reasoning: After cross-motions for summary judgment, the district court ruled in favor of the defendants, determining that under Florida law, they had no duty to defend or indemnify LaFarge for the environmental claims.

Expected or Intended Exclusion

Application: The court found that the expected or intended exclusion applied because the initial waste disposal was intentional.

Reasoning: Regarding the expected or intended exclusion, the district court referenced a Georgia case, determining that since the initial waste disposal was intended, the pollution exclusion barred coverage for damages arising from that discharge.

Interpretation of 'Sudden and Accidental' Exclusion

Application: The court held that the 'sudden and accidental' clause did not apply as the discharge was neither sudden nor accidental.

Reasoning: It determined that both the initial dumping of waste and subsequent seepage were neither sudden nor accidental, barring coverage.

Non-Sudden or Gradual Pollution Exclusion

Application: The court ruled that the non-sudden or gradual pollution exclusion precluded coverage due to the gradual nature of the pollution.

Reasoning: In terms of non-sudden or gradual pollution, the 1984 policy excludes coverage for discharges that are gradual.

Pollution Exclusion Clauses in Insurance Contracts

Application: The court found that the pollution exclusion clauses were unambiguous and excluded coverage unless the discharge was sudden and accidental.

Reasoning: The district court found the pollution exclusion clauses unambiguous, requiring that discharges be sudden and accidental for coverage.