Dimmitt Chevrolet, Inc. v. Southeastern Fidelity Insurance Corp.

Dimmitt Chevrolet, Inc. (Dimmitt) (plaintiff) operated two automobile dealerships and sold used crankcase oil generated by its business to Peak Oil Company (Peak) between 1974 and 1979. During this time, Dimmit received comprehensive general liability (CGL) insurance coverage from Southeastern Fidelity Insurance Corporation (Southeastern). The CGL insurance covered all claims in which Dimmitt would become legally obligated to pay damages based on bodily injury or property damage caused by certain “occurrences.” The CGL insurance did not cover the discharge, waste, leakage, release, and escape of certain hazardous materials and chemicals unless such discharge, waste, leakage, release, and escape were “sudden and accidental.” In 1983, the Environmental Protection Agency (EPA) brought suit against Peak for “substantial pollution” due to its storage of recycled oil from various companies, including Dimmitt. The Environmental Protection Agency (EPA) named Dimmitt as a potentially responsible party (PRP) because it had recycled oil with Peak from 1974 to 1979. Dimmitt paid damages for the pollution and sought indemnity from Southeastern (defendant). Southeastern argued the “sudden and accidental” clause in Dimmitt’s policy contained a temporal aspect which excluded it from liability for pollution by the company occurring slowly and over a period of several years. Dimmitt argued that the word “sudden” should be construed to require Southeastern to provide insurance coverage for any unexpected and unintended pollution discharge. The trial court agreed with Southeastern, and Dimmitt appealed.