Alabama Plating Company v. United States Fidelity and Guaranty Company

Alabama Plating Company (plaintiff) operated a metal-finishing business that included electroplating operations. The electroplating process created various chemical byproducts. In order to dispose of the chemicals, Alabama Plating directed its wastewater through a treatment system approved by several entities, including the Alabama Department of Environmental Management (the department). Despite compliance with the approved procedures, the byproducts caused environmental contamination. Thereafter, the department issued directives requiring Alabama Plating to institute remediation measures. Alabama Plating subsequently requested payment from its insurer, United States Fidelity and Guaranty (the insurer), to cover the costs of complying with the department’s directives. The comprehensive general liability policy (CGL) provided that the insurer would pay all sums constituting damages caused by an occurrence, defined as an accident or condition that causes unintended or unexpected bodily injury or property damage. A “pollution exclusion” in the policy provided that payment would be denied in the case of damages arising from the discharge of waste, chemicals or other contaminants, but only if such discharge is not sudden or accidental. The insurer denied coverage based on the pollution exclusion. Alabama Plating brought suit against the insurer, alleging wrongful denial of insurance coverage. The insurer moved for summary judgment, contending that the “sudden and accidental” exception to the pollution exclusion allowed for coverage only if the contamination at issue was caused by an abrupt, brief event. The court granted the insurer’s motion. Alabama Plating appealed.