Opinion

Quaker State Minit-Lube, Inc. v. Fireman's Fund Insurance

868 F. Supp. 1278
1994 WL 563404

Court: District Court, D. Utah
Filed: Mar 21, 1994
Status: Published
Author: Jenkins
On the bench: Jenkins
Cited by: 34 cases
Authority: More cited than 80.5%

concluding that the insured was entitled to coverage “unless it has [the] specific and subjective intent to cause” the damage giving rise to the claim against it

How later courts described this case

concluding that the insured was entitled to coverage “unless it has [the] specific and subjective intent to cause” the damage giving rise to the claim against it
recognizing multiple “injuries-in-fact” triggering coverage where there is continuous contamination
distinguishing Geary on the grounds that it involved a homeowners policy as opposed to a CGL policy
adopting a trigger-of-coverage theory that was “consistent with the pertinent policy language”

Written by the judges who cited it.

The opinion

MEMORANDUM OPINION AND ORDER

JENKINS, District Judge.

This matter is now before this court on cross-motions for summary judgment filed by

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plaintiff Quaker State Minit-Lube, Inc. (“Quaker State”), and defendants Liberty-Mutual Insurance Company (“Liberty Mutual”), Fireman’s Fund Insurance Company, American Insurance Company, National Surety Corporation (collectively “Fireman’s Fund”) and Unigard Insurance Company (“Unigard”). The parties have submitted a series of lengthy memoranda, supported by voluminous appendices of exhibits, documents, excerpts of deposition testimony, and an array of unpublished court decisions, articles and texts. The motions were heard on March 29, 1993. Since the hearing, the parties’ moving papers have been augmented by a series of supplemental citations and copies of cases forwarded by counsel. The Court has reviewed and considered the materials submitted and the arguments made by counsel, and now rules as follows:

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This action arises out of the efforts of business, firmly prodded by public mandate and administrative enforcement action, to attempt to clean up the mess left by an industrial enterprise, now defunct, which engaged in the discharge of contaminated oils and toxic chemicals upon land. It arises as well out of the efforts of insurance carriers, who profit by reason of their paid-for promises to assume the risks of others, to write those promises as narrowly as possible. It is a case about cost, about consequence, and about who will, as a matter of public policy, ultimately bear the economic burden of the wrongful conduct of others, now defunct.

This action concerns a 6.6-acre industrial oil refining facility located at 1628 North Chicago Street, Salt Lake City, Utah, which until its closure in 1988, was operated purportedly for the purposes of re-refining and recovery of used automobile and industrial oils. The facility was originally owned and operated as an oil refinery by O.C. Allen Oil Company from 1953 to 1968. In 1968, Flinco, Inc. purchased and began operating the facility. In 1978, it was purchased by Axel Johnson, Inc. and was operated by Ekotek, Inc., a

Delaware

corporate subsidiary of Axel Johnson, Inc.

See

EPA Administrative Order on Consent for Emergency Surface Removal, dated August 1, 1989 (Docket No. CERCLA VIII-89-25), at 4 (annexed as Exhibit 4 to the Memorandum of Defendants Fireman’s Fund Insurance Company, American Insurance Company and National Surety Corporation in Support of Motion for Summary Judgment, dated January 15, 1993 (hereinafter “Fireman’s Fund Mem.”)).

Following the purchase of the property by Steven Self and Steven Miller in 1981, Ekotek, Inc., a

Utah

corporation (“Ekotek”), operated the facility until its bankruptcy in 1987. The facility was last operated by an entity known as Petrochem Recycling Corporation, which also purported to engage in the oil recovery/re-refining and recycling business, until February 1988, when all operations ceased.

Id.

Quaker State owns and operates a series of “convenience automobile service centers,” which provide simple vehicle maintenance services, including engine oil changes. Beginning in 1977 and continuing through April of 1985, Quaker State sold drain oil

collected at its service centers to Ekotek. In the ordinary course of dealing between Quaker State and Ekotek, Ekotek trucks would collect drain oil from storage tanks located at the Quaker State service centers and transport it to the Ekotek re-refining facility where it would be transferred to large storage tanks for later processing.

See

“Statement of Facts,” Plaintiff’s Memorandum Brief in Support of Motion for Partial Summary Judgment, dated January 15, 1993 (“Quaker State Mem.”), at ¶¶ 5-6.

Prior to the commencement of remedial action by the United States Environmental Protection Agency (“EPA”) at the 1628 North Chicago Street site (hereinafter re

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ferred to as the “Ekotek Site”), it was observed that an estimated 500,000 gallons of liquid “containing varying concentrations of hazardous substances” was held in approximately 60 above-ground storage tanks ranging in size from 2,900 to 87,000 gallons, including twelve 20,000-gallon tanks located on the site, along with another 475 drums and approximately 1,500 smaller containers found in five warehouse buildings.

See

EPA Administrative Order on Consent for Emergency Surface Removal (Exhibit 4 to the Fireman’s Fund Mem.), at 6. “Approximately 200,000 gallons of flammable liquids ... [we]re contained in 32 tanks and 69 drums.”

Id.

at 9. Also found on the Ekotek Site were three surface impoundment areas, “numerous piles and pits of waste material,” underground tanks and an underground drain field. “EPA Findings of Fact” at ¶ 11, EPA Administrative Order on Consent for Remedial Investigation/Feasibility Study, dated July 10, 1992, (Docket No. CERCLA (106) VIII-92-21) (annexed as Exhibit 5 to the Fireman’s Fund Mem.), at 4.

Contaminants associated with these on-site sources include a wide range of organic substances such as chlorinated solvents and other volatile organic compounds (acetone, vinyl chloride, 1, 1-dichloroethane, 1, 1, 1-trichloroethane), polynuclear aromatic hydrocarbons (2-methylnapthalene), phthalates, pesticides (chlordane, endrin, 4, 4-DDE, 4, 4-DDT) PCBs (Aroclor 1260), dioxin (2, 3, 7, 8-TCDD) and furans. Arsenic, chromium, lead, and mercury are also present in on-site primary and secondary sources.

Id.

Quaker State’s initial summary judgment memorandum details a number of incidents in which oil or toxic materials (such as acid sludge produced in the re-refining process) were discharged or released upon the land or into the water at the Ekotek Site.

See

Quaker State Mem. at 3-9, ¶¶ 7-22.

[O]n two separate occasions, accidents in connection with loading and unloading of Union Pacific Rail Road ears with used oil led to 12,000 gallons of oil being spilled on the property____ The great majority of this oil went underground in a deep trench designed to collect rainwater runoff from the rail siding at the property; the amount recovered is unknown.

[R]efinery accidents over the course of the years contributed very large volumes to the spillage total____ Volumes lost as the result of tank overflows from operator error and spills from trucks resulting from driver error were substantial____

Prior to 1967, acid sludge produced in the rerefining process was discharged into a pit on the property. The pit was covered over in 1967, but no effort was made at the time to remove sludge residue remaining in the pit____

The rerefining process used clay as a filtration substance to remove impurities from the oil. Oil and clay were mixed together, and the oil was then squeezed out of the clay in a rotary vacuum filter. The spent clay was accumulated on the ground in the refinery area and periodically carted to landfills. Witnesses differed on the amount of oil remaining in the spent clay and whether oil leaked out of the pile____

Id.

at 10-11, 13, 15 (citations omitted). Deposition testimony of former refinery employees related numerous incidents of the discharge of oil and other materials onto the Ekotek Site property:

James Blaser

recalls that in early 1985 there was a large spill when a manhole was left off a tank and product flowed from the tank all the way to the west end of the site. He also recalls two or three incidents when tank 52 accidently overflowed approximately 500 gallons caused by water in the hot oil resulting in the oil foaming out the top of the tank____ Jim Blaser also states that he does not believe that there was any year when there wasn’t an accidental spill/mishap at the site____

Scott Adair

recalls that in 1980 or 1981 there were times when there were run-overs in the processing area large enough that they went across the street____ He also recalls that there were occurrences between 1978 and 1983, happening once or twice a year, of overflows during the loading of acid sludge onto trucks. These spills, on occasions, were large enough that

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they flowed down the road and would have involved 500 to 2,000 gallons of oil and acid mixture....

Alex Bloomfield

recalls that there were significant tank spills in each and every year he was at Ekotek, 1978 through 1985....

Id.

at ¶¶ 19-21 (citations omitted);

cf.

Quaker State Minib-Lube’s Response in Opposition to Defendants’ Motions for Summary Judgment, dated February 26, 1993 (“Quaker State Opp.Mem.”) at 3-42; Quaker State Minib-Lube’s Reply Memorandum in Further Support of Motion for Partial Summary Judgment, dated March 10, 1993 (“Quaker State Reply Mem.”) at 3-11, ¶¶2-16. The defendants’ summary judgment memoranda set forth additional facts detailing similar events:

Scott Adair who started work in 1978 testified ... that during cold weather people draining sludge from a tank to a truck would get cold and leave to go inside and allow the sludge to drain into the truck and sludge could overflow the truck.... He testified that ... “when all of the sludge drained out then it was just thin oil, acid treated oil ... and it would fill that semi truck up in just about a minute or two.” ... It would then overflow “and it would be a river running along that roadway.”

Joint Memorandum of Defendants in Opposition to Plaintiffs Motion for Partial Summary Judgment, dated February 26, 1993 (“DefsJoint Mem.”) at 6-7, ¶ 4(g).

Ekotek’s wastewater treatment system was fraught with a history of oil[-]eontaminated effluent discharged into the Salt Lake sewer system....

Beginning in November, 1980, acid sludge from the oil dehydration process was discharged directly on the ground in a large, unlined, earthen pit north of the plant’s Administration building____

Over a period of years, sludge was hauled daily to the acid sludge pit and mixed with lime to neutralize the sludge---- The acid sludge/lime mixture could sit onsite from anywhere up to a one-month period, until it was transported off-site to a landfill facility____ Ekotek continued this cycle of dumping and then disposing of acid sludge until at least 1985____ Sludges remained onsite, however, until removal procedures were instituted by the EPA in 1988____

The plate and frame filters would regularly “squirt oil all over the place” in the course of day-to-day operations____

Former process operators testified that the inferior and outdated equipment used to recycle the waste oil contributed heavily to the persistent discharge of contaminants onto the site____ Broken or leaking process equipment was not repaired or replaced unless absolutely necessary____ In fact, leaking pumps were a facet of everyday operations at the plant____ Plant operators and supervisors have testified at length concerning the ongoing failure of [facility] personnel from 1967 to 1988 to keep the site clean by failing to: empty buckets full of oil; pump oil out of the catch basins designed to contain runoff and rainwater; and clean up spilled oil and oil leaking onto the ground from trucks, pumps and plant machinery____

Oily water regularly and routinely ran over from tanks, valves, dump trucks, catch basins and earthen berms____ Back-ups of oily water in the east tank area and the wrecking yard to the extreme far north of the site occurred systematically....

[T]wo large retention areas in the northwest portion of the Ekotek site experienced frequent overflows of oil that contaminated the soil____

Fireman’s Fund Mem. at 9-18, ¶¶ 18, 20-21, 28, 35-36, 38-39 (citations omitted).

Accord,

Defendant Liberty Mutual Insurance Company’s Memorandum in Support of Motion for Summary Judgment, dated January 14, 1992 (“Liberty Mutual Mem.”) at 11-27, ¶¶ 8-47.

It is uncontroverted that as a consequence of numerous such incidents occurring during the years the Ekotek facility was in operation, the soil at the Ekotek Site as well as surface water and ground water on and near the Ekotek Site have become significantly contaminated with oil and other toxic substances:

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The volatile organic data indicates that soils and groundwater are contaminated with both petroleum and chlorinated volatile compounds....

The oil and grease analysis likewise indicates a pattern of contamination with oil that extends site[-]wide and beyond____

Soils, liquids and sludges over much of the site are contaminated with petroleum and petroleum[-]derived volatile and semi-volatile compounds.

The soil, sludges and groundwater at the site are also contaminated with compounds not typically associated with petroleum hydrocarbons including chlorinated volatile organic compounds (especially TCE and PCE) and PCBs (Aroclor 1260)____

Office of Emergency & Remedial Response, U.S. Environmental Protection Agency,

Final Report for Petrochem Site Investigation, Salt Lake City, Utah

(annexed as Exhibit 10 to the Fireman’s Fund Mem), at §§ 4.0, 5.0. “Contaminated soils and sediments, as well as contaminants within the shallow ground water aquifer, remain at the Site.” EPA Region VIII, Superfund Program Fact Sheet: Petrochem Recycling Corp./Ekotek, Inc. Superfund Site, at 1 (September 1992).

See

Quaker State Mem. at 4, ¶¶ 8-9.

Acting pursuant to the Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”), 42 U.S.C. §§ 9601-9657 , the EPA commenced “response” activities involving the Ekotek Site beginning in 1988. The EPA has taken the position that the Ekotek Site qualifies as a CERCLA “facility” (§ 9601(a)) because of its contamination with “hazardous substances” (§ 9601(a)(14)) and that “responsible parties” (§ 9607(a)), including Quaker State, are liable for “response” costs incurred through cleanup efforts at the Ekotek site.

See

EPA Administrative Order on Consent for Remedial Investigation/Feasibility Study, dated July 10, 1992, (Docket No. CERCLA (106) VIII-92-21) (annexed as Exhibit 5 to the Fireman’s Fund Mem.), at 8. By February 1992, the EPA had formally identified 470 entities as “potentially responsible parties” (“PRP”s) in connection with the Ekotek Site, 129 of which had agreed to participate in response activities in accordance with the EPA’s Administrative Order on Consent (AOC). EPA Region VIII, Superfund Program Fact Sheet: Petrochem Recycling Corp./Ekotek, Inc. Superfund Site 1 (September 1992). Responsible parties may be held strictly, jointly and severally liable under CERCLA for the costs of response and clean-up.

See generally,

Barr,

CERCLA Made Simple: An Analysis of Cases Under the Comprehensive Environmental Response, Compensation and Liability Act of 1980,

45 BusXiAW. 923, 968-83 (1990). Further, pursuant to section 105 of CERCLA, 42 U.S.C. § 9605 , the Ekotek Site was proposed for placement on the EPA’s National Priorities List, or “Superfund List,” on July 29, 1991,

(see

55 Fed.Reg. 35844 (1991)); “Petrochem Recycling Corp./Ekotek, Inc.” has since been placed on that list, along with seven other “Superfund” sites found in Utah. 40 C.F.R. Part 300, App. B, at 208 (1993).

Quaker State and a number of other businesses identified by EPA as potentially responsible parties under CERCLA formed the Ekotek Site Remediation

Committee, which pursuant to the Administrative Order on Consent entered into with EPA, has funded clean-up activities at the Ekotek Site. By affidavit, Quaker State indicates that as of January 15, 1993, the Committee had expended approximately $10,000,000.00 to pay costs incurred in removing waste materials, equipment and machinery from the Ekotek Site. Affidavit of Shane Smoot, dated January 15, 1993, at ¶ 7. Quaker State estimates that the cost of further investigation, planning and total cleanup of the Ekotek site will exceed $60,000,000.00.

Id.

at ¶¶8-9 .

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At the times pertinent to this action, Quaker State has maintained an array of policies of comprehensive general liability insurance and primary garage liability insurance, as well as excess, or umbrella policies, all purchased from one or more of the defendants. Not surprisingly, Quaker State is looking to its liability insurance coverage to defray Quaker State’s share of the actual and expected costs of cleaning up the Ekotek Site, for which Quaker State assumes liability as a “responsible party” under CERCLA. Quaker State suggests that it had no actual knowledge of the activities at the Ekotek Site which resulted in the contamination. Quaker State Mem. at 9, ¶23. Since it has not engaged in the knowing or intentional pollution of the Ekotek Site, Quaker State argues, its strict statutory liability under CERCLA for response and clean-up costs cannot fall within any exclusion or limitation of coverage under the insurance policies purchased from the defendants which otherwise would operate to deny coverage arising from deliberate contamination of the environment.

Id.

at 34-57 . Quaker State commenced this action to enforce defendants’ obligations to indemnify and defend Quaker State under the terms of their policies.

The summary judgment motions address a series of issues concerning the existence and extent of insurance coverage available to Quaker State: (1) whether “damages” covered under defendants’ policies extends to costs of the kind incurred by Quaker State in connection with the cleanup of the Ekotek Site

(see

Part II,

infra);

(2) whether the hazardous waste contamination at the Ekotek Site resulted from an “occurrence” within the meaning of defendants’ policies

(see

Part III,

infra);

(3) whether the defendants’ duty to defend under their liability policies is triggered by administrative action taken by the United States Environmental Protection Agency (EPA), where no civil action, or lawsuit, has been filed in court

(see

Part IV, infra); (4) whether coverage is excluded by the standard pollution exclusion clause in defendants’ comprehensive general liability policies, or whether the discharge of drain oil, acid sludge and other materials by Ekotek comes within the “sudden and accidental” exception to that exclusion

(see

Part V,

infra);

and (5) whether defendants’ “garage policies” extend coverage to liability for cleanup costs arising out of discharge of waste oil at third-party-owned sites outside of the garage premises

(see

Part VI,

infra

I. SUMMARY JUDGMENT.

The Tenth Circuit summarized the principles governing summary judgment in a recent case,

Jensen v. Kimble,

1 F.3d 1073 (10th Cir.1993):

Rule 56(c) permits summary judgment when “there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). In analyzing whether summary judgment is appropriate, we must view the evidence in the light most favorable to the non-moving party.

Deepwater Invs., Ltd. v. Jackson Hole Ski Corp.,

938 F.2d 1105, 1110 (10th Cir.1991).

Id.

at 1076. “Of course, a party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.”

Celotex Corp. v. Catrett,

477 U.S. 317, 323 , 106 S.Ct. 2548, 2552 , 91 L.Ed.2d 265 (1986).

The

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initial burden of production imposed by Rule 56(c) requires the moving party to make a prima facie showing that it is entitled to summary judgment. 10A Charles A. Wright & Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure § 2727, at 121 (2d ed. 1983). If the moving party will bear the burden of persuasion at trial on the claim addressed by the motion, “that party must support its motion with credible evidence — using any of the materials specified in Rule 56(c) — that would entitle it to a directed verdict if not controverted at trial.”

Celotex,

477 U.S. at 331 , 106 S.Ct. at 2556 (Brennan, J., dissenting). Where the

nonmoving

party bears the burden of persuasion at trial on the claim or issue addressed by the motion,

Celotex

instructs that the moving party may meet its initial burden “by ‘showing’ — that is, pointing out to the district court — that

there is an absence of evidence

to support the nonmoving party’s case.” 477 U.S. at 325 , 106 S.Ct. at 2554 (emphasis added);

Bacchus Indus., Inc. v. Arvin Indus., Inc.,

939 F.2d 887, 891 (10th Cir.1991). “[W]e find no express or implied requirement in Rule 56,” the Court explained, “that the moving party support its motion with affidavits or other similar materials

negating

the opponent’s claim.” 477 U.S. at 323 , 106 S.Ct. at 2553 (emphasis in original).

Once the moving party has met its initial burden,

“the burden shifts back to the non-moving party to show that there is a genuine issue of material fact.

Bacchus,

939 F.2d at 891 . To discharge its burden, the nonmoving party must “go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a genuine issue for trial.’ ”

Celotex,

477 U.S. at 324 , 106 S.Ct. at 2553 (quoting Fed.R.Civ.P. 56(e)).”

Jensen v. Kimble,

1 F.3d at 1077 .

As the Court explained in

Celotex:

In our view, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.

477 U.S. at 322 , 106 S.Ct. at 2552 .

Under Utah law, “[t]he interpretation of an unambiguous contract is a question of law to be determined by the court and may be decided on summary judgment. As a general rule, “The construction of an insurance policy is a matter of law.”

Grimes v. Swaim,

971 F.2d 622, 623 (10th Cir.1992). If the policy language is clear and unambiguous, the court must construe it according to its plain and ordinary meaning.”

Utah Power & Light Co. v. Federal Ins. Co.,

983 F.2d 1549 , 1553 (10th Cir.1993) (citations omitted).

Treated as a matter of law, the construction of an insurance contract can be resolved by the Court in the context of a motion for summary judgment.

Adams-Arapahoe Joint School District v. Continental Ins. Co.,

891 F.2d 772, 774 (10th Cir. 1989). Contract construction remains a question of law even though the parties may disagree about the meaning of the contract, or even though one party may claim that the contract is ambiguous.

Gomez v. American

*1288

Electrical Power Service Corp.,

726 F.2d 649 , 651-52 (10th Cir.1984).

II. RESPONSE AND REMEDIATION COSTS UNDER CERCLA AS “DAMAGES” UNDER DEFENDANTS’ CGL POLICIES.

Several of the insurance policies at issue in this case are comprehensive general liability, or CGL policies. CGL policies “are standard insurance policies developed by insurance industry trade associations, and these policies are the primary form of commercial insurance coverage obtained by businesses throughout the country.”

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

636 So .2d 700, 702 (1993). In their policies, the defendant insurers promise to “pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... property damage____”

“Damages” is not specially defined by the policies. The defendants now suggest that their promise to pay “damages” does not extend to Quaker State’s share of the environmental clean-up costs incurred at the Ekotek Site because those costs are not true legal “damages.”

Conversely, Quaker State asserts that the payment EPA seeks under CERCLA,

viz.,

the costs of restoring real property to its natural state, has long been recognized as a measure of legal damages, citing among other authorities,

Ault v. Dubois,

739 P.2d 1117, 1120 (Utah Ct.App.1987), and

Thorsen v. Johnson,

745 P.2d 1243 , 1244-45 n. 1 (Utah 1987). Policy terms, Quaker State asserts, should be given their plain and commonly understood meaning in ordinary usage, and “damages” as plainly and ordinarily understood, encompasses CERCLA remediation costs as compensation or “estimated reparation in money.” Quaker State Mem. at 59-60 (quoting

Webster’s Third New International Dictionary

571 (1986)). No distinction should be made, Quaker State contends, between common-law damages and payments made in compliance with an equitable remedy.

Id.

at 61 (citing

AIU Ins. Co. v. Superior Court,

51 Cal.3d 807 , 274 Cal.Rptr. 820 , 826 nn. 11, 12, 799 P.2d 1253 , 1259 nn. 11, 12 (1990)).

See also Aetna Casualty & Sur. Co. v. Pintlar Corp.,

948 F.2d 1507 , 1512-13 & n. 4 (9th Cir.1991). Nor should any distinction be made between judicial and administrative remedies.

Id.

at 62.

Quaker State cites to one unpublished Utah district court opinion

and a string of state

and federal

cases from other jurisdictions standing for the proposition that “damages” for the purpose of CGL coverage includes environmental response costs.

See also Fireman’s Fund Ins. Co. v. Ex-Cell-O Corp.,

662 F.Supp. 71, 75 (E.D.Mich.1987) (“‘damages’ include money spent to clean up environmental contamination”).

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Defendants rely on cases such as

Continental Ins. Co. v. Northeastern Pharmaceutical & Chem. Co.,

842 F.2d 977 (8th Cir.) (en banc) (applying Missouri law),

cert. denied,

488 U.S. 821 , 109 S.Ct. 66 , 102 L.Ed.2d 43 (1988)

(“NEPACCO

”), and

Maryland Casualty Co. v. Armco, Inc.,

822 F.2d 1348 (4th Cir.1987) (applying Maryland law),

cert. denied,

484 U.S. 1008 , 108 S.Ct. 703 , 98 L.Ed.2d 654 (1988)

(“Armco

”), as expressing the “better reasoned approach” construing “damages” as distinguishing legal claims for monetary damages from costs incurred in response to equitable remedies, including environmental response costs under CERCLA.

See

“Defs. Joint Mem.” at 32 & n. 16.

Armco,

the Fourth Circuit postulated that “[b]lack letter insurance law holds that claims for equitable relief are not claims for damages under liability insurance contracts,” and opined that it would be “a great step, and a dangerous one, for courts to begin to construe insurance policies to encompass costs of compliance with injunctive and reimbursement relief.” 822 F.2d at 1351, 1353 . As used “in the insurance context,” the Fourth Circuit concluded, the term “damages” means “damages in the legal sense.”

Id.

at 1354 .

NEPACCO,

the Eighth Circuit followed

Armco:

In the insurance context, ... the term “damages” is not ambiguous, and the plain meaning of the term “damages” as used in the insurance context refers to legal damages and does not include equitable monetary relief. See

Maryland Casualty Co. v. Armco, Inc.,

822 F.2d [1348] at 1352 [ (4th Cir.1987) ]. The CGL policies require Continental to “pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... property damage to which this insurance applies caused by an occurrence.” (Emphasis added.) “The obligation of the insurer to pay is limited to ‘damages,’ a word which has an accepted technical meaning in law.”

[Aetna Casualty & Surety Co. v.] Hanna,

224 F.2d [499] at 503 [ (5th Cir.1955) ]. Although not defined in the CGL policies, “[t]he word ‘damages’ is not ambiguous in the insurance context. Black letter insurance law holds that claims for equitable relief are not claims for ‘damages’ under liability insurance contracts.”

842 F.2d at 986 (quoting

Maryland Casualty Co. v. Armco, Inc.,

643 F.Supp. 430, 432 (D.Md.1986)).

Further, defendants point to the separate enumeration of “all costs of removal or remedial action” and “any other necessary costs of response” and “damages for injury to, destruction of, or loss of natural resources ...” found in § 107(a)(4)(A), (B) and (C) of CERCLA as evidencing purposeful distinction between “damages” and other CERCLA remedies. Defs.Joint.Mem. at 36-37. In

NEPACCO,

the Eighth Circuit took pains to differentiate the various remedies available under CERCLA, explaining that “[t]he type of relief sought is critical to the insured and the insurer, because under the CGL policies the insurer is liable only for legal damages, not for equitable monetary relief, such as cleanup costs.” 842 F.2d at 987.

*1290

Defendants also contend that environmental response costs cannot be treated as “damages” under Utah law, particularly where those costs exceed the diminution in the market value of the property caused by the contamination. They cite to two cases relied upon by Quaker State,

Ault v. Dubois,

739 P.2d 1117 (Utah Ct.App.1987), and

Thorsen v. Johnson,

745 P.2d 1243 (Utah 1987), as standing for the proposition that “costs of restoration may not be used as a measure of damages if such costs exceed the loss of value

(ie.,

damages) sustained by the injured party.” Defs. Joint Mem. at 38-39.

The rule of

Ault

and

Thorsen

has been summarized as follows:

Generally, the measure of damages for tortious injury to real property is the difference between the value of the property immediately before and immediately after the injury.

Thorsen v. Johnson,

745 P.2d 1243, 1244-45 (Utah 1987);

Ault v. Dubois,

739 P.2d 1117, 1120 (Utah App.1987);

see also Pitts v. Pine Meadow Ranch, Inc.,

589 P.2d 767, 769 (Utah 1978). An alternative measure is the cost of restoration, provided that restoration costs do not exceed diminution in value.

See Thorsen,

745 P.2d at 1244 -45 n. 1;

Ault,

739 P.2d at 1120 .

Henderson v. For-Shor Co.,

757 P.2d 465, 471 (Utah Ct.App.1988). Of course,

Ault

and

Thorsen

are speaking of damages in the

legal

sense. The argument advanced by the defendants simply begs the question whether “damages” as used in their CGL policies, read in light of Utah law, refers to damages in that sense. Moreover, in relying on

Ault

and

Thorsen ,

defendants logically may be forced to concede that at least up to the point that the diminution in value of the property is exceeded, costs of restoration recoverable by EPA under CERCLA

are

legal damages within their own theory of coverage.

See, e.g., Federal Insurance Company v. Susquehanna Broadcasting Company,

727 F.Supp. 169 (M.D.Pa.1989); T. Myers,

Insurance Coverage for CERCLA Cleanup Costs: Resolving the Intercircuit Conflict,

45 Ark. L.Rev. 747 (1992).

NEPACCO,

the Eighth Circuit noted that “from the viewpoint of the lay insured, the term ‘damages’ could reasonably include all monetary claims, whether such claims are described as damages, expenses, costs, or losses.” 842 F.2d at 985.

From this language, Quaker State argues that

NEPACCO,

if anything, indicates the Utah Supreme Court would

not

adopt the narrow, technical reading of “damages” urged by the defendants. Quaker State Opp.Mem. at 85. Quaker State points to cases such as

LDS Hospital v. Capitol Life Ins. Co.,

765 P.2d 857 (Utah 1988), which in considering the use of the term “accident” in policy language, said:

“[W]e are guided by the principle that it is the common understanding of the term which must be used and not its technical meanings. The insurance company may, of course, insert in its policy any definition of ‘accident’ it chooses but, in the absence of doing so, it must accept the common understanding of the term by the ordinary member of the purchasing public.”

765 P.2d at 861 (quoting

Harbeintner v. Crown Life Ins. Co.,

46 Or.App. 579 , 612 P.2d 334, 335 (1980)). Thus, Quaker State contends, absent a specific definition in the defendants’ CGL policies, “damages” should be construed according to “the common understanding of the term by the ordinary member of the purchasing public” and that as

NEPACCO

suggests, “damages” would “include all monetary claims, whether such claims are

*1291

described as damages, expenses, costs, or losses,” including CERCLA remediation expenses.

Independent Petrochemical Corp. v. Aetna Casualty & Sur. Co.,

944 F.2d 940 (D.C.Cir.1991),

cert. denied,

- — U.S. -, 112 S.Ct. 1777 , 118 L.Ed.2d 435 (1992), the United States Court of Appeals for the D.C. Circuit departed from NEPACCO’s reading of Missouri law on the issue of covered “damages.” Noting that the Missouri cases,

inter alia,

mandate that “[m]eaning of words or terms in an insurance contract is tested by common understanding,” and that a conflicting technical meaning of a word shall not be applied “unless it plainly appears that the technical meaning is intended,” the D.C. Circuit observed:

Our difficulty with

NEPACCO

is that it fails to apply these Missouri law principles ____

Liability for environmental cleanup costs quite naturally fits this common and ordinary understanding of damages----

[W]ith the exception of NEPACCO, in every case in which the operative state’s rules of insurance contract interpretation required — -as Missouri’s does — resort to the common and ordinary understanding of language, the word “damages” has been construed to cover reimbursement for environmental response costs____ Decisions construing the term differently were apparently governed by state rules of interpretation under which the technical or legal meanings of language controlled.

944 F.2d at 946 (citations omitted).

The D.C. Circuit concluded that under Missouri law, “damages” as commonly understood “includes costs the insured is legally obligated to pay ... as reimbursement for [state and federal] activities in remedying environmental harm.”

Id.

at 947 .

More recently,

Morton International, Inc. v. General Accident Insurance Co. of America,

134 N.J. 1 , 629 A.2d 831 (1993), reached the same conclusion, applying New Jersey law: “The clear weight of authority, however, among both federal and state courts adopts the view that the undefined term ‘damages’ in CGL policies should be accorded its plain, non-teehnical meaning, thereby encompassing response costs imposed to remediate environmental damage____” 134 N.J. at 25-26 , 629 A.2d at 845 (citations omitted).

*1292

Utah law approaches the reading of insurance policies as follows:

Generally, the interpretation of insurance policy language presents a question of law to be decided by the trial judge using accepted methods of construction. Specifically, the terms of insurance contracts, as well as all contracts, are to be interpreted in accordance with their usually accepted meanings and should be read as a whole, in an attempt to harmonize and give effect to all of the contract provisions. To protect against overreaching insurers and because courts construe contracts against their drafters, ambiguities in the policy are resolved in favor of coverage. Policy language is ambiguous if it is not “ ‘plain to a person of ordinary intelligence and understanding, viewing the matter fairly and reasonably, in accordance with the usual and natural meaning of the words, and in the light of existing circumstances, including the purpose of the policy.’”

Nielsen v. O’Reilly,

848 P.2d 664, 665-66 (Utah 1992) (footnote omitted).

Accord, United States Fidelity & Guar. Co. v. Sandt,

854 P.2d 519, 522 (Utah 1993) (“ambiguous or uncertain language in an insurance contract that is fairly susceptible to different interpretations should be construed in favor of coverage”). The “usually accepted meanings” of the words in an insurance policy are the ones found in common usage: ‘“If a policy of insurance is clear and unambiguous, the words are to be taken and understood in their plain, ordinary and popular sense, as an average or reasonable person with ordinary understanding would construe them.’ ”

Perkins v. Great-West Life Assurance Co.,

814 P.2d 1125, 1128-29 (Utah Ct.App.1991) (quoting

Draughon v. CUNA Mutual Ins. Soc’y,

771 P.2d 1105, 1108 (Utah App.1989));

accord, United States Fidelity & Guar. Co. v. Sandt,

854 P.2d at 523 (“the language of an insurance contract must be interpreted as an ordinary purchaser of insurance would understand it”).

Read in this fashion, legalistic distinctions between “legal” and “equitable” remedies appear to be immaterial.

As the Ninth Circuit explained in

Aetna Casualty & Sur. Co. v. Pintlar Corp.,

“Any definition of ‘damages’ which is grounded upon the ancient division between law and equity — such as the definition now proffered by the insurers — would hardly be an ‘ordinary and accepted meaning in the eyes of a reasonably prudent lay person.” 948 F.2d at 1513 (citations omitted). Similarly, in

Bausch & Lomb, Inc. v. Utica Mutual Ins. Co.,

330 Md. 758 , 625 A.2d 1021 (Ct.App.1993), the Court of Appeals of Maryland said:

Absent an express provision in the document itself, insurance policy-holders

surely do not anticipate that coverage will depend upon the mode of relief, i.e., a cash payment rather than an injunction, sought by an injured party. Policy-holders will, instead, reasonably infer that the insurer’s pledge to pay damages will apply generally to compensatory outlays of various kinds, including expenditures made to comply with administrative orders or formal in

*1293

junctions. The ordinary person understands “damages” as meaning money paid to make good an insured loss. In this context, environmental response costs fall within that definition.

330 Md. at 782 , 625 A.2d at 1033 (footnote omitted). The Maryland court correctly points out that “damages,” as commonly, plainly or ordinarily understood, is not without limits: “The payment of damages — even broadly defined — remains distinct from other expenditures, such as fines, penalties, or assessments, which would not be covered under the CGL policy.”

Id.

To the same effect,

see Independent Petrochemical,

944 F.2d at 947 .

As of the date of this memorandum opinion, the Utah courts have not yet addressed, in a reported case, the question of CERCLA response costs as “damages.” Nevertheless, following the reasoning in cases such as

Independent Petrochemical, Morton,

and

Bausch & Bomb

in light of prior pronouncements by the Utah courts concerning insurance policy language,

it appears that the Utah courts would construe “damages” as used in defendants’ CGL policies to encompass CERCLA environmental response costs.

To the extent the policies’ reference to “damages” is ambiguous, the ambiguity must be resolved in favor of coverage. As the Utah Supreme Court explained in

LDS Hospital v. Capitol Life Ins. Co.:

[T]his Court, similar to courts in many jurisdictions, has long subscribed to the view that any ambiguity or uncertainty in the language of an insurance policy must be resolved in favor of coverage. Also, since the policy is drawn by the insurer, ambiguities are construed against that party. One acknowledged rationale underlying this sound determination is the need to afford the insured the protection he or she endeavored to secure by paying premiums ____

765 P.2d at 858 (footnotes omitted).

See United States Fidelity & Guar. Co. v. Sandt,

854 P.2d at 522 (“ambiguous or uncertain language in an insurance contract that is fairly susceptible to different interpretations should be construed in favor of coverage”);

American Casualty Co. v. Eagle Star Ins. Co., Ltd.,

568 P.2d 731, 734 (Utah 1977) (“[I]f an insurance policy is ambiguous or uncertain, so that it is fairly susceptible to different interpretations, any doubt should be resolved in favor of insurance coverage.” (citations omitted));

Perkins v. Great-West Life Assurance Co.,

814 P.2d 1125, 1128 (Utah Ct.App.1991).

The proper query concerning ambiguity, as framed by the court in

LDS Hospital ,

is “ Would the meaning [of the language of the insurance contract] be plain to a person of ordinary intelligence and understanding, viewing the matter fairly and reasonably, in accordance with the usual and natural meaning of the words, and in light of existing circumstances, including the purpose of the policy[?].’”

Id.

at 858-59 (quoting

Auto Lease Co. v. Central Mutual Ins. Co.,

7 Utah 2d 336, 339 , 325 P.2d 264, 266 (1958)).

See Dawson v. Dawson,

841 P.2d 749, 751 (Utah Ct.App.1992). Posing that query in the context of this action, the Court is satisfied that the meaning of “damages,” viewed as

LDS Hospital

instructs, would be “plain to a person of ordinary intelligence and understanding.” Its plain meaning to such a person would not carry the more subtle, fine-tuned legal distinctions now urged herein by the defendant insurers; it would, as

NEPACCO

suggests, “include

all monetary claims,

whether such claims are described as damages, expenses, costs, or losses.” 842 F.2d at 985 (emphasis added).

If, as Quaker State insists, “an insured is entitled to the broadest protection he could have reasonably understood to be provided by the policy,”

(Fuller v. Director of Finance,

694 P.2d 1045, 1047 (Utah 1985)

), it

*1294

follows that Quaker State should be entitled to the broadest protection that reasonably flows from the language of defendants’ CGL policies, including coverage for “damages” in the form of expenses incurred in remedial action undertaken consistent with CERCLA requirements.

III. WHETHER RELEASES OF HAZARDOUS WASTE RESULTING IN PROPERTY DAMAGE AT THE EKOTEK SITE CONSTITUTE ONE OR MORE COVERED “OCCURRENCES.”

A. “Occurrence.”

Defendants submit that under the insurance policies issued to Quaker State, coverage is available only in the event of an “occurrence,” which is defined in the policies as:

an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.

Fireman’s Fund Mem. at 27 (quoting

id.

at Exhibit 19, Fireman’s Fund “Master Policy: Minit-Lube” #MXP 5670727 (Sept. 1, 1983—Sept. 1, 1985)). They further contend that “[t]he intentional discharge of contaminants at the Ekotek Site in the regular course of business demonstrates that there was no ‘accident’ and hence, no ‘occurrence,’ ” regardless of whether the property damage was “neither expected nor intended” from Quaker State’s standpoint. Defs. Joint Mem. at 12.

Quaker State contends that as defined, “occurrence” excludes coverage “only for bodily injury or property damage actually expected or intended

by the

insured,” (Quaker State Mem. at 21 (emphasis in original)

), and that defendants have failed to carry their burden under Rule 56

to show that coverage is excluded under the definition of “oc

*1295

currence” because they have failed “to point to any evidence in the record that [Quaker State] expected or intended to cause property damage at the Ekotek [S]ite ...” Quaker State Reply Mem. at 12. “ ‘The occurrence clause provides coverage when the damage was unexpected and unintended, though caused by an intentional act____’ ”

Id.

at 13 (quoting

New Castle County v. Hartford Accident & Indem. Co.,

970 F.2d 1267, 1269 (3d Cir.1992)).

B. History and Rules of Construction.

The adoption of the term “occurrence” to define coverage of a loss represents one step in the continuing evolution of standard CGL insurance policies:

After 1966, the term “occurrence” replaced the term “accident,” in the standard CGL policy as the event triggering coverage. The “occurrence” language is generally understood to offer broader coverage than that offered by the former term, “accident.” 11 G. Couch,

Couch on Insurance 2d

§ 44:285 at 437 (1982). The change to occurrence-based coverage was made in response to the need for coverage against damages resulting from continued or repeated exposure____

United States Fidelity & Guar. Co. v. Morrison Grain Co.,

734 F.Supp. 437, 443 (D.Kan. 1990);

accord,

1 R. Long, The Law of Liability Insurance § 1.21, at 1-88 (1990); 7A J. Appleman, Insurance Law and Practice §§ 4492-93 (Berdal ed. 1979).

Adopting the concept of “occurrence” in order to broaden the available coverage was wholly consistent with the overall purpose of a CGL policy:

The primary purpose of a comprehensive general liability policy is to provide broad comprehensive insurance. Obviously the very name of the policy suggests the expectation of maximum coverage. Consequently the comprehensive policy has been one of the most preferred by businesses and governmental entities over the years because that policy has provided the broadest coverage available. All risks not expressly excluded are covered, including those not contemplated by either party. See The Applicability of General Liability Insurance to Hazardous Waste Disposal, 57 S.Cal.Law Review 745 (1984).

James Graham Brawn Foundation, Inc. v. St. Paul Fire & Marine Ins. Co.,

814 S.W.2d 273, 278 (Ky.1991). Moreover, “[c]ourts and commentators alike are in agreement that the term ‘occurrence’ is to be broadly and liberally construed in favor of extending coverage to the insured.”

Id.

(citing

Buckeye Union Ins. Co. v. Liberty Solvent & Chem. Co., Inc.,

17 Ohio App.3d 127 , 477 N.E.2d 1227 (1984)). As a general rule, “the insured is entitled to all the coverage he may reasonably expect under the policy. Only an unequivocal, conspicuous and plain and clear manifestation of the company’s intent to exclude coverage will defeat this expectation.”

Id.

at 277 (citations omitted);

accord, United States Fidelity & Guar. Co. v. Sandt,

854 P.2d at 522-23 .

C. Burden of Proof.

As the insured, Quaker State bears the burden of proving that its claim comes within the broad meaning of “occurrence” and thus comes within the coverage under an insurance policy.

See, e.g., Chemical Lea-man Tank Lines, Inc. v. Aetna Casualty & Sur. Co.,

817 F.Supp. 1136, 1143-44 (D.N.J. 1993) (definition of “occurrence” in CGL policy constitutes grant of basic coverage under policy, and insured bears the burden of proving all elements of the definition);

see generally, Blair v. Metropolitan Life Ins. Co.,

974 F.2d 1219, 1221 (10th Cir.1992) (Oklahoma law);

McGee v. Equicor-Equitable HCA Corp.,

953 F.2d 1192, 1205 (10th Cir.1992);

E-Z Loader Boat Trailers, Inc. v. Travelers Indem. Co.,

106 Wash.2d 901, 906 , 726 P.2d 439, 443 (1986).

See also Amoco Oil Co. v. Borden, Inc.,

889 F.2d 664, 672-73 (5th Cir.1989).

CERCLA imposes joint and several, strict liability for cleanup costs on potentially responsible parties, including: present and past owners and operators of hazardous waste facilities; those who arrange for disposal of hazardous substances; and transporters of hazardous waste. Additionally, the EPA may recover damages for injury, destruction, or loss of natural

*1308

resources, caused by the pollution. CERCLA also empowers the EPA to issue administrative orders, to compel PRPs to clean up sites when necessary to protect public health, welfare and the environment.

G. Reynolds, Comment,

Comprehensive General Liability Policy Coverage of CERCLA Cleanup Costs: A Proposed Guide to Interpretation,

2 Md.J.Contemp.Legal Issues 33, 43 (1991) (footnotes omitted). CERCLA specifically provides that any party failing to comply with such an order is subject to severe fines and, if the EPA attempted to clean up the site itself, that PRPs could be liable for three times the cost of clean-up as punitive damages, in addition to actual clean-up costs. “Thus, in most cases, insureds are forced by the threat of ruinous Lability to begin clean-up efforts prior to the final determination of coverage.”

Id.

Indeed, the EPA’s “PRP” letters are not trifling matters. If the PRP letter requires disclosure of information and the responsible party fails to respond, the EPA can seek civil penalties of up to $25,000 per day. 42 U.S.C. § 9604 (e)(5)(B). Further, the EPA may issue an administrative order requiring a PRP to take specific action, violation of which “may result in civil penalties of up to $25,000 per day and punitive damages up to three times the amount of costs incurred by EPA as a result of the violation.”

Browning-Ferns Indus, v. Muszynski,

899 F.2d 151 , 153 (2d Cir.1990). Arguably, if a PRP wants to present its defense, it must begin submitting evidentiary materials as the EPA develops its administrative record, well before an EPA court action is ever filed.

Resistance to EPA efforts to obtain voluntary compliance may be factored into the apportionment of a responsible party’s share of cleanup costs in subsequent litigation.

See, e.g., United States v. R.W. Meyer, Inc.,

932 F.2d 568, 571 (6th Cir.1991) (“The trial court observed further that appellant ‘neither assisted nor cooperated with the EPA officials during their investigation and eventual cleanup of the ... site’ ”). On the other hand, voluntary compliance with EPA response efforts may serve to insulate the insured against contribution claims later brought by nonsettling parties.

See

42 U.S.C. § 9613 (f)(2);

United States v. Cannons Engineering Corp.,

899 F.2d 79, 92 (1st Cir.1990).

As the Second Circuit recognized in

Avon-dale Indus., Inc. v. Travelers Indem. Co.,

887 F.2d 1200 , 1206 (2d Cir.1989),

cert. denied,

496 U.S. 906 , 110 S.Ct. 2588 , 110 L.Ed.2d 269 (1990), the public interest, as well as the economic interests of both the insured and the insurer, would counsel cooperation at early stages of remedial action under CERCLA: “Common sense argues that for Travelers to proffer a defense now is better for it, Avondale and the public interests in a prompt cleanup of the hazardous waste.” In

Avondale,

a demand letter from the Louisiana Department of Environmental Quality had an effect equivalent to filing of a civil lawsuit in triggering the insurer’s duty to defend under its policy.

Several other eases have held that an EPA or other administrative order or other notice of potential liability under CERCLA comes within the meaning of “suit” as used in liability policies.

See, e.g., Aetna Casualty & Sur. Co. v. Pintlar Corp.,

948 F.2d 1507 , 1516-18 (9th Cir.1991) (Idaho law);

Higgins Indus. v. Firemen’s Fund Ins. Co.,

730 F.Supp. 774, 776-79 (E.D.Mich.1989);

A. Y. McDonald v. Indus., Inc. v. Insurance Co. of North America,

475 N.W.2d 607, 628 (Iowa 1991);

C.D. Spangler Constr. Co. v. Industrial Crankshaft & Engineering Co.,

326 N.C. 133, 153 , 388 S.E.2d 557, 569-70 (1990);

United States Fidelity & Guar. Co. v. Specialty Coatings Co.,

180 Ill.App.3d 378 , 129 Ill.Dec. 306, 314 , 535 N.E.2d 1071, 1079 ,

app. denied,

127 Ill.2d 643 , 136 Ill.Dec. 609 , 545 N.E.2d 133 (1989);

Polkow v. Citizens Ins. Co. of America,

180 Mich.App. 651 , 447 N.W.2d 853, 856 (Ct.App. 1989),

rev’d on other grounds,

438 Mich. 174 , 476 N.W.2d 382 (1991);

United States Aviex Co. v. Travelers Ins. Co.,

125 Mich.App. 579, 590 , 336 N.W.2d 838, 843 (1983). As the Illinois court explained in

Specialty

*1309

Coatings,

where an agency has sought “voluntary” compliance by potentially responsible parties:

It may be presumed that a potentially responsible party responding to the U.S. EPA’s letter will be requested to undertake voluntarily such actions as the agency could choose to require through an action in the court. The fortuitous choice to first seek voluntary compliance instead of court action does not eliminate the specter of potential liability for clean-up costs and damages to be incurred by defendants. Indeed, it is the very threat of available formal legal action that is expected to motivate the recipient of a PRP letter into responding acceptability to the government’s suggestions.

180 Ill.App.3d at 383 , 129 Ill.Dec. at 314 , 535 N.E.2d at 1079 .

See also Hazen Paper Co. v. United States Fidelity & Guar. Co.,

407 Mass. 689 , 555 N.E.2d 576, 581-82 (1990) (insured “had no practical choice other than to respond actively to the letter” from EPA requesting voluntary action).

The concept of “suit” as the trigger of the insurers’ duty to defend an insured “potentially responsible party” is not without logical or practical limits. “Suit” first connotes a formal effort to impose legal liability through a civil action, a judicial proceeding. In

Fireman’s Fund Ins. Co. v. Ex-Cell-O Corp.,

662 F.Supp. 71, 75 (E.D.Mich.1987), the court observed that “coverage does not hinge on the form of action taken or the nature of the relief sought, but on an actual or threatened use of legal process to coerce payment or conduct by the policyholder.” A “suit” according to

Ex-Cell-O,

“includes any effort to impose on the policyholders

a liability ultimately enforceable by a court, ... Id.

(emphasis added). It seems immaterial whether the relief sought is characterized as equitable or legal, whether EPA seeks injunctive relief compelling remedial action, (see 42 U.S.C. § 9606 ), or chooses to undertake remediation itself and later sue responsible parties for the costs incurred under 42 U.S.C. § 9607 (e)(3).

Cf. United States Aviex Co. v. Travelers Ins. Co.,

125 Mich.App. at 590 , 336 N.W.2d at 843 (1983) (“It is merely fortuitous ... that the state has chosen to have plaintiff remedy the contamination problem, rather than choosing to incur the costs of clean-up itself and then suing plaintiff to recover those costs.”).

A contingent liability that is purely hypothetical or speculative as to incidence and amount likely would not qualify as a “suit” triggering an insurer’s duty to defend. Nor is the duty to defend triggered where under the facts as pleaded or as ascertained, it is not even arguable that,

e.g.,

the release of pollutants was “sudden and accidental.”

See Grant-Southern Iron & Metal Co. v. CNA Ins. Co.,

669 F.Supp. 798 (E.D.Mich.1986) (no duty to defend where complaint “does not arguably present” a covered claim and no evidence suggests that a covered claim “could be found by ‘looking behind the complaint’ ”),

reversed on other grounds,

905 F.2d 954 (6th Cir.1990). It has also been suggested that the duty to defend does not extend to EPA actions under CERCLA that are preventative,

i.e.,

that concern property damage that is threatened rather than actual.

See, e.g., Hazen Paper Co. v. United States Fidelity & Guar. Co.,

407 Mass. 689 , 555 N.E.2d 576, 580 (1990) (a letter which “claims only a threat of release of hazardous material ... does not allege the occurrence of any damage that falls within the policy coverage”).

Moreover, under Utah law the duty to defend does not arise only upon the pursuit of formal litigation against the insured:

The duty to defend is broader than the duty to indemnify, but the insurer’s obligation'is not unlimited; the duty to defend is measured by the nature and kinds of risks covered by the policy and

arises whenever the insurer ascertains facts which give rise to the potential of liability under the

policy____

Deseret Fed. Sav. & Loan Co. v. United States Fidelity & Guar. Co.,

714 P.2d 1143, 1146 (Utah 1986) (citing

Gray v. Zurich Insurance Co.,

65 Cal.2d 263, 275-77 , 54 Cal. Rptr. 104, 113 , 419 P.2d 168, 177 (1966)).

An EPA potentially responsible party letter that seeks a binding commitment from a PRP to pay CERCLA response costs, accompanied by the threat of entry of compulsory orders or the commencement of litigation and the imposition of statutory penalties if

*1310

the PRP does not comply, plainly enables “the insurer [to] ascertain[ ] facts which give rise to the potential of liability under the policy,” thus triggering the insurer’s duty to defend.

Deseret Fed. Sav. & Loan Co.,

714 P.2d at 1146 .

Courts have distinguished “between groundless suits giving rise to the duty to defend, and actions which, even if successful, would not be within the policy and against which the insurer has no duty to defend.”

Great Lakes Container Corp. v. National Union Fire Ins. Co., 272

F.2d 30, 34 (1st Cir.1984). They have also acknowledged that the insurer is duty-bound to defend its insured only “until it can confine the possibility of recovery to claims outside the coverage of the policy.”

American Mutual Liability Ins. Co. v. Neville Chemical Co.,

650 F.Supp. 929, 931 (W.D.Pa.1987). So long as there is the possibility that liability with policy coverage exists, however, the insurer remains obligated to defend the insured against the threatened imposition of such liability.

The insured’s need for effectivé defense at the pre-litigation stage of CERCLA has been noted elsewhere: “Unlike the garden variety demand letter, which only exposes one to a potential threat of future litigation, a PRP notice carries with it immediate and severe implications____”

Aetna Casualty & Sur. Co. Pintlar Corp.,

948 F.2d at 1516.

Throughout the investigation process, the EPA develops an administrative record for the site and makes decisions that may seriously affect the cost of cleanup. A PRP may not seek judicial review of the EPA’s actions until the EPA sues for cost recovery pursuant to 42 U.S.C. § 9607 (a)____ Even after a PRP gets to court, 42 U.S.C. § 9613 (j)(l) limits judicial review of the EPA’s actions to an administrative record that is prepared by the EPA itself, according to 42 U.S.C. § 9613 (k). Ray argues that if a PRP wants to present its side of the story, it must begin submitting evidence for the administrative record immediately upon receipt of the PRP letter ... [and] that crucial discovery takes place between the receipt of a PRP letter and the filing of an actual complaint____

Ray Indus., Inc. v. Liberty Mutual Ins. Co.,

974 F.2d at 759.

The administrative action in this case reflects a tangibly coercive effort to obtain the “cooperation” of Quaker State (and other PRPs connected with the Ekotek Site) in defraying environmental response costs, costs representing a liability ultimately enforceable by a court under CERCLA. The June 12, 1989 letter from the EPA supplied Quaker State with draft copies of an “Administrative Order on Consent (AOC)” and a “Unilateral Administrative Order (UAO),” and further advised that “[i]f the AOC is not memorialized by all appropriate parties by July 7, 1989, the UAO will be signed into effect and immediately implemented by EPA.” Exhibit 16 to Quaker State Mem., at 2. “The latter event,” the letter warns, “may lead to the assessment of treble penalties on Responsible Party(ies) during subsequent cost recovery actions.”

Id.

Insureds in the position of Quaker State should not be put in the position of having to elect to incur far greater potential liability under CERCLA by forcing matters into traditional civil litigation before being able to avail themselves of the benefits of insurance coverage, including the insured’s affirmative duty to defend the insured under the terms of the policy. Nothing in the CGL policy language requires such a result. According to its commonly understood meaning, “any suit against the insured” seeking to recover damages on account of property damage embraces coercive legal proceedings regardless of the particular forum chosen by legislature, be it a judicial or a “quasi-judicial” administrative one. The need for and purpose of the defense of the insured is the same in either setting. So is the scope of the insurer’s duty to defend. Coverage of an enforceable legal liability for property damage cannot fairly be denied merely because the mechanism created to determine that liability is procedurally unusual or structurally unique.

Cf. Ray Indus., Inc. v. Liberty Mutual Ins. Co.,

974 F.2d at 764 (“PRP letters may even represent a unique legal creation, with no true parallel in any other area of administrative law.”).

See generally,

Barr,

CERCLA Made Simple: An Analysis of Cases Under the Comprehensive Environmental Response,

*1311

Compensation and Liability Act of 1980,

45 Bus.Law. 923, 968-83 (1990).

Had the defendants desired a narrower, more particularized definition of that duty, they could have written one into their policies. Even after the enactment of CERCLA in 1980, however, the policy language remained unaltered in the defendants’ policies. Unless coverage is defeated as a matter of law by the operation of the pollution exclusion

(see

Part V,

infra),

or as a matter of fact by the insured’s alleged delay in giving notice under the policy terms,

(see

Part VII,

infra),

defendants’ duty to defend has been triggered by the EPA actions taken with reference to the Ekotek Site.

V. APPLYING THE POLLUTION EXCLUSION CLAUSE IN THE DEFENDANTS’ CGL POLICIES TO RELEASES OF HAZARDOUS WASTE AT THE EKOTEK SITE; CONSTRUCTION AND APPLICATION OF THE “SUDDEN AND ACCIDENTAL” EXCEPTION.

A. The Pollution Exclusion and the “Sudden and Accidental” Exception.

Defendants’ CGL policies include language providing that coverage does not apply:

[t]o bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalies, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.

Liberty Mutual Comprehensive General Liability Policy No. LG1-161-028200-065, at Section 1, Exclusion (f) (annexed as Exhibit “A” to Affidavit of Joseph P. Covert, dated January 6, 1993, Exhibit 18 to Liberty Mutual Mem.).

“The standard form of the pollution exclusion was introduced in 1970, when it became a mandatory endorsement to the 1966 revision of the CGL, and it is part of the 1973 revision of the CGL.” 7A John A. Appleman, Insurance Law and Practice § 4524 (Berdal ed. 1979 & Supp.1993).

“Faced with greater potential liability as a result of new federal environmental laws, the insurers adopted the above standard exclusion in an effort to limit their liability.”

United States Fidelity & Guar. Co. v. Morrison Grain Co.,

734 F.Supp. at 445 (citing Note,

Insurance Coverage for Superfund Liability: A Plain Meaning Approach to the Pollution Exclusion Clause,

27 Washburn L.J. 161 , 170-71 (1987)),

aff'd,

999 F.2d 489 (10th Cir.1993).

*1312

Since the early 1980s, many insurers have included “absolute” pollution exclusions in their CGL policies, eliminating coverage for liability arising out of the discharge or cleanup of pollutants, with no exception for “sudden and accidental” releases. 7A John A. Appleman, Insurance Law and Practice § 4525 (Berdal ed. 1979 & Supp.1993).

See, e.g., Union Mutual Fire Ins. Co. v. Hatch,

835 F.Supp. 59, 64-65 (D.N.H.1993).

The CGL policies at issue in this ease, however, were drafted with the prior standard language, including the “sudden and accidental” exception.

B. Burden of Proof.

The defendants contend that it is Quaker State’s burden to show the applicability of the “sudden and accidental” exception. DefsJoint Mem. at 15 n. 9 (citing

Northern Ins. Co. v. Aardvark Assoc., Inc.,

942 F.2d 189, 194-95 (3d Cir.1991);

A. Johnson & Co. v. Aetna Casualty & Sur. Co.,

933 F.2d 66 , 75 n. 4 (1st Cir.1991);

Park-Ohio Indus., Inc. v. Home Indemnity Co.,

975 F.2d 1215 (6th Cir.1992)). While under Utah law, the burden is placed upon the insurer to prove that the insured’s claim falls within an exclusion from coverage,

(see, e.g., Draughon v. CUNA Mutual Ins. Soc.,

771 P.2d 1105, 1108 (Utah Ct.App.1989),

it is not clear whether under Utah law the insurer also bears the burden to show that

exceptions

to an exclusion do not apply. Some courts, applying the law of other states, have so held.

See, e.g., New Castle County v. Hartford Accident & Indem. Co.,

933 F.2d 1162, 1181-82 (3d Cir. 1991) (Delaware law);

Remington Arms Co. v. Liberty Mutual Ins. Co.,

810 F.Supp. 1406 , 1413 n. 2 (D.Del.1992) (Connecticut law); 19 G. Couch, Couch on Insurance § 79:385, at 338 (M. Rhodes rev. ed. 1983). The better rule appears to be that the insured bears the burden of showing that discharge of pollutants was “sudden and accidental” as an aspect of proving coverage under a CGL policy.

See Aardvark,

942 F.2d at 194-95 ;

Dakhue Landfill, Inc. v. Employers Ins. of Wausau,

508 N.W.2d 798, 803 (Minn.Ct.App.1993);

Just v. Land Reclamation, Ltd.,

151 Wis.2d 593 , 445 N.W.2d 683, 688 (Ct.App.1989);

Fireman’s Fund Ins. Co. v. Ex-Cell-O Corp.,

702 F.Supp. 1317, 1328-29 (E.D.Mich.1988),

Fischer & Porter Co. v. Liberty Mutual Ins. Co.,

656 F.Supp. 132, 140 (E.D.Pa.1986). This would also seem consistent with the proposition “that in civil cases the burden rests as a general rule ‘on the party who substantially asserts the affirmative of the issue.’ ”

State in the Interest of N.H.B.,

777 P.2d 487, 491 (Utah Ct.App.1989) (quoting

Lilienthal v. United States,

97 U.S. 237, 266 , 24 L.Ed. 901 (1878)).

Many of the numbered paragraphs set forth in the parties’ statements of uncontroverted facts describe particular events, or series of events, in which drain oil, acid sludge or other materials were discharged onto the land or into the water at the Ekotek Site. Defendants contend that these occurrences fall squarely within the terms of the pollution exclusion, and that as a consequence, they owe no duty to defend or indemnify Quaker State in connection with its liability under CERCLA. Quaker State, on the other hand, characterizes many of these

*1313

events as “sudden and accidental” releases which are excepted from the operation of the pollution exclusion by its express terms.

See

Quaker State Mem. at 4-9, ¶¶ 10-22; Defs. Joint Mem. at 3-9, ¶¶ 3, 4(a) — (g), 6-8; Quaker State Reply at 3-10, ¶¶ 3, 4(a)-(g), 6-8; Liberty Mutual Mem. at 16-27, ¶¶ 17-23, 24, 25-26, 28, 33, 36, 37, 39, 40, 43, 46; Fireman’s Fund Mem. at 8-19, ¶¶ 15, 17, 19-22, 23-24, 25-26, 28, 32, 35, 36-39, 40. Whether Quaker State has met its burden to show coverage must be measured according to the proper construction of the pollution exclusion and the “sudden and accidental” exception.

C. Rules of Construction re: Exclusions From Coverage.

It seems helpful at this point to recall the rules of construction applicable under Utah law to exclusions from coverage under insurance policies:

The scope of such an exclusion will be interpreted according to its clear and unambiguous language.

Dautel v. United Pac. Ins. Co.,

48 Wash.App. 759 , 740 P.2d 894 (1987), (exclusionary clauses are narrowly construed, particularly when the insurer has expressed coverage in broad, inclusive terms). Unless there is some ambiguity or uncertainty in the language of the policy, it should be enforced according to its terms.

St. Paul Fire and Marine Ins. v. Commercial Union Assurance,

606 P.2d 1206 (Utah 1980). We presume that the language used by Bear River Mutual was included for the purpose stated and to give effect according to its usual and ordinary meaning.

Marriot v. Pacific Nat. Life Assurance Co.,

24 Utah 2d 182 , 467 P.2d 981 (1970). In the absence of a clear and unambiguous definition in the policy, the term “automobile” should be given its common sense, plain meaning—

Bear River Mutual Ins. Co. v. Wright,

770 P.2d 1019, 1020-21 (Utah Ct.App.1989) (footnote omitted, citing

Deseret Sav. Bank v. Francis, 62

Utah 85, 88, 217 P. 1114, 1115 (1923)).

See also Matlock v. Government Employees Ins. Co.,

546 P.2d 903 (Utah 1976) (Tuckett, J.) (discussing “[t]he common ordinary meaning to be attributed to the policy’s language____”).

While “ordinary contract rules should be followed”

when “construing the meaning of an insurance policy term,” including an exclusion,

It should also be kept in mind that “the purpose of insurance is to insure,” and clauses excluding activities from coverage are to be strictly construed against the insurer.

LDS Hosp. v. Capitol Life Ins. Co.,

765 P.2d 857, 859 (Utah 1988). Parties to an insurance policy, however, “are free to define the exact scope of the policy’s coverage and may specify the losses or encumbrances the policy is intended to encompass.”

Valley Bank & Trust Co. v. U.S. Life Title Ins. Co.,

776 P.2d 933, 936 (Utah App.1989) (quoting

Brown v. St. Paul Title Ins. Corp.,

634 F.2d 1103, 1107 (8th Cir.1980)). The insurer may avoid assuming the risk of loss associated with a particular activity or place by using “language which clearly and unmistakably communicates to the insured the specific circumstances under which the expected coverage will not be provided.”

Village Inn Apartments v. State Farm Fire & Casualty Co.,

790 P.2d 581, 583 (Utah App. 1990) (quoting

Reserve Ins. Co. v. Pisciotta,

30 Cal.3d 800 , 180 Cal.Rptr. 628 , 640 P.2d 764, 769 (1982)). If the policy terms excluding coverage are unambiguous, then “we interpret those terms in accordance with their plain and ordinary meaning.”

Valley Bank,

776 P.2d at 936 .

Dawson v. Dawson,

841 P.2d 749, 750 (Utah Ct.App.1992). “[PJrovisions that limit or exclude coverage should be strictly construed against the insurer.”

United States Fidelity

*1314

& Guar. Co. v. Sandt,

854 P.2d 519, 523 (Utah 1993) (citations omitted).

D. Construction of the “Sudden and Accidental” Exception.

Hartford

and the objective temporal element.

The insurance policy exclusion language now at issue, with its “sudden and accidental” exception, was previously addressed by this Court in

Hartford Accident & Indem. Co. v. U.S. Fidelity & Guar. Co.,

765 F.Supp. 677 (D.Utah 1991),

affirmed,

962 F.2d 1484 (10th Cir.),

cert. denied,

— U.S. -, 113 S.Ct. 411 , 121 L.Ed.2d 335 (1992). The

Hartford

case was an action for declaratory judgment brought by Hartford Accident & Indemnity Co. (“Hartford”) to determine whether Hartford’s comprehensive general liability (CGL) insurance policy issued to El Paso Natural Gas Co. (“El Paso”) excluded coverage for continuous pollution. The Hartford policy included a pollution exclusion with a “sudden and accidental” exception. El Paso periodically discharged waste lubricating oil which later proved to contain a polychlorinated biphenyl (PCB) into unlined earthen disposal pits. El Paso argued that their Hartford policy covered the damage caused by the PCBs because the damage was unexpected and unintended, and the damage therefore fell within the sudden and accidental exception to the pollution exclusion.

There being no controlling Utah Supreme Court precedent, the Court approached interpretation of the “sudden and accidental” exception as a question of first impression, reviewing decisions from courts in other circuits and other states:

The courts are divided as to the proper interpretation of the terms sudden and accidental in the context of liability insurance. Some courts interpret the phrase to mean “unexpected and unintended.”

See e.g., Anderson & Middleton Lumber Co. v. Lumbermen’s Mutual Casualty Co.,

53 Wash.2d 404 , 333 P.2d 938 (1959);

New England Gas & Electric Ass’n v. Ocean Accident & Guarantee Corp.,

330 Mass. 640 , 116 N.E.2d 671, 680-81 (1953). Other courts find that the terms sudden and accidental mean “happening without notice and occurring by chance.”

See e.g., U.S. Fidelity & Guaranty v. Star Fire Coals, Inc.,

856 F.2d 31 (6th Cir.1988);

Great Lakes Container Corp. v. National Union Fire Ins. Co.,

727 F.2d 30 (1st Cir.1984).

765 F.Supp. at 680 .

This Court concluded in

Hartford

that “the more well-reasoned case law gives the phrase sudden and accidental its plain and simple meaning,”

viz.,

that coverage is excluded “unless the contamination occurs abruptly, without notice, and such events happen by chance,” unexpectedly.

Id.

Applied in the context of repeated discharges of hazardous material into the environment in that ease, the phrase “sudden and accidental” was not ambiguous:

The court finds that the words sudden and accidental have plain, discrete and readily ascertainable meanings. Such language cannot give rise to any reasonable expecta

*1315

tion of coverage for claims arising from repeated and continuous polluting events. A casual reading of the policy as a whole by the ordinary insured should negate any expectation of coverage with respect to such claims.

Great Lakes,

727 F.2d at 34 . As persuasively noted by the Sixth Circuit, the sudden and accidental “language is clear and plain, something only a lawyer’s ingenuity could make ambiguous ... It’s strange logic to perceive ambiguity in this clause.”

U.S. Fidelity,

856 F.2d at 34 (citations omitted).

765 F.Supp. at 681 . This Court also emphasized that the focus of the inquiry under the “sudden and accidental” exception clearly relates to the nature of the “discharge, dispersal, release or escape” of the pollution itself, not to the nature of the damages caused. If the

discharge

is not sudden and accidental, the exclusion is applicable, and the resultant injury or damage is not within policy coverage.

Id.

(citing

Fischer & Porter Co. v. Liberty Mutual Ins. Co.,

656 F.Supp. 132, 140 (E.D.Pa.1986)).

In affirming this Court’s grant of summary judgment in favor of the insurer, the Tenth Circuit accorded the terms “sudden” and “accidental” distinct meanings: the word “accidental” means “unexpected or unintended.”

Hartford,

962 F.2d at 1488. The term “sudden” must be given its conventional temporal definition; “sudden” in this context “cannot mean ‘gradual,’ ‘routine’ or ‘continuous.’”

Id.

at 1489. It, therefore, means abrupt or instantaneous.

Id.

at 1490. The Tenth Circuit ruled that “the temporal element of ‘sudden’ when joined with ‘accidental’ is unambiguous,”

(id.),

and that the terms of the exception must be read together: “ ‘sudden and accidental’ in the pollution exclusion means abrupt or quick

and

unexpected or unintended in the context of Utah law.”

Id.

at 1492 (emphasis in original).

Anaconda, Morrison Grain

and

Gridley.

The Tenth Circuit agreed with this Court’s reading of the “sudden and accidental” exception in

Hartford.

It still does. In

Anaconda Minerals Co. v. Stoller Chemical Co.,

990 F.2d 1175 (10th Cir.1993), the Tenth Circuit declined either to overrule

Hartford

’s reading of the “sudden and accidental” exception or to certify the question to the Utah Supreme Court. Noting that “[t]he Court will certify only questions which are both unsettled and dispositive,” the court of appeals declared that “[i]t is clear from our analysis in

Hartford

that the controlling law is not unsettled.” 990 F.2d at 1177 . The court of appeals rejected the argument that “sudden and accidental” is ambiguous and “that the word ‘sudden’ should be construed against the insurer to mean unexpected or unintended instead of abrupt or instantaneous];:]”

First, the term “sudden and accidental” is unambiguous. The word “accidental” means unexpected or unintended.

Hartford,

962 F.2d at 1488. The term “sudden” must be given its conventional temporal definition.

Id.

at 1489. It, therefore, means abrupt or instantaneous.

Id.

at 1490.

990 F.2d at 1178-79 .

More recently, in

United States Fidelity & Guaranty Co. v. Morrison Grain Co., Inc.,

999 F.2d 489 (10th Cir.1993), the Tenth Circuit affirmed the district court’s ruling that “sudden and accidental” is measured by an objective temporal standard:

In granting the Insurers’ motion for summary judgment, the District Court, in its lengthy, thorough opinion, agreed with the reasoning of the latter line of authorities, concluding that “ ‘sudden and accidental’ should be [construed]

objectively

from the circumstances surrounding the actual release or discharge of the pollutants.” 734 F.Supp. at 449 (emphasis added). According to the District Court:

The terms, “sudden and accidental,” are unambiguous. As commonly used, the meaning of “sudden” combines both the elements of without notice or warning and quick or brief in time.

C.L. Hauthaway & Sons [v. American Motorists Ins. Co.],

712 F.Supp. [265], 286 [ (D.Mass.1989) ];

United States Fidelity & Guar. Co. v.] Murray Ohio Mfg. Co.,

693 F.Supp. [617,] 621 [ (M.D.Tenn. 1988) ]. “Accidental” is typically defined from the subjective viewpoint of happen

*1316

ing unexpectedly or by chance, while “sudden” has an objective definition.

General Host Corp.,

667 F.Supp. at 1428. Sudden connotes “a temporal aspect of immediacy, abruptness, swiftness, quickness, instantaneousness, and brevity.”

C.L. Hauthaway & Sons,

712 F.Supp. at 268.

[ •••]

If the discharge of pollutants is brief or short, unexpected or unanticipated, not gradual or sustained, and not intended or expected, then the “sudden and accidental” exception applies.

Id.

at 446-47. We agree____

999 F.2d at 493 (emphasis added by court). The construction of the “sudden and accidental” exception thus does not present a question of first impression before this Court or in this circuit.

The Utah Court of Appeals has also addressed the question.

Gridley

Assocs.,

Ltd. v. Transamerica Ins. Co.,

828 P.2d 524 (Utah Ct.App.1992), that court adopted a like reading of “sudden” for purposes of the pollution exclusion clause. In

Gridley,

plaintiffs operated a self-service gasoline station. In or about November 1985, a pipe connecting an underground gasoline storage tank to the customer service pumps broke, causing gasoline to be discharged underground each time the pumps were operated. Uncontroverted facts established that the pipe had experienced a “clean break,” as opposed to “corrosion or deterioration which would have resulted in a gradual drip or trickle of gasoline from the line.” 828 P.2d at 525, 527 . After first affirming the district court’s ruling that “sudden” is not ambiguous as used in Gridley’s garage policy, the Utah Court of Appeals expressly adopted the reasoning of eases such as

United States Fidelity & Guar. Co. v. Star Fire Coals, Inc.,

856 F.2d 31 (6th Cir.1988), and

United States Fidelity & Guar. Co. v. Morrison Grain Co.,

734 F.Supp. 437 (D.Kan.1990), and held that “while the word connotes a sense of unexpectedness, ‘sudden’ within the ‘sudden and accidental’ clause cannot be defined without reference to a temporal element, specifically immediacy, abruptness, and quickness.” 828 P.2d at 527 (footnote omitted).

With respect to the particular facts of

Gridley,

the court of appeals concluded, “[t]he clean break certainly resulted in an unexpected as well as an immediate and abrupt flow of gasoline from the severed line every time the pump was activated. Accordingly, the trial court correctly concluded that the discharge was “sudden” under Gridley’s policy.”

Id.

That spillage occurred over a period of time between November 1985 and detection and repair of the leak in February 1986 did not compel a different conclusion:

[T]he explicit language of Gridley’s policy only requires that the discharge itself be “sudden” in order to be covered under the policy. The “length of time that elapse[s] before the leak [is] discovered is irrelevant, as to the suddenness of the discharge.”

Wagner v. Milwaukee Mut. Ins. Co.,

145 Wis.2d 609 , 427 N.W.2d 854, 857 (Wis.App. 1988), overruled on other grounds,

Just v. Land Reclamation, Ltd.,

155 Wis.2d 737 , 456 N.W.2d 570 (Wis.1990). For instance, if an accident causes a break in a very large oil line in a remote area which spills large amounts of oil onto the ground, the fact that the oil spill remains undetected for a period of time does not render the discharge of oil any less “sudden.” Accordingly, ... where there was damage to a line which caused an immediate spill of gasoline into the ground that remained undiscovered by Gridley for some months, the discharge itself was still “sudden” as

*1317

contemplated by the exception to the pollution exclusion.

Id.

at 527-28.

As the Tenth Circuit concluded in

Hartford,

962 F.2d at 1490,

Gridley

reinforces the view that the Utah Supreme Court would construe “sudden” as including an objective, temporal element: “It, therefore, means abrupt or instantaneous.”

Anaconda,

990 F.2d at 1178 -79 (citing

Hartford,

962 F.2d at 1490). Of necessity, then, the Court must approach the “sudden and accidental” exception in light of the construction adopted in

Hartford, Anaconda, Morrison Grain

and Gridley,

3. “Sudden and accidental:” the

Pennsylvania National

example.

Reading both terms together, and in light of the existing case law, the phrase “sudden and accidental” may well be understood to mean “discrete” and “isolated;”

in the district court opinion in

Morrison Grain,

Judge Crow remarked that “the pollution exclusion restricts coverage

to accidents distinct in time and place.”

734 F.Supp. at 447 (emphasis added). Following

Hartford

and

Anaconda,

the phrase plainly does

not

mean “regular” and “continuous” and “gradual,”

or “repeated,”

or “routine.”

Another recent Tenth Circuit case sheds some additional light on the kind of occurrence which may properly be characterized as a “sudden and accidental” discharge or release. In

Westchester Fire Insurance v. City of Pittsburg, Kansas,

794 F.Supp. 353 (D.Kan.1992), motorists Ernest and Brandon Radell were injured when the mosquito pesticide fogging equipment on an adjacent municipal vehicle abruptly began operating, spraying the plaintiffs with a toxic mixture of malathion and diesel fuel. In the district court’s opinion, Chief Judge O’Connor noted that “[i]t is uncontroverted that the fogging apparatus activated suddenly as the City truck passed the Radells’ vehicle, and there is no evidence to suggest that the City expected or intended the discharge to occur.” 794 F.Supp. at 355 . In light of the “sudden and accidental” nature of the release, the district court held that based upon the “sudden and accidental” exception to the insurer’s pollution exclusion, the discharge was covered under the insurer’s policy.

Id.

The court appeals affirmed the district court’s denial of the insurer’s motion for summary judgment, pointing to the uneontroverted testimony of Ernest Radell “which clearly demonstrated the fogging equipment was not operating until the city’s truck came abreast of the Radell car.”

Pennsylvania National Mutual Casualty Ins. Co. v. City of Pittsburg, Kansas,

987 F.2d 1516, 1520 (10th Cir. 1993). Noting that “normally an operator could not activate the equipment without leaving the truck and manually throwing a switch,” and that no evidence had been adduced that the switch had been thrown, “[t]he evidence is uncontroverted that the

*1318

incident was sudden and accidental.”

Id.

(footnote omitted).

Pennsylvania National

illustrates the application of what the Tenth Circuit in

Morrison Grain

referred to as the “objective temporal meaning” of “sudden” as used in the “sudden and accidental” exception: the release in question was an isolated, extraordinary, one-of-a-kind, nonrecurring, nonforeseeable event.

4. Recent cases from other circuits have also found “sudden and accidental” to have an objective temporal meaning.

Smith v. Hughes Aircraft Co.,

10 F.3d 1448 (9th Cir.1993), the Ninth Circuit observed that

“[t]he district court properly (1) looked to the language of the exclusion and concluded that “sudden” “unmistakably connotes a temporal quality” (otherwise, it would simply be a synonym for “accidental”); (2) concluded that requiring temporal brevity furthered public policy by excluding deliberate indifference on the part of a polluting insured; and (3) analyzed the purpose of the transaction and, noting that Hughes is not an unsophisticated consumer, concluded that “an interpretation of ‘sudden’ that fails to recognize its temporal quality” would frustrate the parties’ intent by forcing the Insurers to buy into the risk of insuring a pollution-prone operation.”

10 F.3d at 1452 . The Ninth Circuit also noted that California courts have concluded that “sudden and accidental” is not an ambiguous phrase, and that “‘sudden’ connotes a temporal quality,” citing three 1993 California appellate eases. Id.

Shell Oil Co. v. Winterthur Swiss Ins. Co.,

12 Cal.App.4th 715 , 15 Cal.Rptr.2d 815, 841 (1993), one California court of appeals explained:

[Accidental conveys the sense of an unexpected or unintended event, while “sudden” conveys the sense of an unexpected event that is abrupt or immediate in nature. “Sudden and accidental” is not ambiguous if we give words their full significance. A court should not make a phrase ambiguous by unreasonably truncating a word’s meaning.

15 Cal.Rptr.2d at 841 .

Bureau of Engraving, Inc. v. Federal Ins. Co., 5

F.3d 1175 (8th Cir.1993), the plaintiff-insured shipped its toxic and hazardous chemical wastes to a firm known as Ecolotech, Inc., “based upon Ecolotech’s representations that it would recycle the wastes using environmentally safe processes to recover usable metals.” 5 F.3d at 1175 . State environmental officials discovered that Ecolotech had stored the toxic chemicals rather than recycling them and that the toxic chemicals had contaminated groundwater surrounding the Ecolotech storage facility. The state demanded that the insured and other generators clean up the spills.

Id.

at 1176 . The Eighth Circuit affirmed summary judgment in favor of the insurers under the pollution exclusion clause, rejecting arguments by the insured “that ‘sudden and accidental’ is ambiguous, since it can mean ‘unexpected and unintended’ as well [as] ‘abrupt and unintended[:]’ ”

BE further contends that the policy term “sudden” should be interpreted to mean “unexpected” because: (1) a reasonable layperson would so construe it based upon dictionary definitions and common usage; (2) the term has been so construed for many years in boiler and machinery policies; (3) numerous cases from other jurisdictions have so construed it; and (4) the insurance industry represented to insurance regulators that the exclusion would not bar coverage except for pollution “expected or intended” by the insured.

5 F.3d at 1177 . The Eighth Circuit relied on a 1992 Minnesota appellate opinion holding “sudden and accidental” to be unambiguous on this point:

“‘Sudden’ in the context of the policies carries the temporal connotation of ‘abruptness.’ ‘Sudden’ means the incident at issue occurs relatively quickly rather

*1319

than gradually over a long period of time____ ‘Unexpected’is not a reasonable interpretation [of ‘sudden’] in the context of the policies because ‘unexpected’ is conveyed by the term ‘accidental.’ If ‘sudden’ meant ‘unexpected,’ ‘sudden’ would become superfluous and repetitious in the policies use of the phrase ‘sudden and accidental.’ ”

Id.

(quoting

Sylvester Bros. Dev. Co. v. Great Central Ins. Co.,

480 N.W.2d 368, 375-76 (Minn.Ct.App.1992)). “In our view,” the Eighth Circuit concluded,

“Sylvester I

construed the ‘sudden and accidental’ language consistent with the better reasoned authorities in other jurisdictions.”

Id. Accord, Aetna Casualty & Sur. Co. v. General Dynamics Corp.,

968 F.2d 707, 710 (8th Cir.1992) (same conclusion under Missouri law). Thus, under

Bureau of Engraving,

“in order to qualify for the ‘sudden and accidental’ exception to [the pollution] exclusion under Minnesota law the insured must show that its release of a contaminant was abrupt.”

Bituminous Casualty Corp. v. Tonka Corp.,

9 F.3d 51 , 53 (8th Cir.1993).

5. The “sudden and accidental” exception and “extended” or “continuous” pollution.

American Motorists Ins. Co. v. General Host Corp.,

946 F.2d 1482, 1486 (10th Cir. 1991), the Tenth Circuit noted “[t]here is a sharp division of authority on the issue of whether pollution that occurs over an extended period of time is ‘sudden’ within the meaning of the pollution exclusion____” TJenth Circuit cases since

General Host

appear to have answered that question in the negative, as have courts in several other circuits.

Following Pennsylvania appellate case law,

the Third Circuit in

Northern Ins. Co. of New York v. Aardvark Assocs., Inc.,

942 F.2d 189 (3d Cir.1991), concluded that the plain meaning of the “sudden and accidental” exception embraces “ ‘the temporal meaning of sudden, i.e., abruptness or brevity.’ ” 942 F.2d at 192 (quoting

Lower Paxton Township v. United States Fidelity & Guar. Co.,

383 Pa.Super. at 577, 557 A.2d at 402). Distinguishing its earlier opinion applying Delaware law in

New Castle County v. Hartford Accident and Indem. Co.,

933 F.2d 1162 (3d Cir.1991), the

Aardvark

panel commented that the Pennsylvania decisions “are well-reasoned and are supported by a substantial body of precedent from many other jurisdictions.”

Id.

at 193. Further, the court held that where “there was abundant evidence in the summary judgment record showing that discharges occurred over extended periods,” summary judgment under the pollution exclusion was proper:

There- is of course no dispute that the CERCLA claims were based on pollution and thus fell within the policies’ general exclusion. In order to avoid summary judgment, Aardvark [ (the insured) ] was required to show — that is, to “point[ ] out to the district court”

(Celotex Corp.,

477

*1320

UtS. at 325, 106 S.Ct. at 2554 ) — facts that if proven at trial would establish that the CERCLA claims were based on “sudden and accidental” discharges. Aardvark faded to make this showing----

942 F.2d at 195 .

Similarly, in

New York v. AMRO Realty Corp.,

936 F.2d 1420 (2d Cir.1991), the insured “had engaged in pollution from the 1950’s through 1981, by improperly disposing solvents including tetrachloroethylene and trichloroethylene into a drainage ditch, into groundwater via a septic system, and by dumping the solvents directly onto the ground.” 936 F.2d at 1422 . The Second Circuit, following

Technicon Electronics Corp. v. American Home Assurance Co.,

141 A.D.2d 124 , 533 N.Y.S.2d 91 (2d Dept.1988),

affirmed,

74 N.Y.2d 66 , 544 N.Y.S.2d 531 , 542 N.E.2d 1048 (1989), held that the improper disposal of industrial waste “for close to thirty years cannot be understood to allege a ‘sudden’ release.” 936 F.2d at 1428 . “ ‘For a release or discharge to be sudden, it “must oecur[ ] over a short period of time.” ’ ”

Id.

(quoting

Ogden Corp. v. Travelers Indem. Co.,

924 F.2d 39 , 42 (2d Cir.1991) (quoting

Technicon,

141 A.D.2d at 137 , 533 N.Y.S.2d at 99 )).

Ray Indus., Inc. v. Liberty Mutual Ins. Co.,

974 F.2d 754 (6th Cir.1992), the Sixth Circuit followed the Michigan Supreme Court’s reading of “sudden” in

Upjohn Co. v. New Hampshire Ins. Co.,

438 Mich. 197 , 476 N.W.2d 392 (1991), and its own prior opinions in holding that the regular disposal of waste resin barrels at a landfill where the barrels were crushed, releasing their contents, did not fall within the “sudden and accidental” exception:

Whatever the other facts may have been, the parties clearly stipulated that the barrels were routinely crushed on a regular basis. We believe that this fact outweighs all others, and that Ray’s actions therefore cannot fit the definition of “sudden and accidental” adopted by the Sixth Circuit and the Michigan Supreme Court:

We conclude that when considered in its plain and easily understood sense, “sudden” is defined with a “temporal element that joins together conceptually the immediate and the unexpected.”

Star Fire Coals,

supra at 34. The common, everyday understanding of the term “sudden” is “ ‘happening, coming, made or done quickly, without warning or unexpectedly; abrupt.’ ”

FL Aerospace,

supra at 219. “Accidental” means “[ojccurring unexpectedly and unintentionally; by chance.” The American Heritage Dictionary: Second College ed., p. 72____ Thus, we find that the terms “sudden” and “accidental” used in the pollutionexelusion clause are unambiguous.

Upjohn Co. v. New Hampshire Ins. Co., 438 Mich. 197, 207-08 , 476 N.W.2d 392, 397-98 (1991) (footnote omitted).

974 F.2d at 768.

The

Ray

court held coverage to be barred by the pollution exclusion.

The foregoing cases harmonize with the view expressed by the Tenth Circuit in

Hartford:

“sudden” in the context of the pollution exclusion “cannot mean ‘gradual,’ ‘routine’ or ‘continuous.’ ” 962 F.2d at 1489. Quaker State attempts to circumnavigate this rule, asserting that

Hartford

and similar cases may be distinguished from this case because when considered on a discharge-by-discharge basis, the occurrences at the Ekotek Site were each “sudden and accidental”— particularly when viewed from Quaker State’s standpoint.

See, e.g.,

Quaker State Reply Mem. at 14-15; Tr. at 2:22-11:6, 12:4-19:3, 19:21-20:22, 42:8-14.

E. The “Sudden and Accidental” Exception and Discharge-by-Discharge Analysis.

Emphasizing language in

Hartford

pointing out that “it is the discharge which must be sudden and accidental to qualify for

*1321

coverage, not the pollution damage,” (962 F.2d at 1491), Quaker State contends that the question whether occurrences at the Ekotek Site were “sudden and accidental” must be analyzed on a discharge-by-discharge basis. Approached in that fashion, “[ejvidence of discrete, temporally abrupt spills, leaks, and other discharges of oil is clearly sufficient to meet the ‘suddenness’ requirement of the exception ... even if those spills, leaks or discharges occurred often and over the course of several years.” Quaker State Mem. at 25-26. Further, Quaker State submits that even if particular releases were not “sudden” or “accidental,” many others

were,

and coverage should extend to cover the entire indivisible property damage loss. Quaker State Opp. Mem. at 60-61.

The single incident of release of hazardous materials described in

Pennsylvania National, (see

Part V.D.3,

supra)

was one which readily could be characterized as “sudden and accidental.” The phrase does not lend itself nearly so easily to the description of a series, or pattern of similar releases of hazardous materials. As this Court observed in

Hartford:

The courts adopting the plain and simple definition of “sudden and accidental” have uniformly found the regular and repeated discharge of waste to be excluded from coverage by the pollution exclusion. For example, in

Great Lakes Container,

the insured was alleged to have routinely discharged waste chemicals onto the site of its barrel-reconditioning facility as an aspect of its business operations. The court held that the insured’s clean up cost recovery claim against its carrier fell “squarely” ■within the exclusion, and that no coverage existed. 727 F.2d at 33-34 . Similarly, in

U.S. Fidelity,

the court found that coal dust waste generated by the normal operation of the insured, which was discharged on a routine, continuing basis, was excluded from coverage. 856 F.2d at 32 . In both

Great Lakes

and

U.S. Fidelity,

the courts found that such routine and repeated discharges were not sudden and accidental.

765 F.Supp. at 680 (citing

U.S. Fidelity & Guaranty v. Star Fire Coals, Inc.,

856 F.2d 31 (6th Cir.1988), and

Great Lakes Container Corp. v. National Union Fire Ins. Co.,

727 F.2d 30 (1st Cir.1984)).

Other circuits have concluded that a continuing pattern of temporally abrupt releases is not “sudden and accidental,”, notwithstanding the fact that individual releases, considered in isolation, may seem abrupt, or “sudden.”

A. Johnson & Co. v. Aetna Casualty

Sur. Co.,

933 F.2d 66, 75 (1st Cir.1991), the First Circuit concluded that “[m]ere speculation under these circumstances that any individual instance of disposal, including leaks, occurred ‘suddenly’. cannot contradict a reasonable reading of the allegations that the entire pattern of conduct was not a ‘sudden and accidental’ occurrence.”

Ray Indus., Inc. v. Liberty Mutual Ins. Co.,

the Sixth Circuit followed A

Johnson & Co.,

rejecting the insured’s argument that each instance of spillage of the contents of numerous barrels of resin disposed of in a landfill, considered by itself, was “sudden and accidental:”

We are not convinced that the discharges in this case were brief or momentary. Ray has argued that each release was sudden, when viewed in isolation. But under this theory,

all

releases would be sudden; one can always isolate a specific moment at which pollution actually enters the environment. Rather than pursuing such meta-

*1322

physical concepts, we choose to recognize the reality of Sea Ray’s actions in this case. We agree with the First Circuit that

[m]ere speculation under these circumstances that any individual instance of disposal, including leaks, occurred “suddenly” cannot contradict a reasonable reading of the allegations that the entire pattern of conduct was not a “sudden and accidental” occurrence.

Johnson & Co. v. Aetna Casualty and Sur. Co.,

933 F.2d 66, 75 (1st Cir.1991). Thus, following the passage from

Upjohn

cited above, as well as the Sixth Circuit cases cited by Ray, we hold that the discharges in this case were not “sudden,” even if they involve numerous discrete events. Thus, we hold that the pollution exclusion applies to this case, and Liberty has no obligation under the facts of this ease on any of the policies it issued to Ray containing the exclusion.

974 F.2d at 768-69 (emphasis in original).

More recently, in

Smith v. Hughes Aircraft Co.,

the Ninth Circuit expressly rejected Hughes’ argument that “certain ‘sudden’ polluting events partially caused the injuries” at issue in that ease:

These “sudden” polluting events caused TCE and other toxic chemicals to be dumped directly into Hughes’ unlined ponds. They occurred when the waste treatment plant broke down or was overcapacitated or when TCE was spilled onto the work floor and was pushed down the drain that bypassed the treatment plant.

The district court properly rejected Hughes’ effort to “break down its long term waste practices into temporal components

in order to find coverage where the evidence unequivocally demonstrates that the pollution was gradual.”...

10 F.3d at 1453 (emphasis added).

Smith

affirmed the district court’s grant of summary judgment in favor of the insurers on the pollution exclusion issue.

Similarly, in

Bureau of Engraving,

the Eighth Circuit expressly rejected the insured’s contention that a genuine issue of material fact existed as to “whether any individual discharges at the site were abrupt[;]” under the insured’s “discharge-by-discharge inquiry,” the court said, “ ‘all releases would be sudden,’ and ‘the “sudden and accidental” exception essentially would swallow the “rule” of the pollution exclusion.’ ” 5 F.3d at 1177 -78 (quoting

Sylvester Bros. Dev. Co. v. Great Central Ins. Co.,

503 N.W.2d 793, 797 (Minn.Ct.App.1993)).