Saturday, June 24, 2006

Nebraska Supreme Court rules that insurers could avoid paying for pollution costs when dumping occurred over a long period of time because prolonged dumping was not "sudden and accidental;" Court however also holds that cause of action for failure to defend a customer does not accrue until the customer receives the adverse judgmentDutton-Lainson Co. v. Continental Ins. Co., S-04-1223, 271 Neb. 810 The "sudden and accidental" exception to the pollution exclusion clause expressed conjunctive conditions for insurance coverage.The discharges leading to the pollution in issue in this case were not "sudden."Therefore, the District Court properly gave summary judgment as to the insurers whose policies contained pollution clauses with the suddeness/accidental exceptions. As to those insurers who did notput in pollution exceptions to theirpolicies, but still contended the statute of limitations on a breach for failing to defend their customer, the supreme court found the issue of when the statute of limitations begins to run for breach of contract on a duty to defend is an issue of first impression for this court. The supreme court adopts the clear majority view that a cause of action on an insurer's duty to defend does not run until the underlying action is resolved against the insured. Accordingly, we reverse the district court's determination that Dutton's claims were barred by the statute of limitations. SUMMARY JUDGMENT ON POLLUTION EXCEPTIONS AFFIRMED; SUMMARY JUDGMENT ON STATUTE OFLIMITATIONS REVERSED.

No comments: