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Sunbeam Corp. v. Liberty Mut. Ins. Co.

Supreme Court of Pennsylvania

March 5, 2001, Argued ; October 19, 2001, Decided

No. 32 WAP 2000

Opinion

 [*498]   [**1191]  OPINION OF THE COURT

MR. CHIEF JUSTICE FLAHERTY

Appellant manufacturing corporations are insured by appellee insurance companies under comprehensive general liability policies. At issue is the insurers' obligation to indemnify the manufacturers for the costs of cleaning up environmental pollution caused by the manufacturers. The  [**1192]  insurance policies cover pollution if it was "sudden and accidental," but not otherwise. The manufacturers maintain that according to the usage in the industry, those words mean "unexpected and unintended." The trial court and Superior Court disagreed,  [***2]  holding that the common meaning of the words "sudden and accidental" is unambiguous and does not cover pollution which occurred gradually over a long period of time whether or not the pollution was unexpected and unintended. The trial court  [*499]  therefore granted the insurers' demurrer and dismissed the complaint with prejudice. Superior Court affirmed.

Appellants have a second claim. They argue that according to principles of regulatory estoppel, a form of judicial estoppel, summary judgment was inappropriate. Their complaint alleged that in 1970 the insurance industry, including the defendant insurers, submitted to the Pennsylvania insurance department a memorandum which asserted that the disputed language excluding coverage for pollution unless it was "sudden and accidental" would not result in any significant decrease in coverage. The complaint alleged, moreover, that the insurance department relied on the industry's representation when it approved the disputed language for inclusion in standard comprehensive general liability policies without a reduction in premiums to balance a reduction in coverage. The trial court rejected this claim, stating that "Sunbeam could not reasonably [***3]  establish that the Department relied on the explanatory memorandum submitted to it by the insurance industry." While the Superior Court majority affirmed this holding, President Judge McEwen dissented on the grounds that in reviewing the dismissal of a complaint based on preliminary objections in the nature of a demurrer, the averments of the complaint must be taken as true. A preliminary objection in the nature of a demurrer should be sustained only in a case that clearly and without a doubt fails to state a claim upon which relief may be granted. The dissenting opinion stated that likelihood of proof is irrelevant; a preliminary objection in the nature of a demurrer must be rejected if the facts as pleaded state a claim for which relief may be granted under any theory of law, citing Willet v. Pennsylvania Medical Catastrophe Loss Fund, 549 Pa. 613, 702 A.2d 850, 853 (Pa. 1997).

This dissenting view is correct. Whether or not the court regarded proof of the insurance department's reliance on the insurance industry's memorandum as likely or probable, the fact remains that the reliance was properly pleaded. ] In evaluating a preliminary objection in the nature of a  [*500]  demurrer, [***4]  properly pleaded facts are deemed to be admitted. County of Allegheny v. Commonwealth, 507 Pa. 360, 490 A.2d 402, 408 (Pa. 1985).

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566 Pa. 494 *; 781 A.2d 1189 **; 2001 Pa. LEXIS 2285 ***

SUNBEAM CORPORATION, MONTEY CORPORATION, TEMRAC COMPANY, INC., SUNBEAM PRODUCTS, INC., CHEMETRON INVESTMENTS, INC., ALLEGHENY INTERNATIONAL CANADA, LTD., ELISKIM, INC., AND WOODSHAFT, INC., Corporations, Appellants v. LIBERTY MUTUAL INSURANCE COMPANY, FIRST STATE INSURANCE COMPANY, LEXINGTON INSURANCE COMPANY, AND PENNSYLVANIA MANUFACTURERS ASSOCIATION INSURANCE COMPANY, Corporations, Appellees

Subsequent History:  [***1]  Reconsideration/Reargument Denied December 5, 2001, Reported at: 2001 Pa. LEXIS 2597.

Prior History: Appeal from the Order of the Superior Court entered October 26, 1999 at No. 1122PGH1997, affirming the Order of the Court of Common Pleas of Allegheny County entered May 23, 1997 at No. GD 95-13947. Trial Court Judge: Wettick, R. Stanton, Judge. Intermediate Court Judges: Del Sole, Joseph A., President Judge, Cavanaugh, James R., Judge, McEwen Jr., Stephen J., President Judge Emeritus, Johnson, Justin M., Judge, Hudock, Joseph A., Judge, Eakin, J. Michael, Judge, Joyce, Michael T., Judge, Musmanno, John L., Judge, Orie Melvin, Joan, Judge.

Original Opinion of October 26, 1999, Reported at: 1999 Pa. Super. LEXIS 3459.

Disposition: Reversed and remanded.

CORE TERMS

usage, pollution, words, sudden and accidental, memorandum, coverage, estoppel, unexpected, custom, terms, insurance industry, insurance department, trial court, unintended, ambiguity, abrupt, sudden, contamination, demurrer, insured, comprehensive general liability policy, unambiguous, contracts, parties

Civil Procedure, Responses, Defenses, Demurrers & Objections, Defects of Form, Preclusion of Judgments, Estoppel, Judicial Estoppel, Insurance Law, Claim, Contract & Practice Issues, Estoppel & Waiver, Equitable Estoppel, Judgments, General Overview, Collateral Estoppel, Res Judicata, Contracts Law, Contract Interpretation, Ambiguities & Contra Proferentem, Defenses, Ambiguities & Mistakes, Parol Evidence, Custom & Usage, Evidence, Types of Evidence, Documentary Evidence, Parol Evidence