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REVISED, June 24, 1998
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 97-20730
_____________________
GUARANTY NATIONAL INSURANCE COMPANY
and LANDMARK AMERICAN INSURANCE COMPANY,
Plaintiffs-Counter
Defendants-Appellees,
versus
VIC MANUFACTURING COMPANY,
Defendant-Counter
Claimant-Appellant.
_______________________________________________________
Appeal from the United States District Court for
the Southern District of Texas
_______________________________________________________
June 5, 1998
Before REAVLEY, DeMOSS and PARKER, Circuit Judges.
REAVLEY, Circuit Judge:
Guaranty National Insurance Company sued Vic Manufacturing
Company, seeking a declaratory judgment that it did not have a
duty to defend Vic under its product liability insurance policy.
The district court granted summary judgment in favor of Guaranty.
We affirm.
Background
Vic manufactures dry cleaning equipment that uses
perchlorethylene (perc), a toxic chemical classified as a

"hazardous waste" by the Environmental Protection Agency.1
Pilgrim Enterprises, Inc., purchased the equipment from Vic for
use in its dry-cleaning business. The equipment contaminated
Pilgrim's property as well as adjoining properties. Pilgrim sued
Vic, together with other manufacturers of dry cleaning equipment
and suppliers of perc, seeking to recover substantial cleanup
costs. Harold and Georgina Agim, who live next door to a Pilgrim
facility, sought to intervene to recover for pollution on their
property.
Guaranty issued several general liability and umbrella
policies to Vic that cover the relevant period. The policies at
issue contain a "sudden and accidental" pollution exclusion which
states that the policy does not provide coverage for:
bodily injury or property damage arising out
of the discharge, dispersal, release or
escape of smoke, vapors, soot, fumes, acids,
alkalis, 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. (emphasis added)
The district court found that the Pilgrim suit did not allege
damages within the "sudden and accidental" exception to the
pollution exclusion, and, thus, that Guaranty had no duty to
defend Vic in the underlying suit.
140 C.F.R. § 261.32 (1997).
2

Discussion
We review a district court's grant of summary judgment de
novo.2 Summary judgment is proper when "the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law."3
We review a district court's determination of state law de
novo.4 The parties agree that Texas law governs this diversity
suit. Texas law provides that insurance coverage is determined
under the "Eight Corners" or "Complaint Allegation" test. The
court compares the four corners of the insurance policy with the
four corners of the plaintiff's pleading to determine whether any
claim alleged by the pleading is potentially within the policy
coverage.5 The duty to defend is determined "without reference
to the truth or falsity of such allegations."6
The insured bears the initial burden of showing that there
is coverage, while the insurer bears the burden of proving the
2New York Life Ins. Co. v. Travelers Ins. Co., 92 F.3d 336,
338 (5th Cir. 1996).
3Fed. R. Civ. P. 56(c).
4Salve Regina College v. Russell, 499 U.S. 225, 239 (1991).
5See National Union Fire Ins. Co. v. Merchants Fast Motor
Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997).
6Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387
S.W.2d 22, 24 (Tex. 1965).
3

applicability of any exclusions in the policy.7 Once the insurer
has proven that an exclusion applies, the burden shifts back to
the insured to show that the claim falls within an exception to
the exclusion.8 The perc contamination is clearly within the
pollution exclusion, so Vic has the burden to show, at this stage
to plead satisfactorily, that the pollution was "sudden and
accidental." Even so, all doubt is resolved in the insured's
favor.9
The Texas Supreme Court has not addressed the "sudden and
accidental" pollution exclusion clause.10 This court, reviewing
Texas appellate court decisions and Texas contractual
interpretation rules, has held that the clause contains a
temporal element in addition to the requirement of being
unforseen or unexpected.11
The court held that the "sudden and accidental" requirement
unambiguously excluded coverage for all "pollution that is not
released quickly as well as unexpectedly and unintentionally."12
7Telepak v. United Servs. Auto. Ass'n, 887 S.W.2d 506, 507
(Tex. Civ. App.--San Antonio 1994, writ denied).
8Id.
9Heyden, 387 S.W.2d at 26.
10Mustang Tractor & Equip. v. Liberty Mut. Ins. Co., 76 F.3d
89, 91 (5th Cir. 1996).
11Id.
12Id. at 93 (citations omitted).
4

The general rule is that the insurer's duty to defend is
determined solely from the allegations in the petition.13 A
total of four petitions have been filed in the underlying case:
Pilgrim's Original petition, First Amended Petition, Second
Amended Petition, and Agim's Plea in Intervention. An amended
pleading completely supersedes prior pleadings, such that the
duty to defend rests on the most recent pleading.14
In the Seconded Amended Petition, Pilgrim brings claims for
negligence, gross negligence, strict products liability,
negligent misrepresentation, breach of warranties, and violations
of the Texas Deceptive Trade Practices Act. The petition lists
37 dry-cleaning sites polluted with perc. The petition alleges
that Vic and the other manufacturers "were aware of the use of
PERC in the dry cleaning process and in this equipment and
materials, but despite such knowledge, designed the equipment in
a manner that was inherently defective and which would result in
spills and/or discharges of PERC during Plaintiff's operations."
Additionally, Pilgrim alleges that Vic instructed Pilgrim to
drain perc into the sewage system knowing that perc would sink to
the bottom and remain a potentially hazardous material. The Plea
in Intervention that the Agim family filed alleges that Vic was
"aware of the use of PERC in the dry cleaning process, but
despite such knowledge, designed the equipment in a manner that
13Heyden, 387 S.W.2d 22.
14Rhodes v. Chicago Ins. Co., 719 F.2d 116, 119 (5th Cir.
1983).
5

was inherently defective and which would result in spills and/or
sudden and accidental discharges of PERC during Pilgrim's
operations." Although the petitions append the words "sudden and
accidental," they describe gradual pollution in the regular
course of the dry-cleaning business.15
The court may look at evidence outside the pleadings under
certain circumstances. A Texas court of appeals summarized the
rule on extrinsic evidence as follows:
Where the insurance company refuses to defend
its insured on the ground that the insured is
not liable to the claimant, the allegations
in the claimant's petition control, and facts
extrinsic to those alleged in the petition
may not be used to controvert those
allegations. But, where the basis for the
refusal to defend is that the events giving
rise to the suit are outside the coverage of
the insurance policy, facts extrinsic to the
claimant's petition may be used to determine
whether a duty to defend exists.16
This court held in Western Heritage Ins. Co. v. River
Entertainment that the court may look to evidence outside the
pleadings and policy "when the petition does not contain
15The first two petitions are relevant in that Guaranty's
duty to defend prior to the filing of the Second Amended Petition
is based on the earlier petitions. However, those petitions do
not even try to obscure the gradual by amending with "sudden and
accidental" as in the later pleading.
16Gonzales v. American States Ins. Co. of Tex., 628 S.W.2d
184, 187 (Tex. Civ. App.--Corpus Christi 1982, no writ) (emphasis
in original).
6

sufficient facts to enable the court to determine if coverage
exists."17.61 F.3d 389 (5th Cir. 1995).18
To the extent that the Pilgrim pleadings are incomplete, the
extrinsic evidence shows that there is no duty to defend in this
case. The interrogatories demonstrate that the perc pollution
was not the result of "sudden and accidental" events. Pilgrim's
answers list seventy-seven spills at nineteen of the facilities,
occurring over a period of approximately forty years. Several of
the listed spills actually are multiple spills, so that the perc
pollution is the result of over a hundred separate events.
Listed events include multiple still boilovers, small spills of
perc upon removal and changing of filter cartridges, spills from
failed filter gaskets, and spills while cleaning the machines.
The amounts range from small spills of undetermined amounts to
one spill of almost sixty gallons.
17998 F.2d 311, 313 (5th Cir. 1993) (citing State Farm Fire
& Cas. Co. v. Wade, 827 S.W.2d 448, 452-53 (Tex. Civ. App. --
Corpus Christi 1992, writ denied); see also John Deere Ins. Co.
v. Truckin' U.S.A., 122 F.3d 270, 272 (5th Cir. 1997) ("If the
underlying complaint, however, does not allege facts, if taken as
true, sufficient to state a cause of action under the policy,
evidence adduced in a declaratory judgment action may also be
considered." Vic tries to limit Western Heritage by pointing to
Lafarge Corp. v. Hartford Cas. Ins. Co.,
61 F.3d 389 (5th Cir. 1995), which held that the exception set
out in Western Heritage is not a broad one. In that case,
however, the underlying petition clearly alleged damages which
were covered under the insurance policy. The question was
whether those damages occurred within the applicable coverage
period. Because the petition alleged damages from a continuous
event, the factual allegations were sufficient to trigger
coverage under the insurance policy in effect prior to the actual
date when the damages were discovered.
7

A single covered claim will suffice to require the insurer
to defend the entire case.19 In this case, the factual
allegations do not create a single covered cause of action. Vic
cannot create a duty to defend by microanalyzing the case and
finding a single spill that may have been "sudden and
accidental." The pollution exclusion clause prevents coverage
"where the insured has engaged in the deliberate discharge of
contaminants in the routine course of business over many years.
The fact that the insured may have also experienced isolated
spills or minor accidents over the same period of time is
irrelevant."20
The Texas Supreme Court recently confirmed that "a court
must focus on the factual allegations rather than the legal
theories asserted in reviewing the underlying petition."21 In
this case, regardless of the catch phrases used in the petition,
pollution is not "sudden and accidental" when it consists of
repeated, regular discharges over numerous years in the usual
course of business operation.
A case out of the Seventh Circuit, Cincinnati Insurance
Company v. Flanders Electric Motor Service, Inc.,22 provides a
19Rhodes, 719 F.2d at 119.
20Snydergeneral Corp. v. Great American Ins. Co., 928 F.
Supp. 674, 680 (N.D. Tex. 1996) (citations omitted).
21Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d
81,82 (Tex. 1997)(citing National Union Fire Ins. Co., 939 S.W.2d
at 141.
2240 F.3d 146 (7th Cir. 1994).
8

similar scenario. The insured company, Flanders, sent electric
transformers over a twenty year period to a service shop for
repairs. Flanders was later held liable for part of the cost to
cleanup leaks of polychlorinated biphenyls (PCBs) from
transformers at the repair site. The court held that the
insurer did not have a duty to defend or indemnify Flanders.
"Because these releases of PCBs were commonplace events which
occurred in the course of MEW's regular business, they cannot be
considered sudden and accidental. The fact that one or more of
these spills or leaks may have occurred suddenly and accidentally
does not alter our conclusion."23 Several other circuits have
also held that numerous pollution discharges over the years are
not within the "sudden and accidental" exception to the coverage
exclusion.24.67 Cal. Rptr. 113 (Cal. Ct. App. 1997).25
23Id. at 154.
24See Quaker State Minit-Lube, Inc. v. Fireman's Fund Ins.
Co., 52 F.3d 1522 (10th Cir. 1995) (Utah law); Smith v. Hughes
Aircraft Co., 22 F.3d 1432 (9th Cir. 1993) (California law);
Lumbermens Mut. Cas. Co. v. Belleville Indus., Inc., 938 F.2d
1423 (1st Cir. 1991); A. Johnson & Co., Inc. v. Aetna Cas. & Sur.
Co., Inc., 933 F.2d 66 (1st Cir. 1991) (Maine law); United States
Fidelity & Guar. Co. v. Star Fire Coals, Inc., 856 F.2d 31 (6th
Cir. 1988) (Kentucky law); Great Lakes Container Corp. v.
National Union Fire Ins. Co., 727 F.2d 30 (1st Cir. 1984) (New
Hampshire law); Cessna Aircraft Co. v. Hartford Accident & Indem.
Co., 900 F. Supp. 1489 (D. Kan. 1995). A California court has
reached an opposing result. In A-H Plating, Inc. v. American
Nat'l Fire Ins. Co.,
67 Cal. Rptr.2d 113 (Cal. Ct. App. 1997), a California appellate
court found that there was a duty to defend under very similar
circumstances. However, the case is distinguishable on the
grounds that the court placed the burden on the insurer to prove
that the "sudden and accidental" exception to the pollution
exclusion did not apply. Id. at 116, 118. Texas law places the
burden on the insurer to show that an exclusion applies, but once
9

The trial court dismissed the issue of Guaranty's duty to
indemnify Vic. Guaranty argues that the issue should be decided
at this time, based on the Texas Supreme Court's recent decision
in Farmers Texas Mutual Insurance Company v. Griffin,26 in which
the Texas Supreme court held that the duty to indemnify is
justiciable in a liability lawsuit when the insurer has no duty
to defend. However, Guaranty stipulated in the trial court that
the issue of a duty to indemnify should not be decided at that
point. It was not decided by the district court and was not
brought forward in the appeal. Therefore we do not reach the
issue of Guaranty's duty to indemnify.
AFFIRMED.
it has done so, the insured bears the burden to show that an
exception to that exclusion applies. See
Snydergeneral, 928 F.Supp. at 680 n.5. Moreover, the court noted
that the evidence indicated only four or five spills, not of such
frequency that they could be considered expected. A-H Plating,
67 Cal. Rptr.2d at 118-19.
26955 S.W.2d 81 (Tex. 1997).
10