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COVINGTON TWP. v. PACIFIC EMPLRS. INS. CO.

February 7, 1986

COVINGTON TOWNSHIP, Plaintiff
v.
PACIFIC EMPLOYERS INSURANCE COMPANY, Defendant



The opinion of the court was delivered by: NEALON

William J. Nealon, Chief Judge, Middle District of Pennsylvania

 MEMORANDUM AND ORDER

 Plaintiff, Covington Township, commenced this declaratory judgment action on April 19, 1985, against Defendant, Pacific Employers Insurance Co., seeking to compel defendant to provide a legal defense for plaintiff in accordance with an insurance contract between the parties. Essentially, plaintiff seeks a declaratory judgment that defendant provide legal defense for law suits against plaintiff "arising out of the causes of actions for the presence of giardia cysts in the Elmhurst and Springbrook Reservoirs." See Document 1 of the Record. Additionally, plaintiff requests costs and expenses incurred for defense of eight (8) lawsuits already commenced, as well as interest and attorney's fees. Plaintiff filed a Motion for Summary Judgment and supporting documents on August 2, 1985. See Document 9 of the Record. Plaintiff filed a Brief in Support of Motion for Summary Judgment on August 12, 1985. Defendant filed an opposition brief on October 11, 1985 and plaintiff replied on November 1, 1985. The matter is now ripe for disposition. For the reasons set forth below, plaintiff's Motion for Summary Judgment will be granted; the request for reimbursement and interest will be held in abeyance pending receipt of proper documentation and the request for attorney's fees will be denied.

 FACTUAL BACKGROUND

 Defendant entered into a Professional Liability Insurance Policy contract with plaintiff, coverage commencing on April 29, 1982. See Brief in Support of Motion for Summary Judgment, Document 10 of the Record and Memorandum on Behalf of Pacific Employers Insurance Company, Document 25 of the Record. The insurance contract, PEL 00 02 03, was to remain in effect until April 29, 1985. See Document 25 of the Record -- Exhibit A. In essence, the contract provides:

 
1. INSURING AGREEMENT AND CLAIMS MADE CLAUSE
 
TO PAY ON BEHALF OF THE INSURED ALL SUMS WHICH THE INSURED SHALL BECOME LEGALLY OBLIGATED TO PAY AS "DAMAGES" AS A RESULT OF CLAIMS FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD BY REASON OF ANY ACT, ERROR, OR OMISSION IN SERVICES RENDERED IN THE DISCHARGE OF PUBLIC ENTITY DUTIES.

 Id. at 1. The term insured includes the Public Entity itself *fn1" and defendant has the duty to defend any claim against the insured to which the insurance applies. *fn2" Id.

 Plaintiff maintains that defendant is bound to provide a defense for eight (8) suits filed against plaintiff as the result of the recent giardia cyst contamination of drinking water. The eight (8) complaints filed against plaintiff allege, inter alia, that plaintiff negligently caused the contamination of the Springbrook reservoir. See Document 9 of the Record -- Exhibits B to I. Basically, the eight (8) suits aver that plaintiff failed to provide adequate sewage treatment, granted sewage permits which permitted inadequate sewage treatment and failed to properly monitor and warn of the contamination of the drinking water supply. The "Insuring Agreement and Claims Made Clause" is broad in scope and, consequently, defendant relies on policy exclusions in denying its duty to defend.

 Defendant contends that the insurance contract excludes coverage for the type of damages sought in the complaints filed against plaintiff. The policy, in pertinent part, provides:

 
This policy does not apply to any claim made against the Insured
 
3. for any damages, direct or consequential, arising from bodily injury, sickness, disease or death of person, or for damage to or destruction of any tangible property including loss of use thereof.

 See Document 25 of the Record -- Exhibit A at 3. Furthermore, defendant maintains that the manner in which plaintiff allegedly caused the injury falls outside the ambit of the insurance contract. In this regard, the policy states:

 
This policy does not apply to any claim made against the Insured
 
7. for any damages 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 watercourse or body of water; but this exclusion does ...

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