Supreme Court of South Dakota
In Demaray v. De Smet Farm Mut. Ins. Co., ___ N.W.2d ___, 2011 WL 2937284 (S.D. July 20, 2011), the Supreme Court of South Dakota held that an underlying suit did not fall within an exception to a pollution exclusion because the alleged pollutant discharge was not "sudden and accidental."
Floyd Demaray and James Hagemann were sued by Alvine Family Limited Partnership for discharging pollutants into lakes and streams on Alvine's property. Demaray and Hagemann tendered their defense to their insurer, De Smet Farm Mutual Insurance Company, which declined the tenders based on an exclusion for property damage arising out of "the discharge, dispersal, release, or the escape of pollutants into or upon land, water or air." Demaray and Hagemann filed suit against De Smet, contending that the underlying action fell within an exception that stated that the exclusion did not apply to property damage arising out of the "sudden and accidental" discharge of pollutants. The trial court agreed with Demaray and Hagemann and ruled that De Smet breached its duty to defend.
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