Hecla Mining Co. v. New Hampshire Insurance Co.

811 P.2d 1083, 15 Brief Times Rptr. 631, 115 Oil & Gas Rep. 591, 33 ERC (BNA) 1340, 1991 Colo. LEXIS 292, 1991 WL 75380

• Court: Supreme Court of Colorado
• Decided: May 13, 1991
• Docket: 89SC646
• Status: Published

Opinions

Justice ERICKSON

delivered the Opinion of the Court.

We granted certiorari to review New Hampshire Insurance Co. v. Hecla Mining Co., 791 P.2d 1154 (Colo.App.1989), which held that a comprehensive general liability insurance policy did not require an insurer to defend an action for damages for pollution resulting from the insured’s mining activities. We reverse and remand with directions.

In 1983, the state of Colorado (state) filed suit in federal district court under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9601, 9607 (1983 & 1990 Supp.), against Asarco, Inc., Resurrection Mining Company, and the Res-Asarco Joint Venture.¹ The state alleged that the defendants were jointly and severally liable under the strict liability provisions of CERCLA, and under common-law negligence theories, for the cleanup costs and other damages resulting from the discharge of heavy metals and other contaminants into California Gulch from the Yak Tunnel.² The state filed an amended complaint in April 1985, seeking compensation for the cleanup costs for the entire California Gulch drainage basin system.

The state’s CERCLA complaint was initiated after employees of Asarco caused a surge of yellow sedimentary sludge to emit from the Yak Tunnel when shoring timbers and accumulated debris were removed that had impounded the contaminated water.³ The yellow sedimentary sludge emitted from the Yak Tunnel was a limonitic precipitate, formed by ferric hydroxide and a variety of ferric sulfates, that accumulated on the bottom of the drainage tunnel. The surge of contaminated water turned a twenty-mile stretch of the Arkansas River orange.

In January 1985, Resurrection, Asarco, and Res-Asarco Joint Venture filed a third-party complaint against Hecla Mining Company.⁴ The complaint against Hecla seeks contribution for alleged discharges into the Yak Tunnel that occurred from 1938 to 1953 when Hecla was a shareholder and had a one-third ownership interest in the Resurrection Mining Company. The Resurrection Mining Company mined gold, silver, and lead ore at the Resurrection mine. Two of Resurrection’s mine shafts connect with and drain into the Yak Tunnel. From 1981 to 1985, Hecla also held a lease interest in a mill and several tailings impound-ments located in the lower California Gulch.

Industrial Indemnity Company provided a series of comprehensive general liability (CGL) insurance policies covering Hecla from January 1, 1974, through January 1, 1982. New Hampshire Insurance Company provided a series of one year CGL insurance policies for Hecla from January 1, 1980, through January 1, 1985. Hecla requested that both Industrial and New Hampshire provide a defense against the joint venture’s third-party complaint. Industrial denied coverage and filed a declaratory judgment action in Denver District Court to obtain a judicial determination of whether it had a duty to defend the third-party claim, and whether it had a duty to indemnify Hecla for any liability resulting from the lawsuit. C.R.C.P. 57; § 13-51-101, 6A C.R.S. (1987). New Hampshire originally agreed to defend Hecla, subject to a reservation of its right to deny coverage. New Hampshire later denied coverage and intervened in the declaratory judgment action brought by Industrial.

The district court entered summary judgment in favor of Hecla, finding that Industrial and New Hampshire had a duty to defend Hecla in the CERCLA action, and that the issue of the duty to indemnify was not ripe for resolution. The court of appeals reversed the district court, holding that Hecla knew or should have known of a substantial probability that its mining activities would result in environmental damage, and therefore the resulting damage was not an unexpected and unintended occurrence and was thus outside the scope of Hecla’s coverage. The court of appeals concluded that neither Industrial, nor New Hampshire, had a duty to defend or to indemnify Hecla for liability resulting from pollution generated by its mining activities. We hold that under the terms of Hecla’s CGL policies, both Industrial and New Hampshire have a duty to defend Hecla against the state’s CERCLA action. The issue of Industrial’s or New Hampshire’s duty to indemnify Hecla can only be determined after liability of Hecla has been determined, and is therefore not ripe for resolution at this stage of the proceedings.⁵

I

The CGL insurance policies issued to Hecla by Industrial and New Hampshire limit defense and liability coverage to property damage caused by an occurrence. The word “occurrence” is defined in Hecla’s policies as:

an accident, including continuous or repeated exposure to conditions, which result in bodily injury or property damage, neither expected nor intended from the standpoint of the insured.

See Fire Casualty & Surety Bulletin, Aat-1 (1986) (commenting on CGL coverage forms and interpretations of occurrence and claims-made trigger provisions). Hec-la’s policies also contain exclusions that limit the scope of coverage as defined in the insuring agreement. The pertinent exclusion at issue here is:

This insurance does not apply ... to 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, 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.) This CGL policy provides defense and liability coverage for damage that results from an unexpected and unintended occurrence, not including damage caused by the discharge of pollution, unless that discharge is sudden and accidental.⁶

Hecla contends that the discharge of heavy metals into California Gulch was neither an expected, nor intended, consequence of its mining activity, and that although the discharge of heavy metals constitutes pollution, the discharge was sudden and accidental. Hecla therefore contends that both Industrial and New Hampshire are liable for defense and indemnification costs associated with the state’s CERCLA action.

Industrial and New Hampshire both contend that the contamination of California Gulch was reasonably foreseeable and thus was expected and not an occurrence under the terms of Hecla’s policies. Industrial and New Hampshire argue that even if this court determines that the damage was unexpected and unintended, the discharge of pollution was not sudden and accidental and is therefore not covered under the CGL insurance policies.

A

The court of appeals concluded that the damage caused by Hecla’s mining operations was not unexpected, and therefore was not an occurrence covered by Hecla’s insurance policies. The court of appeals reasons were that:

The results of one’s intentional acts cannot be unexpected if they are the ordinary consequences of those acts.

Here, Hecla knew or should have known of a substantial probability that its mining activities would result in environmental damage. The Colorado Mined Land Reclamation Act, § 34-32-101, 14 C.R.S. (1984), expresses the General Assembly’s intent to “aid in the protection of wildlife and aquatic resources ... and promote the health, safety, and general welfare of the people of this state.” Section 34-32-102, 14 C.R.S. (1984).... Thus, absent a contrary showing, the Act provides constructive notice to all mine operators that their activities could cause environmental damage.

... Accordingly, the damage that occurred was an ordinary consequence of Hecla’s actions. As a matter of law, it was not unexpected.

New Hampshire Ins. Co. v. Hecla Mining Co., 791 P.2d at 1157 (citations omitted).

The court of appeals reasoning is in error. The Colorado Mined Land Reclamation Act does not provide notice to all mine operators that mining could cause environmental damage. The court of appeals, in interpreting the Mined Land Act, failed to consider the entire section on which it relied for its holding. Section 34-32-102, 14 C.R.S. (1984), begins:

It is declared to be the policy of this state that the extraction of minerals and the reclamation of land affected by such extraction are both necessary and proper activities. It is further declared to be the policy of this state that both such activities should be and are compatible. It is the intent of the general assembly by the enactment of this article to allow for the continued development of the mining industry of this state, while requiring those persons involved in mining operations to reclaim land affected by such operations ....

(Emphasis added.) Contrary to the court of appeals analysis, the Mined Land Act proclaims that mining is a necessary and proper activity, and should be promoted by the state of Colorado.

Hecla’s CGL insurance policies provide that an occurrence is an accident that is neither expected nor intended from the standpoint of the insured. In City of Johnstown v. Bankers Standard Insurance Co., 877 F.2d 1146 (2nd Cir.1989), the Second Circuit held that damages are only intended if the insured knew that they would flow directly and immediately from the insured’s intentional act. The Second Circuit said:

In general, what make injuries or damages expected or intended rather than accidental are the knowledge and intent of the insured. It is not enough that an insured was warned that damages might ensue from its actions, or that, once warned, an insured decided to take a calculated risk and proceed as before. Recovery will be barred only if the insured intended the damages, or if it can be said that the damages were, in a broader sense, “intended" by the insured because the insured knew that the damages would flow directly and immediately from its intentional act ....

Id. at 1150 (citations omitted). See also Brooklyn Law School v. Aetna Casualty & Sur. Co., 849 F.2d 788, 789 (2d Cir.1988). We are persuaded by the Second Circuit and hold that the phrase “neither expected nor intended” should be read only to exclude those damages that the insured knew would flow directly and immediately from its intentional act.

The state’s CERCLA complaint contains claims asserting strict liability. The third-party complaint against Helca does not allege that Hecla expected or intended environmental damage to result from its mining operations. There is no allegation and no proof that the damage caused by Hecla was expected or intended. The incident therefore must be deemed an occurrence under the terms of the CGL policies for the purposes of determining the insurers’ duty to defend.

B

Indemnity and New Hampshire contend that even if the discharge is an occurrence covered by the policies, the discharge is subject to the exclusionary clause because it was not a sudden and accidental discharge, but rather occurred continuously for a period of many years. Hecla contends that because the phrase sudden and accidental is ambiguous, it must be construed against the insurance carriers to mean unexpected and unintended.⁷

An insurer seeking to avoid its duty to defend an insured bears a heavy burden. City of Johnstown v. Bankers Standard Ins. Co., 877 F.2d at 1149. An insurer’s duty to defend arises when the underlying complaint against the insurer alleges any facts that might fall within the coverage of the policy. Douglass v. Hartford Ins. Co., 602 F.2d 934, 937 (10th Cir. 1979). “The actual liability of the insured to the claimant is not the criterion which places upon the insurance company the obligation to defend.” Rather, the obligation to defend arises from allegations in the complaint, which if sustained, would impose a liability covered by the policy.⁸ Id. “[W]here the insurer’s duty to defend is not apparent from the pleadings in the case against the insured, but the allegations do state a claim which is potentially or arguably within the policy coverage, or there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded, the insurer must accept the defense of the claim.” ⁹ City of Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177, 459 N.E.2d 555, 558 (1984). Since the duty to defend is broader than the duty to indemnify, the insurer must defend the insured if the pollution could have occurred suddenly and accidentally. Whether coverage is ultimately available under the contract is a question of fact to be decided by the trier of fact. Reliance Insurance Co. of Ill., v. Martin, 126 Ill.App.3d 94, 97, 81 Ill.Dec. 587, 590, 467 N.E.2d 287, 290 (1984). See Fire Casualty & Surety Bulletin, Aa-1 (1990) (not necessary that all allegations come within scope of coverage).

The appropriate course of action for an insurer who believes that it is under no obligation to defend, is to provide a defense to the insured under a reservation of its rights to seek reimbursement should the facts at trial prove that the incident resulting in liability was not covered by the policy, or to file a declaratory judgment action after the underlying case has been adjudicated.¹⁰ See Reliance v. Martin, 126 Ill. , 81 Ill.Dec. at 590, 467 N.E.2d at 290; City of Willoughby Hills v. Cincinnati Ins. Co., 459 N.E.2d at 558. Determining the duty to defend based on the allegations contained within the complaint comports with the insured’s legitimate expectation of a defense, and prevents the insurer from evading coverage by filing a declaratory judgment action when the complaint against the insured is framed in terms of liability coverage contemplated by the insurance policy.¹¹ Hartford Ins. Group v. District Court, 625 P.2d 1013, 1018 (Colo.1981).

In order to avoid policy coverage, an insurer must establish that the exemption claimed applies in the particular case, and that the exclusions are not subject to any other reasonable interpretations. City of Johnstown v. Bankers Standard Ins. Co., 877 F.2d at 1149. See also Koncilja v. Trinity Universal Ins. Co., 35 Colo.App. 27, 528 P.2d 939, 941 (1974) (having affirmatively expressed coverage through broad promises, the insurer assumes a duty to define any limitations upon that coverage in clear and explicit terms). The insurer has a duty to defend unless the insurer can establish that the allegations in the complaint are solely and entirely within the exclusions in the insurance policy. Id. An insurer is not excused from its duty to defend unless there is no factual or legal basis on which the insurer might eventually be held liable to indemnify the insured. See Hartford Ins. Group v. District Court, 625 P.2d 1013, 1018 (Colo.1981); see also City of Johnstown v. Bankers Standard Ins. Co., 877 F.2d at 1149.

The determination of a duty to defend in this case depends on the terms in the insurance policy, and the interpretation of those terms based upon the principles of contract interpretation. Marez v. Dairyland Ins. Co., 638 P.2d 286, 288-89 (Colo. 1981); Benham v. Manufacturers & Wholesalers Indem. Exchange, 685 P.2d 249, 253 (Colo.App.1984). Hecla’s CGL insurance policies do not define the meaning of the phrase “sudden and accidental.” The interpretation of the phrase “sudden and accidental” is therefore dependent on whether the phrase is used ambiguously in the context of the policy’s exclusionary clause.¹² Ambiguous language must be construed in favor of the insured and against the insurer who drafted the policy. Northern Ins. Co. of N. Y. v. Ekstrom, 784 P.2d 320, 323 (Colo.1989); Kane v. Royal Ins. Co. of America, 768 P.2d 678, 680 (Colo.1989); Republic Ins. Co. v. Jernigan, 753 P.2d 229, 232 (Colo.1988). Terms used in a contract are ambiguous when they are susceptible to more than one reasonable interpretation. Northern Ins. Co. v. Ekstrom, 784 P.2d at 323.

A majority of the courts addressing the meaning of the phrase “sudden and accidental” as used in CGL insurance policies have determined that the phrase is ambiguous and therefore must be construed against the insurer to mean unexpected and unintended. See Claussen v. Aetna Casualty & Sur. Co., 259 Ga. 333, 380 S.E.2d 686 (1989); United States Fidelity & Guar. v. Specialty Coatings Co., 180 Ill.App.3d 378, 386, 129 Ill.Dec. 306, 311, 535 N.E.2d 1071, 1077 (1989); Upjohn Co. v. New Hampshire Ins. Co., 178 Mich.App. 706, 714, 444 N.W.2d 813, 817 (1989); Broadwell Realty Serv., Inc. v. Fidelity & Casualty Co. of N.Y., 218 N.J.Super. 516, 531-35, 528 A.2d 76, 84-85 (App.Div.1987); Allstate Ins. Co. v. Klock Oil Co., 73 A.D.2d 486, 488, 426 N.Y.S.2d 603, 605 (1980); Kipin Indus., Inc. v. American Universal Ins. Co., 41 Ohio App.3d 228, 231, 535 N.E.2d 334, 338 (1987); United Pac. Ins. Co. v. Van’s Westlake Union, Inc., 34 Wash.App. 708, 664 P.2d 1262 (1983); Just v. Land Reclamation, Ltd., 155 Wis.2d 737, 157 Wis.2d 507, 456 N.W.2d 570, 575-76 (1990). Other courts have determined that “sudden and accidental” has a temporal quality and means immediate, unexpected, and unintended. See United States Fidelity & Guar. Co. v. Star Fire Coals, Inc., 856 F.2d 31, 34 (6th Cir.1988); American Motorist Ins. Co. v. General Host Corp., 667 F.Supp. 1423 (D.Kan.1987); Fireman’s Fund Ins. Co. v. Ex-Cell-O Corp., 702 F.Supp. 1317, 1326 (E.D.Mich.1988); Outboard Marine Corp. v. Liberty Mutual Ins. Co., 212 Ill.App.3d 231, 156 Ill.Dec. 432, 570 N.E.2d 1154 (1991); Waste Management of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 693, 340 S.E.2d 374, 379 (1986); Lower Paxton Township v. United States Fidelity & Guar. Co., 383 Pa.Super. 558, 566, 557 A.2d 393, 397-99 (1989). See also Great Lakes Container Corp. v. National Union Fire Ins. Co. of Pittsburgh, 727 F.2d 30 (1st Cir.1984) (complaint alleged that pollution was deliberate and continuous); American States Ins. Co. v. Maryland Casualty Co., 587 F.Supp. 1549 (E.D.Mich.1984) (same); Barmet of Indiana, Inc. v. Security Ins. Group, 425 N.E.2d 201 (Ind.App. 1981) (same); Techalloy Co. v. Reliance Ins. Co., 338 Pa.Super. 1, 487 A.2d 820 (1984) (same).

When determining the plain and ordinary meaning of words, definitions in a recognized dictionary may be considered. People v. Forgey, 770 P.2d 781, 783 (Colo. 1989). In doing so, we find that a number of recognized dictionaries differ on the meaning of the term “sudden.” Webster’s Third New International Dictionary 2284 (1986) attaches a number of definitions to “sudden.” Webster’s first defines “sudden” as “happening without previous notice ... occurring unexpectedly ... not foreseen.” Webster’s then lists synonyms for “sudden” that include “prompt” and “immediate.” Random House Dictionary of the English Language 1900 (2 ed. 1987) defines the word “sudden” in a temporal sense as “happening, coming, made, or done quickly.” Black’s Law Dictionary 1284 (5th ed.1979) defines “sudden” as “[hjappening without previous notice or with very brief notice; coming or occurring unexpectedly; unforeseen; unprepared for.”

In Claussen v. Aetna Casualty & Surety Co., 259 Ga. 333, 335, 380 S.E.2d 686, 688 (1989), the Georgia Supreme Court stated:

Perhaps, the secondary meaning is so common in the vernacular that it is, indeed, difficult to think of “sudden” without a temporal connotation: a sudden flash, a sudden burst of speed, a sudden bang. But, on reflection one realizes that, even in its popular usage, “sudden” does not usually describe the duration of an event, but rather its unexpectedness: a sudden storm, a sudden turn in the road, sudden death. Even when used to describe the onset of an event, the word has an elastic temporal connotation that varies with expectations: Suddenly, it’s spring. See also Oxford English Dictionary, at 96 (1933) (giving usage examples dating back to 1340, e.g., “She heard a sudden step behind her”; and, “A sudden little river crossed my path As unexpected as a serpent comes.”).

Although “sudden” can reasonably be defined to mean abrupt or immediate, it can also reasonably be defined to mean unexpected and unintended. Since the term "sudden” is susceptible to more than one reasonable definition, the term is ambiguous, and we therefore construe the phrase “sudden and accidental” against the insurer to mean unexpected and unintended.¹³

If we were to construe “sudden and accidental” to have a solely temporal connotation, the result would be inconsistent definitions within the CGL policies. In the portion of the policies defining occurrence, accident is defined to include “continuous or repeated exposure to conditions, which result in bodily injury or property damage, neither expected nor intended from the standpoint of the insured.” If “sudden” were to be given a temporal connotation of abrupt or immediate, then the phrase “sudden and accidental discharge” would mean: an abrupt or immediate, and continuous or repeated discharge. The phrase “sudden and accidental” thus becomes inherently contradictory and meaningless. City of Northglenn v. Chevron, U.S.A., Inc., 634 F.Supp. 217, 222 (D.Colo.1986); United States v. Conservation Chem. Co., 653 F.Supp. 152, 203-04 (W.D.Mo.1986); Van’s Westlake Union, Inc., 34 Wash.App. at 711-15, 664 P.2d at 1265-66.

Neither the state’s CERCLA complaint, nor the third-party complaint contains claims asserting that Hecla expected or intended the discharge of pollutants into the California Gulch as a result of its mining operations.

Hecla’s CGL policies extend coverage to a sudden and accidental occurrence. The trial court resolved the duty to defend issue by entering a summary judgment. No allegations were made in either the CERC-LA complaint or in the third-party complaint that the damage caused by Hecla’s discharge of the contents of the Yak tunnel was either expected or intended. No proof was offered by either Indemnity or New Hampshire, discovery proceedings had not been completed, and the factual issues had not been determined. Accordingly, the trial court did not err in concluding that Indemnity and New Hampshire had the duty to defend Hecla.

We reverse and remand to the court of appeals with directions to reinstate the judgment entered by the trial court against Indemnity and New Hampshire.

MULLARKEY, J., dissents, and ROVIRA, C.J., and KIRSHBAUM, J., join in the dissent.

1 . CERCLA creates statutory liability for present and former owners of hazardous waste disposal sites, transporters of hazardous wastes, and those who arrange for the transport and disposal of hazardous waste. 42 U.S.C. § 9607. Under CERCLA, any party with an ownership interest in the site responsible for the release of contaminants can be held strictly liable regardless of fault or intent. Id. The liability under CERCLA is joint and several, regardless of each party’s degree of fault or responsibility for the creation of the hazardous condition. Id.

2 . The Yak Tunnel is not far from Leadville, and was developed between 1895 and 1923. The tunnel extends four and one-half miles under Iron Hill and Breece Hill in upper California Gulch, and was designed as a portal for the transportation of ore out of adjacent mines and to allow for drainage of the mine shafts into the California Gulch.

3 . A "surge” is a sudden release of water that has been impounded in a mine tunnel. A surge is of short duration and generally produces a high flow of water. When a tunnel is properly maintained as part of the ongoing mining operations, surges do not occur, although once maintenance stops, roof rock and timbers collapse, creating debris barriers, impounding water that has seeped into the tunnel. When the hydraulic pressure becomes high enough, the impounded water bursts the debris barrier and a surge results. Flow rates and volumes of a surge are unpredictable.

4 . Third-party complaints were also filed against over 200 other companies and individuals.

5 . The duty to defend and the duty to indemnify are separate and distinct. City of Johnstown v. Bankers Standard Ins. Co., 877 F.2d 1146, 1148 (2d Cir.1989). Any determination of whether Industrial or New Hampshire have a duty to indemnify Hecla is premature, and should not be made until the underlying claims are resolved. Id. at 1153.

6 . Following the widespread prosecution of CERCLA actions, the standard CGL policy was amended and now provides:

2. Exclusions.

This insurance does not apply to:

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f.(l) “Bodily injury” or "property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants:

(a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured;

(b) At or from any premises, site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing or treatment of waste;

(c) Which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for any insured or any person or organization for whom you may be legally responsible; or

(d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured’s behalf are performing operations:

(i) if the pollutants are brought on or to the premises, site or location in connection with such operations by such insured, contractor or subcontractor; or

(ii) if the operations are to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants.

Subparagraphs (a) and (d)(i) do not apply to "bodily injury” or "property damage” arising out of heat, smoke or fumes from a hostile fire.

As used in this exclusion, a hostile fire means one which becomes uncontrollable or breaks out from where it was intended to be.

(2) Any loss, cost or expense arising out of any:

(a) Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or any way respond to, or assess the effects of pollutants; or

(b) Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of pollutants.

Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

Fire Casualty & Surety Bulletin, F-l, -2 (November 1990).

7 . The definition of occurrence focuses on whether the damage caused by the discharge of pollution was unexpected and unintended, the pollution exclusion clause focuses on whether the discharge of pollution was unexpected and unintended. Claussen v. Aetna Casualty & Surety Co., 259 Ga. 333, 380 S.E.2d 686 (1989).

8 .See also Gray v. Zurich Ins. Co., 65 Cal.2d 263, 276-77, 54 Cal.Rptr.104, 113, 419 P.2d 168, 177 (1966) (insurer obligated to defend insured even assuming application of clause excluding coverage of intentionally caused damage, since the facts alleged in the complaint might have supported a judgment based merely on the negligent conduct of the insured, which is within the coverage of the policy); Hawaiian Ins. & Guar. Co. v. Blanco, 72 Haw. 9, -, 804 P.2d 876, 879-80 (1990) (duty to defend arises whenever pleadings allege facts which potentially might lead to indemnification liability); Zurich Ins. Co. v. Raymark Indus., 118 Ill.2d 23, 51, 112 Ill.Dec. 684, 697, 514 N.E.2d 150, 163 (1987) (although insurer may not ultimately be obligated to indemnify insured, insurer must defend insured if complaint alleges facts which bring the claim within potential indemnity coverage of the policy); Republic Vanguard Ins. Co. v. Buehl, 295 Minn. 327, 331, 204 N.W.2d 426, 429-30 (1973) (where the allegations of a complaint state a cause of action within the terms of policy coverage, the insurer must undertake to defend the insured); Graber v. State Farm Fire & Cos. Co., 797 P.2d 214, 217 (Mont.1990) (same); MacDonald v. Home Ins. Co., 97 N.J.Super. 501, -, 235 A.2d 480, 482 (1967); (same); Technicon Elecs. Corp. v. American Home Assur. Co., 74 N.Y.2d 66, 73, 544 N.Y.S.2d 531, 533, 542 N.E.2d 1048, 1050 (1989) ("when an exclusion clause is relied upon to deny coverage, the insurer has the burden of demonstrating that the ‘allegations of the complaint cast that pleading solely and entirely within the policy exclusions, and, further, that the allegations, in toto, are subject to no other interpretation’”) (emphasis in original) (citation omitted); Waste Management of Carolinas v. Peerless Ins. Co., 315 N.C. 688, 690-93, 340 S.E.2d 374, 377-78 (1986) (insurer’s duty to defend is measured by facts alleged in pleadings, and any doubt as to coverage is to be resolved in favor of insured).

9 . Similarly, where the complaint alleges facts which would "establish a reasonable likelihood that the alleged tortious conduct of [the insured] is excluded from coverage ...,” the insurer may seek a declaratory judgment to determine the insured’s duty to defend. Troelstrup v. District Court, 712 P.2d 1010, 1012-13 (Colo.1986); see also First Nat’l Bank in Bristol v. South Carolina Ins. Co., 207 Tenn. 520, 522, 341 S.W.2d 569, 570 (1960) (insurer has no duty to defend where alleged facts fall within policy exclusion to coverage).

10 . If the trial court were permitted to go beyond the complaint to determine Industrial’s and New Hampshire’s duty to defend, this would likely place Hecla in the dilemma of establishing in the declaratory judgment action that although it was responsible for the discharge of pollution into the California Gulch, that discharge was both sudden and accidental. This defense, the most reasonable and effective in the declaratory judgment action, would unduly compromise Hecla’s defense in the CERCLA action where the complaint is based on a strict liability claim.

If the declaratory judgment action were to result in a determination that Hecla’s discharge of pollution was neither sudden nor accidental, but was expected and intended, then the state, in the underlying action, need only amend its CERCLA complaint to include intentional discharge and invoke the doctrine of collateral estoppel against Hecla. Hartford Ins. Group v. District Court, 625 P.2d 1013, 1016 (Colo.1981). However, if Industrial and New Hampshire provide Hecla with a defense to the state’s CERCLA action, and it is there determined that Hecla was not liable, the insurer avoids any judgment liability under its insurance contract. If Hecla had been defended under a reservation of rights and no declaratory judgment had been sought and Hecla was found to be liable to the state under CERCLA, that determination would have had no effect on a subsequent declaratory proceeding brought by Indemnity and New Hampshire seeking reimbursement for defense expenses, since a determination as to strict liability and negligence does not resolve whether the discharge was sudden and accidental for the purposes of the pollution exclusion. See Farm Bureau Mut. Auto. Ins. Co. v. Hammer, 177 F.2d 793, 801 (4th Cir.1949); Lane v. Hartford Fire Ins. Co., 343 F.Supp. 79, 85-86 (E.D.Mo.1972); Gray v. Zurich Ins. Co., 65 Cal.2d 263, 278, 54 Cal.Rptr. 104, 114, 419 P.2d 168, 178.

The burden imposed on Industrial and New Hampshire by requiring that the duty to defend be determined by the allegations in the complaint are negligible compared with the burden imposed on Hecla in defending a declaratory judgment action which looks to facts beyond the allegations in the complaint. See Hartford Ins. Group v. District Court, 625 P.2d at 1017.

11 . Requiring the average auto accident victim, or the average home owner to bear the onerous financial burden of proving that they are entitled to a defense from liability claims asserted against them would deny the insured the protection afforded by a liability policy.

12 . Some courts have determined that the terms “sudden and accidental” are ambiguous by the mere fact that they are not defined in the insurance policy. See Buckeye Union Ins. v. Liberty Solvents & Chem., 17 Ohio App.3d 127, 477 N.E.2d 1227 (1984).

13 . The determination that “sudden and accidental” is an ambiguous phrase is supported by a large amount of conflicting authority. Although the mere existence of conflicting authority does not establish the ambiguity of a contract term, see Allstate Insurance Co. v. Troelstrup, 789 P.2d 415 (Colo.1990), "this type of comprehensive debate dispels the insurer’s contention that the exclusionary language is clear.” Just v. Land Reclamation, Ltd., 456 N.W.2d at 578.