                     UNITED STATES COURT OF APPEALS
                             FOR THE FIFTH CIRCUIT



                                      No. 95-11177



SNYDERGENERAL CORP.,
                                                                       Plaintiff-Appellant,
                                         versus
CENTURY INDEMNITY CO.,
                                                                      Defendant-Appellee.



                       Appeal from the United States District Court
                           For the Northern District of Texas

                                      May 19, 1997
Before POLITZ, Chief Judge, SMITH and DUHÉ, Circuit Judges.
POLITZ, Chief Judge:

      In this insurance coverage dispute, SnyderGeneral Corporation appeals an
adverse summary judgment in favor of its insurer, Century Indemnity Company.

Concluding that environmental cleanup costs qualify as damages under the

applicable insurance policy, we affirm in part and vacate in part the district court’s
grant of summary judgment, and remand for further proceedings consistent

herewith.

                                   BACKGROUND
      In 1982 SnyderGeneral purchased the assets of the Climate Control Division

of The Singer Company. Included in this purchase was a manufacturing facility
located in Wilmington, North Carolina.               SnyderGeneral manufactured air
conditioning and heating equipment at the Wilmington facility from 1982 until it

sold the facility in 1988.1 The manufacturing process required the use of the

industrial degreasing solvent trichloroethane (“TCA”) and thousands of gallons of
groundwater.

       In 1983 approximately 500 gallons of TCA spilled from an above-ground

storage tank at the Wilmington facility. SnyderGeneral reported the spill to North

Carolina environmental authorities and cleaned it up to their satisfaction. In 1988
an investigation revealed the presence of additional TCA in the groundwater at the
Wilmington facility.       SnyderGeneral undertook the task of cleaning up the
contamination and, to date, has spent approximately $2,000,000 toward that goal.

       At the time of the 1983 spill, SnyderGeneral had two comprehensive general
liability insurance policies. The first, with Commercial Union Insurance Company,

provided $300,000 of primary coverage. The second, with Century Indemnity
Company, provided umbrella coverage up to $25,000,000. When the additional
TCA contamination was discovered in 1988, SnyderGeneral notified both insurance

companies of its claim for reimbursement for its expenses in conjunction with the

TCA contamination. Specifically, SynderGeneral called upon Century to pay the
expenses it had incurred in excess of its primary insurance. Century denied

coverage and SnyderGeneral filed suit in Texas state court alleging breach of


   1
    SnyderGeneral sold the Wilmington facility to Heatcraft, Inc., which declined to
assume liability for the costs of investigating and cleaning up environmental
contamination at the facility. SnyderGeneral retained responsibility for that liability.
                                             2
contract and of the duty of good faith and fair dealing in violation of the Texas
Insurance Code.

         Century removed the case to federal court and moved for summary judgment

on the grounds that either the pollution exclusion clause or the care, custody or
control exclusion clause in its policy precluded recovery by SnyderGeneral or, in

the alternative, that environmental cleanup costs did not constitute damages under

the policy. The district court denied Century summary judgment on the first two

grounds but granted it on the third. The court concluded that environmental
cleanup costs resemble restitution or reimbursement and are not compensation for
a traditional legal injury; therefore, such costs did not qualify as damages under
Century’s policy. Century, therefore, was deemed justified in refusing to reimburse

SnyderGeneral for the expenses it had incurred in cleaning up the TCA
contamination at the Wilmington facility. SnyderGeneral timely appealed.

                                     ANALYSIS
         We review a district court’s grant of summary judgment de novo, applying
the same standards as those applied by the district court.2 Federal Rule of Civil

Procedure 56(c) provides that summary judgment is appropriate only 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.”
                                   1. Damages

         The Century policy provides indemnity for:


   2
       Duhon v. Mobil Oil Corp., 12 F.3d 55 (5th Cir. 1994).
                                           3
         all sums which [SnyderGeneral] shall be obligated to pay by reason of
         liability. . .imposed upon [SnyderGeneral] by law. . .for damages. . .on
         account of. . .property damage. . .caused by or arising out of an
         occurrence occurring anywhere in the world. (Emphasis added.)

         Century contended, and the district court agreed, that the term damages in its
policy referred to the technical distinction between legal damages and equitable

relief. Consequently, SnyderGeneral’s environmental cleanup costs, which the

court characterized as restitution or reimbursement, did not qualify as damages.
         An intervening decision by this court is dispositive of the issue presented
herein. In Bituminous Casualty Corp. v. Vacuum Tanks, Inc.,3 an insurer contended

that it did not have a duty to defend its insured in a suit by the federal government

under the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (“CERCLA”).4 In that action the government sued the insured for

expenses incurred in cleaning up environmental contamination at a facility where
the insured delivered hazardous waste. The insurer contended that such cleanup
costs constituted economic injury and, as such, did not qualify as damages under

its policy.5 We held, however, that environmental cleanup costs imposed on an

insured by CERCLA were damages.
         Consistent with the holding in Bituminous Casualty, we now conclude and


   3
       75 F.3d 1048 (5th Cir. 1996).
   4
       42 U.S.C. § 9601 et seq.
   5
    The Bituminous policy provided coverage for “all sums which the insured
shall become legally obligated to pay as damages because of injury to or
destruction of property, including the loss of use thereof, caused by accident.”
75 F.3d at 1052.
                                            4
hold that environmental cleanup costs, whether incurred by the federal government
under CERCLA or by an individual who voluntarily undertakes the task of cleaning

up hazardous waste, are damages and thus are covered by the language of

Century’s policy. We are persuaded that such a reading of the subject insurance
policy is consistent with the conclusions of several federal courts and with

decisions of Texas courts.6

             2. Pollution and Care, Custody and Control Exclusions

       In its motion for summary judgment, Century contended that either the
pollution exclusion clause7 or the care, custody and control exclusion clause8 of its
policy precluded recovery by SnyderGeneral. The district court disagreed on both
counts, finding that the term “sudden” in the pollution exclusion clause had a

temporal component, and that SnyderGeneral had created a question of fact as to
the suddenness of the TCA discharge by alleging that it occurred within a 24-hour




   6
    See id., 75 F.3d at 1053 (citing decisions of federal courts); and Barnett v.
Aetna Life Ins. Co., 723 S.W.2d 663, 666 (Tex. 1987) (“[W]hen the language [of
an insurance policy] is susceptible of more than one construction, [it] should be
construed strictly against the insurer and liberally in favor of the insured.”).
   7
    "[T]his policy shall not apply to . . . property damage arising out of the
discharge . . . of . . . toxic chemicals . . . into or upon land, the atmosphere or
any water course or body of water; but this exclusion does not apply if such
discharge. . .is sudden and accidental.”
   8
    "[T]his policy shall not apply to: property damage to: (1) property owned
or occupied by or rented to the insured; (2) property used by the insured; or (3)
property in the care, custody or control of the insured as to which the insured is
for any purpose exercising physical control.”
                                           5
period. We find no error in the district court’s finding. 9 We likewise find no error
in the district court’s determination that under Texas law, the care, custody and

control exclusion only precludes insurance coverage in cases in which the insured

totally and physically manipulates property. As Century failed to establish that
SnyderGeneral totally and physically used or controlled the entire pool of

groundwater at the Wilmington facility, it was not entitled to summary judgment.10

        For the foregoing reasons, the judgment of the district court is AFFIRMED

in part and VACATED and REMANDED in part for further proceedings consistent
herewith.




   9
    See Mustang Tractor & Equip. Co. v. Liberty Mut. Ins. Co., 76 F.3d 89, 93
(5th Cir. 1996) (holding that “‘[s]udden’ may only reasonably be construed to
mean quick or brief”).
   10
     See Hartford Cas. Co. v. Cruse, 938 F.2d 601, 604 (5th Cir. 1991) (“The
[homeowners] continued inhabiting the house while [the contractor] worked on
the foundation. We thus reject the contention that [the contractor] had care,
custody, or control of the entire house. ‘The cases have limited this ‘control’ to
the particular object of the insured’s work. . .and to other property which he
totally and physically manipulates.’”) (quoting Goswick v. Employers’ Cas. Co.,
440 S.W.2d 287, 289-90 (Tex. 1969)).
                                         6
