711 A.2d 45

Superior Court of Delaware,

E.I. DU PONT DE NEMOURS AND COMPANY, Plaintiff,

v.

ADMIRAL INSURANCE COMPANY, et al., Defendants.

No. 89C-AU-99.Submitted: Aug. 11, 1995.Decided: Aug. 23, 1995.

OPINION

STEELE, Vice Chancellor.

Plaintiff E.I. du Pont de Nemours and Company (“DuPont”) filed this action against Admiral Insurance Company and numerous other insurance companies seeking a declaration of the parties’ rights, duties and liabilities under umbrella and excess liability insurance policies issued to DuPont by the defendants from 1967 to 1986.1 DuPont also *49 seeks compensatory damages for defendants’ alleged breach of the indemnity provisions concerning environmental claims against DuPont at a multitude of manufacturing and waste disposal sites.

II. THE POLLUTION EXCLUSIONS

The majority of DuPont’s umbrella and excess insurance policies issued on and after March 1, 1970 contain one of two types of pollution exclusions.5 The first and by far the most common pollution exclusion in DuPont’s insurance policies is “NMA 1685”,6 which states:

This policy shall not apply with respect to seepage, pollution or contamination to claims made against the Insured for:

(i) Personal Injury or Bodily Injury, or loss of or damage to, or loss of use of property directly or indirectly caused by seepage, pollution or contamination, provided always that This Paragraph shall not apply to

(1) liability for Personal Injury or Bodily Injury or loss of or physical damage to or destruction or tangible property, or loss of use of such property damaged or destroyed, where such seepage, pollution or *52 contamination is caused by a sudden, unintended and unexpected happening during the period of this Insurance.

(2) The cost of removing, nullifying or cleaning-up seeping, polluting or contaminating substances unless the seepage, pollution or contamination is caused by a sudden, unintended and unexpected happening during the period of this Insurance.

(3) Fines, penalties, punitive or exemplary damages.

(Dangel Aff. Ex. A) (emphasis added). The second form of pollution exclusion, referred to as the “ISO Pollution Exclusion”7 states:

This policy does not apply to personal 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 material or other irritants, contaminants or pollutants into or upon land, or the atmosphere; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.

(Dangel Aff. Ex. A) (emphasis added).8

****

B. Regulatory Estoppel

14 DuPont argues the insurers should be estopped from asserting the exceptions to the pollution exclusions are limited to “abrupt” events. To bolster its claim, DuPont now relies upon insurance industry representations made to insurance regulators.11 A few courts interpret the exception to the pollution exclusion in a manner consistent with their interpretations of the insurance industry’s statements to insurance regulatory authorities in seeking approval of the language. See Morton Int’l, Inc. v. General Accident Ins. Co. of Am., N.J.Supr., 134 N.J. 1, 629 A.2d 831 (1993), cert. denied, 512 U.S. 1245, 114 S.Ct. 2764, 129 L.Ed.2d 878 (1994); Joy Technologies, Inc. v. Liberty Mut. Ins. Co., 187 W.Va. 742, 421 S.E.2d 493 (1992). These authorities are unpersuasive for two reasons.

First, Morton, Joy and cases using similar reasoning rely heavily on their interpretations of the insurance industry’s representations to administrative bodies and entirely disregard the contractual language. See Morton, 629 A.2d at 872 (recognizing the plain meaning of “sudden” includes a temporal requirement). In reality, these courts do not “estop” insurance companies from denying coverage for gradual pollution, but reform the contract to read out the pollution exclusion based on subjectively assumed public policy grounds. Using selective portions of the regulatory submissions, the courts make broad assumptions of fact and draw conclusions unsupported by the record. See, e.g., Morton, 629 A.2d at 872 (“The material and substantial reduction in coverage proposed by the pollution-exclusion clause, if disclosed to regulators in New Jersey and elsewhere, undoubtedly would have affected adversely the industry’s rates for CGL coverage.”). At best, the insurance industry’s representations are unclear. However, even if the portions cited by the Morton court are considered misrepresentations, the regulators had the clear and unambiguous language of the ISO pollution exclusion before them.12 As one court stated:

To start, Morton seems grossly insulting to the members of all the regulatory agencies for it implies that all of them accepted the statements made to them by ‘the industry’ changing the meaning of an unambiguous clause. That suggests, at the kindest, naivety and passivity.

*63 Carrier Corp. v. Home Ins. Co., Conn.Super., No. CV-88-352393-8, O’Neill, J. (Oct. 31, 1994) Mem. of Decision at 4. It appears, in light of forty-five affidavits filed by insurance regulators from more than thirty-five states, the unclear “explanation” of the ISO pollution exclusion did not “mislead” the regulators.13

One glance at the record demonstrates DuPont cannot be relegated to Morton ‘s assumed class of beneficiaries of regulatory ineptness. The 1970-71 policies, the first policies to contain pollution exclusions, contained the ISO “sudden and accidental” exclusion. Dissatisfied with Aetna’s attitude and its inability to manipulate Aetna, DuPont switched brokers to Marsh and McLennan in late 1970, developed its own manuscript policy and had Marsh and McLennan place the 1970-71 insurance coverage with various insurers. DuPont chose to include the NMA 1685 pollution exclusion, and not the ISO pollution exclusion, in the majority of the policies for the next fifteen years. The minority of the policies between 1971 and 1986 containing ISO pollution exclusions actually contain both the NMA 1685 and ISO pollution exclusions. Therefore, the record reflects DuPont, a sophisticated insured, prepared the manuscript insurance policy and insisted on including specific standardized wording in the contract.

Second, it is a well-settled rule that when the clear and unambiguous terms of an insurance policy preclude coverage, a policyholder cannot create coverage by asserting estoppel. Independent Petrochemical Corp. v. Aetna Casualty & Sur. Co., 842 F.Supp. 575, 582 (D.D.C.1994); K.J. Quinn & Co. v. Continental Casualty, 806 F.Supp. 1037, 1044 (D.N.H.1992); see Matia v. Carpet Transp., Inc., 888 F.2d 118, 121 (11th Cir.1989). This Court has stated the rule as follows:

As a general rule estoppel cannot be invoked to create an insurance contract where none exists and cannot operate to bring within a policy’s coverage property, risks, or losses which by the terms of the policy are expressly excepted or otherwise excluded. 16A Appleman Insurance Law and Practice, § 9090 (1968); 18 Couch on Insurance 2d, § 71:35 (1968); 45 C.J.S. Insurance § 674 (1946).

Container Corp. of America v. Bituminous Casualty Corp., Del.Super., 252 A.2d 117, 121 (1969); National Fire Ins. Co. of Hartford v. Eastern Shore Laboratories, Inc., Del.Super., 301 A.2d 526, 530 (1973); see Mutual Benefit Life Ins. Co. of Newark, N.J. v. Bailey, Del.Supr., 190 A.2d 757, 761 (1963).14 The pollution exclusions clearly and unambiguously exclude coverage for damage caused by pollution. The pollution exclusions’ exceptions clearly and unambiguously restore coverage for the abrupt and unexpected advent of pollution causing bodily injury or property damage. Despite the invitation to do so, I cannot revisit the original bargain and rewrite the contract to include gradual damage in the pollution exclusions’ exceptions or limit the exclusion to the intentional discharge of “known” pollutants. Therefore, I find DuPont’s regulatory estoppel argument fails as a matter of law.

*69 XIII. CONCLUSION

I find the NMA 1685 and ISO pollution exclusions preclude coverage for DuPont’s claims for the Trial Group I sites. DuPont cannot restore coverage using the exceptions to the pollution exclusions. The Plaintiff’s Motion for Partial Summary Judgment Regarding the Proper Interpretation of Certain Pollution Exclusions Found in 1970-1985 Insurance Policies is denied. Certain Defendants’ Joint Motion For Partial Summary Judgment on Pollution Exclusion Defenses is granted.

In accordance with my letter to counsel of this same date, an Order prepared by Defendants’ coordinating counsel, approved as to form by all moving parties will be signed upon presentation.