A federal judge has ruled that Nationwide Insurance Co. is not obliged to defend homeowners accused of allowing raw sewage to spew onto a neighboring property.

U.S. District Senior Judge Terrence F. McVerry of the Western District of Pennsylvania ruled in Nationwide Property and Casualty Insurance v. Shearer that policy exclusions allowed Nationwide to refuse defense and indemnity to its customers involved in the underlying property-damage lawsuit.

The policyholders claimed that Nationwide, which had been defending them in the underlying proceedings, waited too long to invoke a declaratory judgment action. The defendants also maintained that having to retain new counsel in the middle of a lawsuit would put them at a disadvantage.