Pollution Exclusion Clause Bars Coverage of 90 Negligence Claims
February 28, 2011 |Construction workers and landowners brought 90 negligence claims alleging that owners of more than 15.5 acres of land in Dania Beach, Florida, had been negligent in releasing, discharging, emitting or otherwise permitting extremely hazardous toxic chemicals from the soil and groundwater at the land; removing or transporting contaminated soil and groundwater from the property; failing to warn them of the toxic contamination and increased risk of personal injuries or property damage; failing to promptly remedy the contamination and migration of toxic chemicals from the property; failing to warn them of the toxic contamination of the local groundwater; and/or failing to remedy the contamination and migration of toxic chemicals into the local groundwater. The defendants’ insurer refused to defend or indemnify them, and they brought suit against the insurer. The insurer moved for summary judgment, arguing that it had no duty to defend or indemnify the defendants because the injuries and damages alleged in the complaint against them were barred by the policy’s pollution exclusion clause.
A federal district judge in Florida recently granted the insurance company’s motion, based on the policy’s pollution exclusion clause. As the court explained, the exclusion applied to bodily injury or property damage arising out of the discharge, dispersal or escape of pollutants. The phrase “arising out of” was “not ambiguous” and had to be “interpreted broadly,” the court explained.
The court also rejected the contention that the “mobile equipment” exception applied because the claims against the defendants contended that they had caused “emissions, leakages, seeping, blowing, releases, transfers, dumping, emptying, pouring or otherwise prohibited discharges of pollutants, contaminants, hazardous substances, petroleum products, [and] petroleum products chemicals of concern” to be dispersed. As the court pointed out, this exception was only applicable to bodily injury, property damage or personal injury “arising out of the escape of fuels, lubricants or other operating fluids.” The claims against the defendants failed to allege that they had suffered injury as a result of exposure to operating fluids, the court ruled. Accordingly, it found that the insurer had no duty to defend or indemnify the defendants.
The case is Mt. Hawley Ins. Co. v. Dania Distribution Centre, Ltd., No.: 09-61275-Civ-Cooke/Bandstra (S.D. Fla. Jan. 31, 2011).
Case & Point
Recent noteworthy decisions
Claim for Business Interruption Loss Should Have Been Brought in Prior Action, Court Finds
After the owner of a mall damaged by a hurricane brought a coverage action against its insurer, the mall owner filed another action against the same insurer. In the second suit, the mall owner sought “business interruption” coverage under the policy and it challenged the amount and validity of the hurricane deductible. The insurer moved to dismiss.
The court found that the mall owner could have claimed a business interruption loss in the first case, even if it was for an unliquidated amount. The court also found that the amount and validity of the deductible were “offshoots” of the same basic controversy and should have been raised in the first action. The plaintiff therefore was barred from asserting these claims in the second suit, and the court dismissed the action. [U.S. Capital/Fashion Mall, LLC v. American Zurich Ins. Co., No. 10-62010-civ-Huck/O’Sullivan (S.D. Fla. Jan. 20, 2011).]
No Coverage for Damages from Phone Calls and Text Messages that Led to Emotional Harm
Lewis Heacker claimed that he had been damaged by harassing phone calls and text messages from Jessica Wright. After he obtained a judgment against her, Heacker brought suit against her insurance companies to recover for his “emotional damages.” The court dismissed his complaint, finding that any injury to Heacker arising from any of the phone calls and text messages “were caused intentionally by Wright or another person.” Thus, it found, the “Intentional Injury” provision applied to bar coverage. The court concluded by also noting that the plaintiff’s alleged injuries arose from purely emotional harm, which was “clearly and unambiguously excluded from coverage.” [Heacker v. American Family Mut. Ins. Co., No. 09-4270-CV-W-GAF (W.D. Mo. Jan. 14, 2011).