Pollution Exclusion Clause Bars Coverage of 90 Negligence Claims

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).

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