Pollution Exclusion Continues to be Examined
Recently, two courts scrutinized the application of the pollution exclusion in the context of the facts alleged in the underlying pleadings. The Washington Supreme Court, in the case of Xia, et al. v. ProBuilders Specialty Insurance Co. RRG, 393 P.3d 748 (2017), rendered a groundbreaking analysis of the pollution exclusion favorable to policyholders. The court, in analyzing the underlying complaint segregated the pollution events and a claim of negligent installation. Within the context of the efficient proximate cause doctrine, the court held that the resulting carbon monoxide exposure was not barred by the pollution exclusion. As an aside, the Court held that the insurers failure to defend the insured constituted bad faith.
The Second Circuit Court of Appeals, in the case of Cincinnati Insurance Co. v. Roy’s Plumbing, Inc., WL2347562 (2017), analyzed the pleadings in the underlying claim and concluded that sewage constituted a pollutant within the context of the pollution exclusion. The court specifically noted that it had “no doubt” that sewage was toxic to persons. As a result, the court held that the insurer did not have a duty to defend or indemnify.
Also, of note, Eleventh Circuit Court of Appeals, in the case of Evanston Insurance Co. v. J&J Cable Construction, LLC, was considering whether a sewage leak constitutes a pollutant within the pollution exclusion. The lower court had held that the exclusion did not bar coverage for the sewage event.