Pollution Exclusion

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Law360 recently published a roundup of the biggest general liability rulings in the first quarter of 2022. As part of that roundup, it discussed Omega Protein, Inc. v. Evanston Insurance Company, which the Mississippi Supreme Court decided in January 2021. And it quoted Hunton Partner and practice group leader Syed Ahmad’s analysis of the opinion.
Continue Reading If Courts Have Said it Once They Have Said it a Million Times: Exclusions Susceptible to Multiple Reasonable Interpretations Are Ambiguous

The First Circuit recently held that a “Special Hazard and Fluids Limitation Endorsement” was ambiguous and therefore there was excess coverage for a fuel spill that occurred after a tanker-truck overturned.

In Performance Trans. Inc. v. General Star Indem. Co., the First Circuit reversed the District Court’s grant of summary judgment in favor of General Star Indemnity Company. The District Court held that the excess policy General Star issued to Performance Trans. Inc. precluded coverage for a spill that resulted in the leaking of thousands of gallons of fuel. The District Court relied on the existence of a total pollution exclusion to bar coverage and held that the policy’s Special Hazards and Fluids Limitation Endorsement could not create an ambiguity that would afford coverage.
Continue Reading First Circuit Rules Excess Insurer Must Provide Coverage for Fuel Spill

In March, we reported on the initial filing of several securities class action suits arising from the coronavirus pandemic (COVID-19). For example, at the start of the pandemic, shareholders of Norwegian Cruise Lines Holdings, Ltd. filed a class action alleging that the company and certain officers violated the Securities and Exchange Act of 1934. The lawsuit alleged that the cruise line made false and misleading statements about COVID-19 in order to persuade consumers to purchase cruises. This allegedly caused the share prices to be cut in half.
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Continue Reading COVID-19 Event-Driven Litigation Continues to Sail

The Southern District of Georgia recently ruled that Evanston Insurance Company is not entitled to summary judgment on whether its policies’ pollution exclusion bars coverage for the release of nitrogen into a warehouse. The case stems from an incident at Xytex Tissue Services, LLC’s warehouse, where Xytex stored biological material at low temperatures. Xytex used an on-site “liquid nitrogen delivery system” to keep the material properly cooled. This system releases liquid nitrogen, which would vaporize into nitrogen gas and cool the biological material. On February 5, 2017, a Xytex employee, Deputy Greg Meagher, entered the warehouse to investigate activated motion detectors and burglar alarms. Deputy Meagher was overcome by nitrogen gas and died as a result. Following Deputy Meagher’s death, his heirs filed suit against Xytex and other defendants. Evanston denied coverage based on the pollution exclusion in its policy. Evanston then brought a declaratory judgment action to confirm its coverage position.
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Continue Reading Georgia Federal Court Says Fact Questions Exist As To Whether Nitrogen Is An “Irritant” or “Contaminant” As Used in Pollution Exclusion

In a victory for policyholders, and an honorable mention for Merriam-Webster’s Dictionary, a federal judge in Virginia ruled that the dispersal of concrete dust that damaged inventory stored in an aircraft part distributor’s warehouse was a pollutant, as defined by the policy, but that it also constituted “smoke” as that term was defined in the dictionary, thereby implicating an exception to the policy’s pollution exclusion.  The Court then granted summary judgment for the policyholder, who had suffered a $3.2 million loss.[1]
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Continue Reading Another (Insurer) Bites The Dust: Virginia District Court Rejects Narrow Reading of Pollution Exclusion

On April 20, 2018, the Eleventh Circuit affirmed an Alabama district court decision finding that an “absolute pollution exclusion” did not bar coverage for environmental property damage and injuries from a sewage leak. Evanston Ins. Co. v. J&J Cable Constr., LLC, No. 17-11188, 2018 WL 1887459, (11th Cir. Apr. 20, 2018).
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Continue Reading Eleventh Circuit Upholds Coverage for Environmental Damage from Sewage, Concluding It is Not a “Pollutant”

Two recent decisions addressing allocation of long-tail liabilities demonstrate that resolution of the issue under New York law depends upon the policy language at issue. Judge-made rules on “equity” and “fairness” do not control.  As the New York Court of Appeals held on March 27, 2018, in Keyspan Gas East Corp. v. Munich Reinsurance America, Inc., 2018 WL 1472635 (2018), under New York law, “the method of allocation is covered for most by the particular language of the relevant insurance policy.” Both Keyspan and the April 2, 2018 decision in Hopeman Brothers, Inc. v. Continental Casualty Co., No. 16-cv-00187 (E.D. Va. Apr. 2, 2018), by the United States District Court for the Eastern District of Virginia, illustrate the importance of reviewing insurance policies – both before purchase, to ensure that they contain optimal language for coverage; and after claims arise, to ensure that the policyholder receives the benefit of insurance coverage under “legacy” and all other potentially applicable policies.
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Continue Reading Allocation Under New York Law: The Contract Language and the Facts Rule

A Georgia district court recently denied an insurer’s attempt to recoup defense costs, holding that even where the court previously determined that coverage was barred under the policy’s pollution exclusion, the insurer could not “rewrite the record” or clarify its “defective” reservation of rights letters to show that it fairly informed the policyholder of its coverage position, which is a prerequisite to recoupment of defense costs.
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Continue Reading District Court Rejects Insurer’s Attempt to Recoup Defense Costs, Citing Defective Reservation of Rights