GEORGIA, May 26 – The Georgia Supreme Court has ruled that a CGL policy pollution exclusion bars coverage for claims against the insured landlord for injuries resulting from lead paint ingestion.
In Georgia Farm Bureau Mut. Ins. Co. v. Smith, 784 S.E.2d 422 (Ga. 2016) the insurer sought a declaratory judgment that it did not owe defense or indemnity to its insured landlord in an underlying suit against the landlord by a tenant who claims she sustained as a result of ingesting lead paint in a rental home. Georgia Farm Bureau relied on an absolute pollution exclusion in the policy. The exclusion by its terms did not cover injury “arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants.’” The policy defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”
The insurer won summary judgment on the exclusion at the trial court level, the court holding that lead-based paint was unambiguously a “pollutant” as defined in the policy. An appeals court reversed, observing a split in jurisdictions, noting that some jurisdictions applied the exclusion only in instances of “industrial pollution.” The insurer appealed.
The Georgia Supreme Court reversed, finding that the absolute pollution exclusion applied from injury arising from exposure to lead-based paint.
Georgia Farm Bureau Ins. v. Smith et. al., 784 S.E.2d 422 (Ga. 2016)
MICHICAN, May 31 – The Michigan Supreme Court refused to address or overturn a lower court’s determination that smoke from an apartment complex fire doesn’t constitute a pollutant within the meaning of a pollution exclusion in a commercial general liability policy. The effect of the ruling leaves a judgment against XL Insurance in place.
Plaintiffs Charlie and Mary Hobson sued apartment owners as well as XL after sustaining injuries in an apartment fire. The Hobsons claimed that XL wrongfully denied insurance coverage to the apartment entities. XL had sought a ruling that smoke related injuries, including smoke inhalation arising out of an apartment fire, constituted excluded pollution related losses within the meaning of the landlord’s CGL policy. The Hobson’s responded that smoke related losses were a component of the fire, clearly contemplated by the CGL coverage, and were not within the pollution exclusion. The trial court denied the insurer’s motion for summary disposition and a three-judge panel of an intermediate appeals court affirmed.
The state supreme per Justice Brian Zahra court declined to hear the matter:
“[W]hile this case presents an interesting question of contract interpretation, because the record is undeveloped with regard to what constitutes a discharge, dispersal, seepage, migration, release, or escape [of pollutants] under the endorsement, I agree with my colleagues that leave should be denied.”
Charlie B. Hobson et al. v. Indian Harbor Insurance Co. et al.(Mich 2016, case number 151447). A link to the prior Court of Appeals opinion can be found here.