Pollution exclusion clauses are an insurance industry staple and
are often contained in commercial general liability insurance
policies. While one might think that raw sewage would be considered
a pollutant, under current Alabama case law, raw sewage is not a
pollutant for the purposes of the pollution exclusion under a
commercial general liability policy. This somewhat counterintuitive
interpretation of a pollutant was recently applied by the United
States District Court for the Middle District of Alabama.
In this suit, Evanston Insurance Company sought a declaration of
its obligation to defend and/or indemnify J&J Cable and/or
Dixie Electric under a commercial general liability insurance
policy. J&J Cable and Dixie Electric had filed for coverage
from Evanston Insurance in connection with pending state court
lawsuits against them for bodily injury and property damage caused
by a sewer pipe broken by J&J Cable. As a result of the broken
sewer pipe, raw sewage backed up into two homes.
Evanston Insurance filed a motion for summary judgment arguing
that there was no coverage for J&J Cable or Dixie Electric
based in part on the pollution exclusion clause of their insurance
policy. The Middle District turned to Alabama law in answering
whether the pollution exclusion language unambiguously included
sewage as a pollutant. The test in Alabama for determining whether
there is ambiguity is what a reasonably prudent person applying for
insurance would have understood the words to mean. State Farm Fire
& Cas. Co. v. Slade, 747 So. 2d 293, 308 (Ala. 1999). The
policy in this case contained the following language for its
(1) "Bodily injury" or "property damage"
arising out of the actual, alleged or threatened discharge,
dispersal, seepage, migration, release or escape of
"Pollutants" is defined by the policy as: any solid,
liquid, gaseous or thermal irritant or contaminant, including
smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.
Waste includes materials to be recycled, reconditioned, or
Here, the Middle District relied on the Alabama Supreme
Court's instructive analysis in Porterfield v. Audubon Indem.
Co., 856 So. 2d 789 (Ala. 2002) to determine the applicability of
Evanston Insurance's pollution exclusion clause.
Porterfield's analysis directed courts to look at previous
Alabama Supreme Court interpretations of the pollution exclusion.
In looking to prior interpretations of what is considered a
pollutant, the Middle District relied upon United States Fidelity
and Guar. Co. v. Armstrong, 479 So. 2d 1164 (Ala. 1985), where the
Alabama Supreme Court found that sewage was not a pollutant as a
matter of law and that a reasonably prudent person would understand
that "pollutant" was not intended to include sewage.
Despite the fact that the pollution exclusion clause in
Armstrong was different from the clause in the instant case, and
despite the fact that the pollution in Armstrong was industrial
sewage and not residential sewage—potentially creating an
ambiguity in the pollution exclusion's application for this
case—the Middle District applied the Alabama Supreme
Court's findings that sewage is not considered a pollutant.
Therefore, because under Alabama law sewage was not considered a
pollutant, the Middle District held that Evanston Insurance could
not rely on the pollution exclusion in its comprehensive general
liability policy to preclude coverage for J&J Cable or Dixie
While the Middle District's holding of what constitutes a
pollutant might seem contrary to what a reasonably prudent person
might believe, the Middle District was bound by the Alabama Supreme
Court's prior interpretations of the pollution exclusion
clause, however illogical those prior interpretations might
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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It feels like a black swan event: last month, in GEICO Gen. Ins. Co. v. Harvey, No. 4D15-2724 (Fla. Ct. App. Jan. 4, 2017), a Florida appellate panel unanimously overturned a jury verdict, on the ground that the plaintiff's bad faith claim was insufficient as a matter of law.
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