The Alabama Supreme Court ruled that Superfund "response costs" are "damages" in Alabama Plating Co. v. USF&G, 690 So.2d 331 (Ala. 1996). More recently, the court also ruled in Certain Underwriters at Lloyd's, London v. Southern Natural Gas Co., No. 1110698 (Ala. June 28, 2013) that costs incurred by a pipeline operator to remediate PCB contamination were "damages" and not merely sums that the insured had voluntarily agreed to pay as a business decision. The court declined to distinguish between clean ups resulting from a court order or governmental directive and those that, as here, were voluntarily performed by the insured.
In U.S.F.&G. v. Armstrong, 479 So.2d 1164 (Ala. 1985), the Alabama Supreme Court ruled that contamination resulting from insured's removal of sewer line was an "occurrence" since harm though foreseeable, was not intended. More recently, a federal district court held in Associated Scrap Metal, Inc. v. Royal Globe Ins. Co., 927 F. Supp. 432 (S.D. Ala. 1995) that an insured was not precluded from obtaining coverage merely because it provided waste batteries to a third party, who then intentionally disposed of the acid contents of the batteries, since the insured had not expected or intended the resulting injury to occur.
After initially upholding the exclusion on August 30, 1996, the Alabama Supreme Court ruled on rehearing in Alabama Plating Co. v. USF&G, 690 So.2d 331 (Ala. 1996) that "sudden" is ambiguous and that the exclusion only applies to intentional pollution. Further, where the wastes were meant to be contained, as in a landfill, it only applies if the insured expected that the wastes would escape from the area in which they were placed, even if the initial disposal was intentional.
Earlier cases had declined to apply the exclusion in the cases that were not clearly "environmental." Compare Hicks v. American Resources Ins. Co., 544 So.2d 952 (Ala. 1989)(no coverage for discharge of chemicals and other contaminants from the insured's strip mining operations) with USF&G v. Armstrong, 479 So.2d 1164 (Ala. 1985) and Molton, Allen & Williams v. St. Paul Fire & Marine Ins. Co., 347 So.2d 95 (Ala. 1977)(erosion and mud run-off from insured's construction operations not excluded). See also Essex Ins. Co. v. Avondale Mills, Inc., 639 So.2d 1339 (Ala. 1994) (indoor exposures did not involve a discharge of pollutants "into the atmosphere").
"Absolute" Pollution Exclusion
In Federated Mut. Ins. Co. v. Abston Petroleum, Inc., 967 So.3d 705 (Ala. 2007), the Alabama Supreme Court ruled that an absolute pollution exclusion clearly precluded coverage for the cost of cleaning up contamination from gasoline leaking out of pipes connecting above-ground storage tanks and gasoline pumps at the insured's service station. The court ruled that the focus of the inquiry under the absolute pollution exclusion was not in the nature of the substance alone, but on the substance in relation to the property damage or bodily injury, rejecting the insured's argument that it should nonetheless be entitled to coverage in light of its claimed "reasonable expectations.
Similar exclusions have generally been given broad effect by Alabama's federal courts. See Reliance Ins. Co. v. Kent Corp., 896 F.2d 501 (11th Cir. 1990)(personal injuries resulting from toxic fumes from chemical fire in insured's dumpster) and Kruger Commodities, Inc. v. USF&G, 923 F. Supp. 1474 (M.D. Ala. 1996)(auto dealer's lost profits claim due to foul odors from insured's animal rendering plant). See also Shalimar Contractors, Inc. v. American States Ins. Co., 975 F.Supp. 1450 (M.D. Ala. 1997)(no coverage for claims arising out of insured's disposal of lead-contaminated debris from construction project) and Haman, Inc. v. St. Paul Fire & Marine Ins. Co., 18 F.Supp.2d 1306 (N.D. Ala. 1998)(spraying of highly toxic pesticide inside insured's motel held excluded under first party "pollution" exclusion).
The Eleventh Circuit has issued an unpublished affirmance of an Alabama District Court's ruling that a lawsuit brought by a furrier who complained that its products had begun to smell like curry as the result of shared air conditioning ducts with a neighboring Indian restaurant were subject to an absolute pollution exclusion in the restauranteur's liability policy. Maxine Furs, Inc. v. Auto-Owners Ins. Co., 2011 WL 1197466 (11th Cir. March 31, 2011), the Court of Appeals held in an unpublished opinion that no person of ordinary intelligence could reasonably conclude that curry aroma is not a contaminant, nor was there any dispute that the aroma had migrated, seeped or escaped from the insured's property contaminating the plaintiff's furs.
Most recently, the Eleventh Circuit issued a short, unpublished opinion in Evanston Ins. Co. v. J&J Cable Co., No. 17-11188 (11th Cir. April 20, 2018), affirming an Alabama District Court's declaration that an absolute pollution exclusion did not apply to damage caused by a release of sewage as the contamination did not occur in an industrial context.
"Personal Injury" Claims
Efforts to characterize pollution claims as a covered "offense" were rejected by the U.S. District Court in Kruger, supra.
On a certified question from a local District Court, the Alabama Supreme Court has declared in Travelers Cas. & Sur. Co. v. Alabama Gas Corp., 117 So.3d 695 (Ala. 2012) that a U.S. EPA PRP letter is a "suit" triggering a CGL insurer's duty to defend.
Trigger of Coverage
An "exposure" theory has been adopted by courts construing claims for asbestos bodily injury in Alabama. In Shook and Fletcher Asbestos Settlement Trust v. Safety National Casualty Corp., 909 A.2d 125 (Del. 2006) the Delaware Supreme Court predicted that the Alabama Supreme Court would adopt an "exposure" theory for asbestos BI claims, rejecting the insured's contention that policies in effect after the date that the claimants' exposure ceased should also be triggered or that, being the rule that most state courts have adopted, the Alabama Supreme Court would also likely follow it. In fact, the court concluded that based upon its own analysis, exposure was the majority rule. See also Commercial Union Ins. Co. v. Sepco Corp., supra and Safety National Casualty Corp. v. Shook & Fletcher Insulation Co., Jefferson No. CV-93-01574 (Ala. Cir. Ct. March 5, 1999).
The period of exposure is deemed to terminate on the last date of the claimant's employment in the type of work causing injury. Simmons v. American Mutual Liability Ins. Co., 433 F.Supp. 747 (S.D. Ala. 1976).
Superfund "response costs" were held to be covered in Mapco Alaska Petroleum, Inc. v. Central National Ins. Co. of Omaha, 784 F.Supp. 1454 (D. Alaska 1991).
No pollution cases.
No clear construction. In Sauer v. The Home Indemnity Co., 841 P.2d 176 (Alaska 1992), the Alaska Supreme Court suggested that it might follow an "actual polluter" approach. In Mapco, the federal district court ruled that "sudden" did have a possible temporal meaning but found that its principal meaning was "unexpected."
"Absolute" Pollution Exclusion
In Whittier Properties, Inc. v. Alaska National Ins. Co., 185 P.3d 84o. (Alaska 2008), the Alaska Supreme Court held that gasoline hat leaked from the insured's service station was clearly a "pollutant." Rejecting the insured's reliance on cases such as Kiger and Hocker Oil, the court held that the better-reasoned approach was to preclude coverage for gasoline and other products after they escape into the environment.
"Personal Injury" Claims
In Whittier, the court refused to find that claims by neighboring property owners triggered Coverage B, as such an analysis would render the APE meaningless.
Scope and Allocation Issues
Horizontal exhaustion" rejected in Mapco Express, Inc. v. American International Specialty Lines Ins. Co., No. 3AN-95-8309 (Alaska Super. July 31, 1998).
Trigger of Coverage
"Exposure" theory adopted in Mapco.
To view the full article, click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.