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The United States District Court for the Northern District of New York, applying New York law, has determined that an insurer had a duty to defend an insured because a carve-out to the relevant pollution exclusion applied. Town of Harrietstown v. Westchester Fire Ins. Co., 2025 WL 2391758 (N.D.N.Y. Aug. 18, 2025).
The insured municipality operated a regional airport that used aqueous film-forming foam (AFFF), which contained known pollutants per- and polyfluoroalkyl substances (PFAS), including perfluorooctane sulfonic acid (PFOS). On November 5, 2020, the municipality received a Potentially Responsible Party letter from the New York State Department of Environmental Conservation (NYSDEC) regarding contamination at the airport, which had been designated as a superfund site. The municipality tendered the letter to its insurer seeking coverage for the defense of the regulatory action. Based on the information available at that time, the insurer agreed to defend the municipality subject to a reservation of rights.
During the course of the insurer's investigation, the municipality admitted that AFFF was stored at the site and used for training purposes. Although the airport maintained no records of AFFF use for firefighting or other emergency response purposes, the insured submitted evidence of airplane-related emergencies occurring at the airport that might have required the use of AFFF. The municipality's final Order on Consent and Administrative Settlement with the NYSDEC stated that "[c]ontamination at the Site appears to be [the] result of [AFFF] spilled or used for training, responding to plane crashes, and/or for other purposes at the Site."
The relevant policies contained a pollution exclusion baring coverage for "pollution and contamination of any kind whatsoever." The exclusion contained a carve-out for pollution and contamination "caused by or resulting in a crash fire explosion [sic] or collision or a recorded in-flight emergency causing abnormal aircraft operation." The pollution exclusion also contained a combined claims subpart that would absolve the insurer of the duty to defend "a claim or claims covered by the policy when combined with any claims excluded by [the pollution exclusion]."
After the underlying matter had developed further, the insurer notified the municipality on July 23, 2024, that it would cease providing a defense, citing the combined claims provision. The municipality initiated a coverage action seeking to reinstate the insurer's defense obligations. In the coverage action, the insurer argued that the combined claims provision applied to absolve it of the duty to defend because the pollution exclusion delineated between covered and non-covered claims based on the cause of the pollution. Here, the insurer argued, while the pollution exclusion did not apply to that part of the claim caused by AFFF's use in responding to plane crashes, it nonetheless applied to that part of the claim caused by AFFF's other uses, including training. The policyholder argued that the combined claims provision did not apply because it required the existence of two or more claims, and multiple causes do not constitute multiple claims.
The court determined that despite the parties' different interpretations, the combined claims provision unambiguously required more than one claim. The court assessed the meaning of "claim" and concluded that a "claim" is not a cause and is instead "an assertion or statement of a right brought against an insured in a format other than a 'civil proceeding' for which Insurers may investigate, settle, and/or defend." The court differentiated combined claims provisions from anti-concurrent cause provisions, noting that anti-concurrent cause provisions bar coverage where a claimed loss is caused by a combination of covered and excluded perils. Accordingly, the court determined that there was only one claim, the combined claims provision did not apply, and the insurer had a duty to defend "unless and until such time as the Insurers can establish with certainty that the NYSDEC claim falls outside of an exception of the Pollution Exclusion clause."
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