John MacKinnon (MacKinnon) owned and operated a residential apartment building in California. Truck Insurance Exchange (Truck) issued a commercial general liability policy providing coverage on that property for the period April 1996 to April 1997. That policy included an exclusion for any loss involving pollutants.
At the request of a tenant, the insured hired an exterminating company to spray a pesticide to eliminate wasps from the building. The building was treated several times in 1995 and 1996. The tenant that requested the pesticide treatment died on May 19, 1996. The tenant's parents filed a wrongful death suit, alleging the following:
MacKinnon filed a claim with Truck and the insurer responded that the loss was excluded. MacKinnon retained his own counsel, settled the suit with the parents and then sued Truck, claiming the insurer had a duty to defend and indemnify him. Truck moved for a summary judgment on the grounds of their absolute pollution exclusion. The trial court granted Truck summary judgment based primarily on the policy pollution exclusion being clear and unambiguous. The appeals court affirmed the trial court decision and the MacKinnon appealed.
The California Supreme Court reviewed the case, interpreted the exclusion and concluded that the exclusion did not bar coverage. The court disagreed with the insurer's interpretation of the exclusion as unreasonable, citing that any substance under certain circumstances can be an "irritant or contaminant." They invoked the "limiting principle" argument, which states that "without some limiting principle, the pollution exclusion clause would extend far beyond its intended scope, and lead to some absurd results." The court further concluded that the spraying or application of pesticides in and around an apartment building does not satisfy the "discharge, dispersal, release or escape" element of the absolute pollution exclusion. They found that the usual dictionary definitions of "discharge" and "dispersal" which, while useful, did not necessarily yield the "ordinary and popular" sense of the words when applied to the context of the policy, concluding that the terms "discharge" and "dispersal" did not apply to the normal application of pesticides. The lower court rulings were reversed in favor of MacKinnon.
John R. MacKinnon, et al., Plaintiffs and Appellants, v. Truck Insurance Exchange, Defendant and Respondent. California Supreme Court. No. S104543. Filed August 14, 2003. Reversed. CCH Personal and Commercial Liability Cases. Paragraph 7663.