POLLUTION EXCLUSION BARS RECOVERY
|
Commercial General Liability |
Duty To Defend |
|
Total Pollution Exclusion |
|
Thomas McGregor, DBA McGregor Heating & Air
Conditioning (McGregor), installed a new furnace in the home of Peter and Susan
Staecker. Six years later, a leak in the supply line
caused oil to leak into the ground beneath the Staeckers'
home. The state Department of Environmental Protection issued a notice of
responsibility to the Staeckers and directed them to clean up the environmental damage
caused by the oil leak. The Staeckers filed a
negligence lawsuit against McGregor seeking payment for the cost of the cleanup
and lost rental income.
McGregor looked to his commercial general liability
carrier, Allamerica Insurance Company (Allamerica), for coverage but Allamerica
denied the request because of the pollution exclusion on the policy. The Allamerica policy contained a total pollution exclusion
that excluded coverage for pollutant related-bodily injury or property damage and
for damages due to requests for monitoring, testing or cleaning up of
pollutants.
McGregor filed a lawsuit against Allamerica to require it to defend him in the Staecker lawsuit. The lower court judge found in favor of
McGregor and Allamerica appealed.
On appeal, the Supreme Judicial Court of
Massachusetts found that Allamerica had no obligation
to defend or indemnify McGregor. According to the court, a policyholder reading
McGregor's policy could reasonably expect that oil leaking into the ground
constituted a pollutant within the meaning of the policy.
McGregor then argued that allowing Allamerica to deny coverage under the pollution exclusion
would "effectively eviscerate" his policy because any mishap within
his type of business would include the discharge of oil, soot or smoke. The
court was not persuaded by this argument and instead found that the policy
could cover some accidents involving oil or soot incidentally discharged. As
long as the policy provided coverage for some acts, it was not
"effectively eviscerated."
McGregor vs. Allamerica Insurance Company-Supreme Judicial Court of Massachusetts, Worcester-July 10, 2007-868 North Eastern Reporter 2d 1225