NOTE – This
is from our older court case archives. It may involve situations that are
inapplicable to newer coverage forms. Please be aware of this possibility when
reading and using this case.
Pollution Exclusion
Applied Although Pollution Was Caused By Former Owner
|
General
Liability Insurance |
|
Pollution
Exclusion |
A
manufacturer of photographic supplies, which purchased land from a manufacturer
of ribbon and carbon, found hazardous materials five years after the purchase
which had been buried in trenches and pits over a number of years by the
previous owner. The photo company, pursuant to an agreement with the New York
State Department of Environmental Conservation, agreed to decontaminate the
site. It submitted a claim for indemnification under General liability
insurance carried continuously since before the property purchase. The insurer
denied coverage on the basis of the standard pollution exclusion.
Legal action
resulted in summary judgment limiting the insured’s right of recovery to the
actual expenses for cleanup of contamination to the groundwater and
environment; it did not indemnify for contamination of the insured’s own
property. The insurer appealed, seeking relief from all obligations. The
insured cross-appealed, seeking full indemnification.
The insured
stressed that the discharge of hazardous materials was done without its consent
or knowledge by the former owner. It cited legal precedent in which the purpose
of the exclusion was described as a deterrent to deliberate pollution “by
withholding the shelter of liability insurance for injuries resulting from such
conduct.” It argued that the important purpose would not be served by applying
the exclusion in the present situation.
Despite
several case citations in which it was held that the exclusion was intended to
apply to actual polluters, the appeal court found the exclusionary language to
be “clear and unambiguous” and that there was no exception for pollution caused
by parties other than the insured.
Accordingly,
the insurer’s motion for summary judgment in full was granted. Extension of
coverage to the cost of cleaning up contamination of ground water and
environment, as well as to the insured’s own property, was denied.
Powers Chemco, Inc., Respondent, Appellant v. Federal Insurance Company, Appellant, Respondent, New York Supreme Court, Appellate Division, Second Judicial Department, No. 2592E. November 14, 1988. CCH 1988-89 Fire and Casualty Cases, Paragraph 1442.