The routine actions of a NewYork state fire department sparked a legal "fire" between a manufacturer and its insurer. Hartford Fire Insurance Co. (Hartford) provided commercial insurance coverage to Catatact Metal Finishing, Inc. The manufacturing plant was destroyed by fire in February 2000. The local fire department’s use of water to control the fire likely caused several chemical vats to overflow, contaminating surrounding earth and flowing into the local sewer system.

Cataract was ordered by state authorities to either clean up the chemical spill or reimburse the state for doing so. The state billed Cataract for more than $800,000 for the clean-up (and related) costs. Hartford told Cataract that, due to its policy’s pollution exclusion, it would not pay the expenses. After filing suit against Hartford, both parties asked for declaratory judgment. The motions revolved around the applicability of the policy’s exclusion of any loss or expense related to a government request to handle a pollution incident.

Cataract’s chief argument was that the policy exclusion applied to incidents involving active polluters. Since the pollution did not arise out of active polluting, the clean-up expenses should be paid by the insurer. Unfortunately for Cataract, the court saw things differently. Upon review of related, pertinent cases and the relevant parts of the policy, the panel of judges decided that the policy exclusion was applicable. In its opinion, the exclusion clearly barred recovery. The court was not persuaded of the relevancy of whether the pollution was accidental. The court denied Cataract’s motion and granted Hartford’s motion for summary judgment.

Cataract Metal Finishing, Incorporated, Plaintiff v. The Hartford Fire Insurance Company, Hartford Insurance Company of Connecticut and Hartford Insurance Company, Defendants. United States District Court for the Western District of New York. No. 02-CV-0261 (Sc). Filed January 2, 2003. CCH Paragraph 7653