TOXIC EXPOSURE CLAIMS ARISING FROM RESTAURANT’S DISCHARGE OF COOKING GREASE INTO CITY SEWERS EXCLUDED FROM CGL COVERAGE BY POLLUTION EXCLUSION
The insured restaurant dumped large quantities of cooking grease down its sewer line, resulting in a several foot-long clog. Certain plaintiffs were overcome by hydrogen sulfide gas while trying to clean out the sewer line. After the plaintiffs obtained a liability verdict against the insured, the liability insurer for the restaurant (Mountain States) (that had defended under reservation of rights initially until it obtained a declaratory judgment in a federal coverage action) was issued a garnishment in the state liability case. The insurer asserted that coverage was barred by the pollution exclusion and asserted the declaratory judgment in its favor in the federal case. The trial court found for the insurer on summary judgment, but the Court of Appeals reversed, finding the pollution exclusion to be ambiguous. The Supreme Court granted review and reversed the Court of Appeals. Mt. States Mut. Cas. Co. v. Roinestad, 2013 CO 14, 2013 Colo. LEXIS 166 (Colo. Announced February 25, 2013).
The evidence showed that the restaurant dumped large quantities of grease into the sewer, creating a clog several feet long, in violation of a municipal ordinance. The clog allowed for the accumulation of hydrogen sulfide gas which overcame the workers. The CGL policy contained the modern “absolute” pollution exclusion. The Court rejected arguments that the pollution exclusion was ambiguous, or had to be confined to instances of “traditional” environmental pollution. The language of the policy was not so limited, and excluded anything that was an irritant or contaminant. The statute upon which the restaurant was held liable prohibited the discharge of any “pollutant” that obstructed sewer line flow. The Court also rejected a “reasonable expectations” argument for coverage, holding that the doctrine had no application to unambiguous policy provisions. Such absolute pollution exclusions had been broadly applied by Colorado courts in other cases in the past, The Court thus Reversed the Court of Appeals and remanded for entry of judgment in favor of Mountain States. For a copy of Roinestad, click here.
From the law firm of Montgomery, Kolodny, Amatuzio & Dusbabek, LLP