Brian Margolies, Partner, Traub Lieberman Straus & Shrewsberry LLP
In its recent decision in Travelers Property Casualty Company of America v. Chubb Custom Insurance Co., 2012 U.S. Dist. LEXIS 44756 (E.D. Pa. Mar. 30, 2012), the United States District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, had occasion to consider whether noxious odor emanating from a pig farm constituted a pollutant for the purpose of a total pollution exclusion.
The insured operated commercial pig farms in several states, including a facility in Indiana that contained some 2,800 sows and their babies. The facility collected the pig excrement into a large, cement pit that eventually drained through a drag line. The drag line, in turn, deposited the waste onto nearby fields for use as fertilizer. The insured and other entities were sued by several neighbors who alleged that the facility produced "harmful and ill-smelling odors, hazardous substances and contaminated wastewater" that resulted in personal injury and property damage. Among other things, the complaint alleged that the "offensive and noxious odors" impaired plaintiffs' use and enjoyment of their properties and caused "sudden onset" ailments, including nausea, vomiting, headaches, respiratory problems, irritation and aggravation of existing medical conditions.
Travelers and Zurich, which issued successive years of primary general liability coverage, denied coverage based on their policies' respective total pollution exclusions, which in pertinent part applied to the "actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of 'pollutants.'" After engaging in a lengthy choice of law analysis in which the court determined that the policies were governed by Pennsylvania rather than Indiana law, the court addressed the issue of whether noxious odors fell within the policies' definitions of "pollutants," defined as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste."
The court conceded that the issue of whether odors emitted from a large livestock facility are a pollutant was a matter of first impression under Pennsylvania law. The court therefore relied on several Pennsylvania cases applying standard dictionary definitions to the terms used in the definition of "pollutant." Thus, for example, contaminant is generally defined as "something that renders another thing impure" and waste is generally defined as "superfluous material produced during or left over from a manufacturing process or industrial operation." The court also looked to Pennsylvania cases holding that fumes can qualify as pollutants for the purpose of pollution exclusions. See, e.g., Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100 (Pa. 1999) (fumes from cement curing agent); Matcon Diamond, Inc. v. Penn National Ins. Co., 815 A.2d 1109 (Pa. Super. Ct. 2003) (carbon monoxide fumes). Relying on these definitions and cases, the court determined that:
... noxious odors produced by pig excrement (or waste) that cause bodily injury and property damage appear to fit squarely within the definition of pollutant under the policies. The fact that pig waste is spread over fields as fertilizer is of no moment, as "waste" includes materials left over from a production operation, and the policies' definition of pollutant expressly includes waste that is to be reused.
In reaching its holding, the court considered the insured's argument that "simple odors cannot be pollutants." Specifically, the insured argued that "because odors can be unpleasant or sweet, harmful or innocuous, the allegation of foul odors is too ambiguous to be construed as a pollutant barring coverage." The court, however, rejected such a bright line rule. Instead, the court held that it is the nature of the alleged odors, in relation to the alleged harm, that determines whether it is a pollutant. Thus, explained the court, noxious odors emanating from a pig farm that allegedly resulted in harms beyond mere nuisance, but actual bodily injury (i.e., nausea, vomiting, breathing difficulties, etc.), unambiguously fell within the definition of "pollutant." The court also rejected the insured's argument that the exclusion did not apply because manure odors are commonplace in rural areas.
Lexis.com subscribers can access the Lexis enhanced version of the decisions with summary, headnotes, and Shepard's, Travelers Property Casualty Company of America v. Chubb Custom Insurance Co., 2012 U.S. Dist. LEXIS 44756 (E.D. Pa. Mar. 30, 2012); Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100 (Pa. 1999); Matcon Diamond, Inc. v. Penn National Ins. Co., 815 A.2d 1109 (Pa. Super. Ct. 2003).
Read more at the Traub Lieberman Insurance Law Blog, Edited by Brian Margolies.
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