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Insurance Law

Appeals Court Swats Policyholders: Pollution Exclusion Applies To Flies

It has become difficult these days to find a pollution exclusion case that warrants discussion. In general, while each case is different, they also often have many similarities. Does the exclusion apply narrowly and only to traditional environmental pollution? Or does it apply more broadly to all hazardous substances? This is one of the tired issues in these cases.

As a result I’ve generally resorted to discussing cases that address whether the pollution exclusion applies to seemingly peculiar substances, such as fireworks, ejaculate, deli odors, curry odor, swine waste odors and bat guano. These are the kinds of unique cases that make the pollution exclusion a fan favorite. These seemingly unusual pollution exclusion cases are sure to continue to leach from courthouses. Here is the latest entry is this pollution exclusion category: flies and insects.

In Brouse v. Nationwide Agribusiness Insurance Company, No. A14-1729 (Minn. Ct. App. July 27, 2015), [subscribers can access an enhanced version of this opinion: | Lexis Advance], the court addressed the applicability of the pollution exclusion in the following context.

The Dairy Dozen–Thief River Falls, LLP purchased Excel Dairy, a dairy operation. Excel’s neighbors filed a lawsuit against Dairy Dozen alleging that “invasive, offensive, and noxious odors” were interfering with the enjoyment of their properties. In a second amended complaint it was alleged by the neighbors that “[o]ffensive and noxious odors, particulate matter, flies and other insects emanating from the Excel Dairy facilities impaired [their] ability to use and enjoy their property and caused substantial damage to [their] quality of life.”

Putting aside some interesting, but not important here, procedural events, at issue was the applicability of coverage under Dairy Dozen’s insurance policies. The trial court granted summary judgment for the insurers on the basis that the absolute-pollution exclusions – fairly typical ones - precluded coverage. The Court of Appeals of Minnesota affirmed.

The appeals court started out by setting forth Minnesota’s rules concerning the interpretation of what it noted to be absolute pollution exclusions: “Although the majority of jurisdictions limit these exclusions to situations involving traditional environmental pollution, Minnesota follows the minority of jurisdictions in applying the exclusions literally and finding the terms clear, unambiguous, and not limited to traditional environmental pollution. Minnesota applies a non-technical, plain-meaning approach to interpreting pollution exclusions.’” (citations and internal quotes omitted).

First the court examined the argument that the absolute-pollution exclusions were ambiguous because they “did not specifically mention odors, smells, flies, insects, or rodents and the definition of ‘pollutants’ ‘is so broad as to be nearly meaningless.’” The court disagreed, noting that “Minnesota does not require pollution exclusions to use specific words, as appellants suggest.”

Examining whether the pollution exclusion applied to “offensive and noxious odors,” that damaged the “use and quiet enjoyment of [the neighbors] lives, homes and properties,” the court concluded that it did. It reached this decision based on the plain-meaning definition of “fume” [contained in the definition of the pollution], which is “vapor, gas, or smoke, especially if irritating, harmful, or strong’ or ‘a strong or acrid odor.”

And now, getting to the most important aspect of the decision, the court held that “[t]he absolute-pollution exclusions also encompass appellants’ claims regarding flies and other insects. Under the exclusions, ‘pollutants’ encompasses ‘any solid, liquid, gaseous or thermal irritant or contaminant,’ not just contaminants dispersed through the air. ‘Contaminant’ means ‘one that contaminates’ and ‘contaminate’ means ‘to make impure or unclean by contact or mixture.’ The American Heritage Dictionary of the English Language 406 (3d ed.1992). Flies and other insects meet the plain-meaning definition of ‘contaminant’ because they impaired appellants’ use and enjoyment of their properties by making them ‘impure or unclean.’”

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The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

    Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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