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Randy J. Maniloff, White and Williams, LLP
This spring the 11th Circuit Court of Appeals held that the aroma of Indian food is a pollutant within the terms of a pollution exclusion. Despite its best effort to curry favor with the court, the policyholder was shown the tandoori. It is a decision that the policyholder will no doubt describe as papa-dumb. Of course, the insurer knew all along that the policyholder was going to vindallose.
Maxine Furs is a fur shop located next door to an Indian restaurant. Because the two establishments shared air-conditioning ducts, Maxine's furs soon began to smell like curry. Maxine had the affected furs cleaned and then made a claim with Auto-Owners Insurance Company. Auto-Owners denied coverage based on the absolute pollution exclusion clause in Maxine's policy. Maxine sued. PETA filed a amicus brief in support of Auto-Owners (just kidding). The district court concluded that coverage was excluded. Maxine Furs v. Auto-Owners at 1-2.
The policyholder waved Mumbai to the District Court and proceeded to the Eleventh Circuit (Alabama law).
[The case appears to involve a first-party property policy. However, when it comes to whether a non-traditional pollutant falls with the pollution exclusion, the issue is generally the same between property and liability policies.]
The opinion is brief (and cites no Alabama law addressing the pollution exclusion, despite there being no shortage of it). See "General Liability Insurance Coverage: Key Issues In Every State" at p. 297-98).
The Auto-Owners policy excluded from coverage any damage or loss caused by "discharge, dispersal, seepage, migration, release or escape of 'pollutants.'" The policy defined pollutant as: "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." Id. at 2.
The parties disagreed whether curry aroma is a pollutant. The court looked to the policy's definition of pollutant, in conjunction with the applicable standard for interpreting a policy, and concluded that it did "not think that a person of ordinary intelligence could reasonably conclude that curry aroma is not a contaminant under these circumstances." Id. at 3.
The court explained:
A contaminant is something that "soil[s], stain[s], corrupt[s], or infect[s] by contact or association." Webster's Third New International Dictionary 491 (1986). Indeed, what happened here is that the curry aroma soiled Maxine's furs. Otherwise, they would not have needed cleaning. We do not think that a reasonable person could conclude otherwise. Accordingly, we conclude that curry aroma is a pollutant under the policy.Id. at 3-4.
Lastly, the court concluded that the "wafting" of the curry aroma satisfied the "migrating, seeping, or escaping" requirement of the pollution exclusion. Id. at 4.
Of course, Maxine Furs stands in direct contrast with a New York federal court's 2010 decision in Greengrass v. Lumbermans Mut. Cas. Co., 2010 U.S. Dist. LEXIS 76781, No. 09 Civ. 7697 (S.D.N.Y. July 27, 2010), which held that the absolute pollution exclusion did not preclude coverage for odors emanating from the "Sturgeon King's" delicatessen. The court noted that, according to Zagat's restaurant guide, "The smells alone are worth the price of admission."
You can download a copy of the 11th Circuit's March 31st decision in Maxine Furs, Inc. v. Auto-Owners Insurance Company. Lexis.com subscribers can access the Lexis enhanced version of the Maxine Furs, Inc. v. Auto-Owners Ins. Co., 2011 U.S. App. LEXIS 6706 (11th Cir. Ala. Mar. 31, 2011) decision with Shepard's.
Please let me know if you have any questions.
RandyRandy J. ManiloffWhite and Williams LLP1800 One Liberty Place | Philadelphia, PA 19103-7395Direct Dial: 215.864.6311 | Direct Fax: email@example.com
The views expressed herein are solely those of the author and not necessarily those of the 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. The term "Binding Authority" is used herein for literary purposes only and is not an admission that any case discussed herein is in fact binding authority on any court.
Randy J. Maniloff is a Partner in the Business Insurance Practice Group at White and Williams, LLP in Philadelphia. He concentrates his practice in the representation of insurers in coverage disputes over various types of claims. He writes frequently on insurance coverage topics for a variety of industry publications. Maniloff's views on coverage issues have been quoted by numerous media including The Wall Street Journal, The New York Times, USA Today, Associated Press and Dow Jones Newswires. In January Maniloff published "General Liability Insurance Coverage: Key Issues In Every State," a book addressing the law in all 50 states on twenty key liability insurance coverage issues (Oxford University Press) (Co-authored with Professor Jeffrey Stempel of the University of Nevada Las Vegas Boyd School of Law).
Read more Binding Authority newsletters.
Additional Resources for Lexis.com subscribers:
ISO-Form Pollution Exclusion, Business Insurance Law and Practice Guide § 15.08 (Matthew Bender).
Absolute and Total Pollution Exclusions, Law of Liability Insurance § 14.09
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