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Reed v. Auto-Owners Ins. Co.

Supreme Court of Georgia

September 22, 2008, Decided

S07G1768

Opinion

 [**91]   [*286]  Sears, Chief Justice.

This appeal involves the proper construction of a pollution exclusion clause in a commercial general liability ("CGL") policy. A residential tenant sued her landlord for carbon monoxide poisoning allegedly caused by the landlord's failure to keep the rental house in good repair. The landlord tendered the claim to his insurance carrier under his CGL policy. The carrier initially defended the suit but later filed a declaratory judgment action requesting a determination of non-liability. The trial court denied the carrier's motion for summary judgment based on the pollution exclusion clause, and a seven-judge panel of the Court of Appeals reversed on interlocutory appeal. The Court of Appeals held that the pollution exclusion clause in the landlord's CGL policy unambiguously excluded the tenant's claim from coverage. 1 We granted certiorari to decide whether the Court of Appeals erred in its interpretation of the pollution exclusion clause. We agree with the Court of Appeals' judgment and analysis, and we therefore affirm.

1.  [***2] Leslie Reed sued her landlord, Melvin Waldrop, for carbon monoxide poisoning allegedly caused by Waldrop's failure to maintain the house she was renting from him in good repair. 2 Waldrop tendered the claim to his insurance carrier, Auto-Owners Insurance Company ("Auto-Owners"), under his CGL policy. Auto-Owners assumed Waldrop's defense under a reservation of rights.

On May 11, 2005, Auto-Owners filed a complaint for declaratory judgment in the Butts County Superior Court seeking a declaration  [*287]  of non-liability. Auto-Owners filed a motion for summary judgment based on the pollution exclusion clause of the policy, and the trial court denied the motion without explanation. Auto-Owners sought and obtained permission to pursue an interlocutory appeal.

A seven-judge panel of the Court of Appeals reversed. The majority held that a straightforward reading of the pollution exclusion clause, and in particular the provision defining a "[p]ollutant[ ]" as "any solid, liquid, gaseous or thermal irritant or contaminant, including . . . fumes," compelled the conclusion that Reed's claim against Waldrop was excluded from coverage under  [***3] the CGL policy. Two judges dissented. 3 The dissenters would have held that the pollution exclusion clause in the CGL policy is ambiguous; that one reasonable reading of the clause is that it applies only to what is traditionally considered to be "environmental" pollution; and that, because ambiguous terms in insurance policies must be construed against the insurer, Auto-Owners was not entitled to judgment as a matter of law.

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284 Ga. 286 *; 667 S.E.2d 90 **; 2008 Ga. LEXIS 746 ***; 2008 Fulton County D. Rep. 2937

REED et al. v. AUTO-OWNERS INSURANCE COMPANY.

Prior History: Certiorari to the Court of Appeals of Georgia - 286 Ga. App. 603, 649 S.E.2d 843.

Auto-Owners Ins. Co. v. Reed, 286 Ga. App. 603, 649 S.E.2d 843, 2007 Ga. App. LEXIS 840 (2007)

Disposition:  [***1] Judgment affirmed.

CORE TERMS

pollution exclusion, insured, coverage, irritant, carrier, terms, contaminant, pollutant, carbon monoxide, landlord

Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Plain Language