The latest round in the fight over the CGL’s “pollution exclusion” — which well-respected commentator Craig F. Stanovich has called “one of the least understood and most litigated portions” of the CGL — went to the insurance company the other day in Oregon. The case is Colony Ins. Co. v. Victory Construction LLC.
The case began when the insured was sued over the installation and ventilation of a natural gas swimming pool heater. “The state court complaints allege damages resulting from the release of carbon monoxide from the heater.” In the resulting coverage action, the U.S. District Court for the District of Oregon held:
The only plausible interpretation of the Policy’s terms results in the conclusion that carbon monoxide is a pollutant. Thus, the pollution exclusion applies to damages caused by carbon monoxide and, therefore, Colony Insurance has no duty to defend or indemnify Victory Construction.
Because the key terms, “irritant” and “contaminent,” were not defined in the policy, the Court looked to dictionary definitions, and concluded:
Based on a plain meaning analysis, the Court concludes that carbon monoxide is either an “irritant” or “contaminant” and, thus, is a “pollutant” under the Policy.
Insureds and insurers alike may be surprised to see just how broad those dictionary definitions are; the Court quoted some of them as follows (the emphasis is mine):
Merriam–Webster’s Dictionary defines irritant as “something that irritates or excites.” The Merriam–Webster Medical Dictionary defines irritant as “causing irritation, specifically tending to produce inflammation.” One of the medical definitions of “irritate” is “to cause (an organ or tissue) to be irritable.” For example, “harsh soaps may irritate the skin.” The Oxford English Dictionary defines irritant as “an irritant substance, body, or agency” such as a poison which produces irritation and “anything that stimulates an organ to its characteristic vital action.”
It was more than a decade ago that Mr. Stanovich observed that “[t]he basic 2001 ISO CGL policy provides very little pollution coverage. . .” That observation has never been more true. Caveat insured!