TLSS Insurance Law Blog – September 23, 2014
In its recent decision in State Farm Fire & Casualty Co. v. Dantzler, the Supreme Court of Nebraska had occasion to consider the application of pollution exclusion to an underlying personal injury claim involving an individual’s exposure to lead paint.
The case involved coverage under a rental dwelling policy issued by State Farm with the following pollution exclusion applicable to:
i. bodily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, spill, release or escape of pollutants:
(1) at or from premises owned, rented or occupied by the named insured;
The policy defined “pollutants” to mean “solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”
All parties agreed that lead paint is a “pollutant.” The question presented to the Court was whether the alleged injury resulted from a requisite “discharge, dispersal, dispersal, spill, release or escape” of the lead paint. The Nebraska Court of Appeals denied State Farm’s motion for summary judgment based, in large part, on the decision by a Connecticut intermediate court in Danbury Ins. Co. v. Novella, 727 A.2d 279 (Conn. Supp. 1998). The Danbury court held that exposure to lead paint can happen in manners other than the discharge, dispersal, release, etc. Relying on this decision, the Nebraska Court of Appeals reasoned that if lead paint exposure is not exclusively the result of a discharge, dispersal, spill, release or escape of the lead paint, then it was incumbent on State Farm to demonstrate the precise manner by which the claimant was exposed, and its failure to have done so in its motion papers raised a question of fact precluding summary judgment.
In considering the matter, the Nebraska Supreme Court acknowledged a split in authority throughout the country as to whether the pollution exclusion is limited to matters considered traditional environmental harm, or applies more broadly to any harms resulting from pollutants. Notably, in Cincinnati Ins. Co. v. Becker Warehouse, Inc., 635 N.W.2d 112 (Neb. 2001), the Nebraska Supreme Court concluded that the pollution exclusion is not limited to matters involving traditional environmental damage since no such limitation is expressly stated in the language of the exclusion. With this in mind, the Court concluded that the Court of Appeals’ reliance on the Danbury decision was in error, since the Danbury decision relied on a more limited application of the exclusion to traditional environmental harm.
The Nebraska Supreme Court further reasoned that in any case involving exposure to lead paint, there necessarily is a separation of that paint from the painted surface which allows for the claimant’s injury, and this separation is necessarily a discharge, or a dispersal, or spill, or release. This is true regardless of whether the claimant’s exposure is a result of ingesting paint chips or inhaling lead paint dust. The Court therefore concluded that the exclusion necessarily applies to any claim alleging injury as a result of lead paint exposure, thus making it unnecessary for the insurer to determine the precise manner by which the exposure happened. As the Court explained:
Because the above terms encompass the separation of lead-based paint that is inherent in every case of lead paint poisoning, the pollution exclusion is not ambiguous as applied to lead-based paint and a determination of the specific process of exposure in any particular case is not material to application of the exclusion. Regardless of how the lead-based paint is separated from the painted surface or what form it takes once it is separated, an individual’s exposure to and absorption of that lead-based paint results from the “discharge, dispersal, spill, release or escape” of a pollutant. Thus, it is not necessary to differentiate between the processes by which exposure occurs. It is not material to application of the pollution exclusion to determine the manner in which the injured party was allegedly exposed to lead-based paint.