Insurance Policy – Policy Exclusions

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Civil

Court of Appeals – District IV

Officials: Kloppenburg, P.J., Sherman, and Blanchard, JJ.

Insurance Policy – Policy Exclusions

2014AP2990

Patrick J. Connors v. Zurich American Insurance Company

Patrick Connors alleges that a foundry where he had been employed negligently allowed bacteria to be dispersed or released into the air, that he inhaled some of these bacteria while visiting the foundry, and that this resulted in illness causing bodily injury. Connors filed this direct action against the foundry’s insurer. The circuit court granted summary judgment to the insurer after concluding that a pollution exclusion provision contained in the foundry’s insurance policy bars coverage for Connors’ alleged injuries. The court concluded that the bacteria allegedly dispersed or released by the foundry and inhaled by Connors were “contaminants,” which are defined to be “pollutants” under the pollution exclusion. We conclude that the pollution exclusion in the foundry’s policy, which is considerably more detailed than the standard pollution exclusion in many commercial general liability policies, is ambiguous on the question of whether the bacteria are “pollutants” in the context of the occurrence alleged here. The exclusion is ambiguous in this context because the bacteria are not obviously in the nature of the commercial or industrial products or byproducts specified in the pollution exclusion, and therefore a reasonable insured could expect coverage. Accordingly, we reverse the summary judgment and remand for further proceedings.

Decision

Reversed and Remanded. Recommended for Publication

Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.