In Reed v. Auto-Owners Ins. Co., 2008 WL 4286606 (Ga. ), the Supreme Court of Georgia determined the proper construction of a pollution exclusion clause in a commercial general liability policy.
Leslie Reed, a residential tenant, sued her landlord, Melvin Waldrop, for carbon monoxide poisoning allegedly caused by the Waldrop's failure to keep the rental house in good repair. Waldrop tendered the claim to Auto-Owners Insurance under his CGL policy, and Auto-Owners assumed Waldrop's defense under a reservation of rights.
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. The court of appeals reversed on interlocutory appeal, holding that the pollution exclusion clause in the landlord's CGL policy unambiguously excluded the tenant's claim from coverage.
The Supreme Court of Georgia granted certiorari to decide whether the appeals court erred in its interpretation of the pollution exclusion clause.
The Supreme Court agreed with the court of appeals 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 the CGL policy.
According to the court, Reed alleged that she suffered “bodily injury” from the “release” of carbon monoxide gas “at … [the] premises,” i.e., the rental house, “owned … by … [the] insured,” i.e., Waldrop. And, as all the parties recognized, the question thus narrowed to whether carbon monoxide gas is a “[p]ollutant”-i.e., matter, in any state, acting as an “irritant or contaminant,” including “fumes.”
The court explained that it “need not consult a plethora of dictionaries and statutes to conclude that it is. After all, the very basis for Reed's lawsuit is her claim that the release of carbon monoxide gas inside the rental house “poison[ed]” her, causing her to suffer difficulty breathing, dizziness, insomnia, vomiting, nausea, headaches, and decreased appetite.”
The majority decision pointed out that the dissenting court of appeals judges reached their conclusion only by first identifying “the purpose” of pollution exclusion clauses generally and then surveying the “historical evolution of the text of the standard exclusion” before turning to the plain language of the pollution exclusion clause in the CGL policy issued to Waldrop. The court explained that the dissenters looked through “the prism of what one might expect to find based on this previously determined 'purpose' and 'historical evolution' to conclude that the pollution exclusion clause 'can' reasonably be read as being “limited to what is commonly or traditionally considered environmental pollution.”
The high court stated that nothing in the text of the pollution exclusion clause supported such a reading, and the dissenters' focus on extra-textual sources of interpretation had led them to find ambiguity in the exclusion clause where there was none.
Accordingly, the court affirmed the judgment of the court of appeals, holding that the plain language of the pollution exclusion clause excluded Reed's claim against Waldrop from coverage under the CGL policy.
*Editor's Note: The current CGL form has an exception for BI caused by smoke and fumes produced by equipment used to heat, cool, or dehumidify the building. So, if the plaintiff in Reed suffered the carbon monoxide poisoning from a heating or cooling device in the building and had the current CGL form from ISO, the claim most likely would have been covered.