Smoke from Fire Not a Pollutant
April 6, 2015
This appeal arises from an action filed by the plaintiffs seeking to recover under the landlord's commercial general liability insurance policy for alleged injuries that occurred following a fire in the apartment complex where the plaintiffs lived. This case is Hobson v. Indian Harbor Ins. Co., Docket No. 316714, 2015 WL 1069242 (Mich. App. March 10, 2015).
The apartment building in which the Hobsons lived was insured under a CGL form that contained a total pollution exclusion. The original complaint filed by the Hobsons averred that one of the landlord's employees set a fire due to negligence and this fire injured the Hobsons and caused them damage. When the insurer of the building denied coverage, the plaintiffs then filed a lawsuit against the insurer.
The insurer said that the alleged injuries suffered by the Hobsons included smoke inhalation, and the total pollution exclusion barred coverage. The Hobsons countered that the pollution exclusion did not bar coverage since the exclusion clearly contemplates pollution as a substance that was confined and then released, something distinctively apart and different from a fire—a fire that in this instance was caused by negligence on the part of an insured, which then generated combustion and its natural by-products.
The insurer filed a motion for summary judgment and the trial court denied the motion. This appeal followed.
The court noted that the resolution of this case turns on whether the pollution exclusion applied to bar coverage for the alleged bodily injuries. The court found that the pollution exclusion in this case was intended to eliminate all pollution claims. However, the Hobsons did not allege that their injuries were caused by a pollutant. Instead, they argued that negligence on the part of the insured's employee gave rise to their injuries, specifically a fire set due to the negligence of an employee. Thus, the court said, the injuries were not caused in whole or in part by a pollutant that was discharged, dispersed, released, seeped, migrated, or escaped; rather, the injuries arose from the negligence of the insured, which resulted in a fire.
The insurance company contended that the Hobsons suffered smoke inhalation and so, the injuries were barred by the pollution exclusion since the definition of a pollutant included smoke. The insurer attempted to separate smoke from the fire and in so doing, said the court, tried to extend the scope of the pollution exclusion beyond the scope of its original intent and beyond the plain meaning of the policy language. The court found that it was impossible to separate smoke from fire in instances where fire breaks out within the premises of the insured. Because the fire was located in the premises of the insured where the Hobsons resided, under the plain meaning of the policy terms in the exclusion, the insurer cannot show how the plaintiffs were injured in whole or in part by a discharge, dispersal, seepage, migration, release, or escape of a pollutant.
The court said that the injuries suffered by the Hobsons were not caused by smoke that passed, flowed, or oozed gradually into the apartment complex, but instead, the smoke was there with the fire when the fire started. The smoke was attached to the fire that started inside the building where the Hobsons were physically located. The court noted that the insurer wanted it to hold that any pollutant involved in the causal chain negated the insurer's liability, but to do so, the court continued, would ignore the context in which the pollution exclusion was written and to extend it far beyond its plain meaning.
The ruling of the trial court was affirmed.
Editor's Note: The court ruled that its finding that the injuries were caused by smoke from a fire and that smoke in this instance was not a pollutant was consonant with the understanding of the average purchaser of insurance and consistent with the provisions of the insurance policy as a whole. The court held that the pollution exclusion was designed to exclude coverage for traditional environmental harms, and this claim did not fit that design.