No Duty to Defend Based on Pollution Exclusion

 

March 14, 2016

 

Insurer sought a declaration that it did not owe a duty to defend or indemnify to its insured in an underlying strict liability and negligence action. The case is Evanston Ins. Co. v. Haven South Beach, LLC, No. 15-20573-CIV, 2015 WL 9459979 (S.D. Fla. Dec. 28, 2015).

 

The insured, Haven, served an alcoholic beverage containing liquid nitrogen to the original claimant, Mrs. Kaufman. Upon drinking the liquid nitrogen infused beverage, Mrs. Kaufman suffered injuries and filed an action for strict liability and negligence against Haven. When she sued, Haven tendered the defense to its insurer, Evanston Insurance Company. Evanston countered, claiming that they did not have a duty to defend because the allegations in the complaint did not establish coverage.

 

At the time of the incident, Haven had an insurance policy with Evanston containing both a Commercial General Liability (CGL) and a Liquor Liability Coverage (LLC) provision. The CGL contained the usual pollution exclusion stating that the insurer is not liable for damages resulting from discharge of pollutants. OSHA considers liquid nitrogen hazardous according to its hazard communication standard. Merriam-Webster Dictionary defines the verb “discharge” as “to pour forth fluid.”

 

Editors Note: The U.S. District Court applied the plain meaning of all language that was unambiguous in the policy, and determined that the pollutant exception applied in this case because the allegations in the underlying complaint clearly supported a finding that Haven poured the liquid nitrogen into Kaufman's drink. Because the court found that Evanston had no duty to defend based on the pollution exclusion, they also have no duty to indemnify.